Quiznos is moving towards bankruptcy protection within the next few weeks due to declining sales and about $570 million in debt, sources tell the Wall Street Journal. A bankruptcy filing would give Quiznos room to restructure its debt, organize lease payments and negotiate with creditors.
This is the second attempt in two years that the sandwich chain has made at getting its finances in order. In early 2012, Quiznos entered a restructuring deal with creditors that trimmed its debt by more than a third to approximately $570 million. The turnaround plan stalled, however, when the chain failed to hit its performance targets. Then, at the end of 2013, the chain missed a major loan payment, and eventually entered a forbearance agreement with creditors to give the company more time to pay its debts while maintaining its liquidity.
The Denver-based chain has closed thousands of restaurants over the past few years as it struggles to measure up against its dominant rival Subway and trendier chains like Potbelly. Quiznos operates 2,100 locations worldwide, compared with Subway's more than 41,000 around the globe and 26,000 in the U.S. Quiznos' current store count is less than half the nearly 5,000 restaurants that were open during its peak in 2008.
The chain has also been tough to operate because of its franchise structure. Franchisees maintain it's hard to meet sales goals because of the fees they have to pay Quiznos. Franchisees are also required to buy everything from food to condiments and paper supplies from Quzinos' distribution business, American Food Distributors, which store operators allege charges more than what they'd pay elsewhere.
Another gripe from franchisees is that the chain has spent too much time introducing new products, such as pasta items, instead of improving the struggling menu items it already offers.
-See this Wall Street Journal article
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