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BUILDING A BETTER QUIZNOS

Building a Better Quiznos

Group 5
Shiva Doriyani, Ana Corona, David Meeds, Kyle Roberds, & Darren Johnson
Professor Aidin T. Namin
Marketing, 3300, 007
December 9, 2014

BUILDING A BETTER QUIZNOS

TABLE OF CONTENTS

Project Proposal
3
Company Brief
3
Marketing Problem 3
Possible Marketing Actions 3
SWOT Analysis
Strengths
5
Weaknesses 5
Opportunities
Threats
6
STP Analysis 7
Segmentation
Targeting
8
Positioning 8
Marketing Mix9

Conclusion

11

References

12

4
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BUILDING A BETTER QUIZNOS

Project Proposal
Company Brief:
QCE Finance LLC, generally recognized as Quiznos, was established in 1981 and is
based in Denver, Colorado. They operate and franchise submarine sandwich shops which are

located domestically, as well as internationally. Quiznos is the third largest chain of sub shops
with more than a thousand restaurants open in Japan, United Kingdom, Australia, Canada, Puerto
Rico, and the United States. After nine years of having started, monthly sales averaged to
$27,000 for each restaurant. When the company was sold in 1991 to Rich Schaden, a franchisee,
new marketing initiatives began to evolve. Within a year the marketing budget skyrocketed from
$50,000 to $250,000. In 2000, at the end of the fiscal year, Quiznos reported corporate revenues
of $41,900,000 with a net income of $1.1 million.

Marketing Problem:
Quiznos has experienced a significant decline in its number of franchisees, due to an
unaddressed decline in sales over an extended period. The decline in franchisees will reverse
itself if we can increase sales and franchisee profitability. The marketing strategy will focus on
(1) current and potential future locations, (2) innovative strategies that will formulate success,
and (3) exposure opportunities that will increase sales.

Possible Marketing Actions:

To address the significant financial problems Quiznos is currently experiencing, these
marketing actions should be taken:

BUILDING A BETTER QUIZNOS

Identifying which locations that the franchise is currently located that are

salvageable and selecting new locations where stores have the most potential to be
successful.
Scrapping the current promotional department and starting from scratch. A new
marketing campaign that promotes the quality of the menu in a professional and
appealing manner will be created.
Reevaluating the current pricing policy and making the appropriate changes, such
as:

Lowering the price of the menu to compete with competitors such as

Subway.
Carefully consider whether discounts would be beneficial for the

company.
Consider abolishing the policy that requires franchisees to buy supplies

from the franchise.

Evaluate the menu and make the appropriate changes where feasible, taking the
company image and slogan into consideration when doing so.

SWOT Analysis
Quiznos over time became a huge chain that became internationally know for its quality
sandwiches with their signature toasted subs. Quiznos has been at its peak at one point
generating a net income of 1.1 million dollars, but now the franchise is dwindling. In order to
rebuild brand equity in the eyes of the consumer and franchises, Quiznos must assess their
strengths and weakness in order to develop new marketing strategies. Quiznos has had much
success over time, but their marketing techniques have become antiquated therefore for the brand
to make a comeback determining when their strengths became weakness and weakness turned to
failure.

BUILDING A BETTER QUIZNOS

As a group, we found strengths and weaknesses in the Quiznos brand; many of us even
share the same opinion on which ones they are. For instance everyone agrees the product is
quality, well known, and being internationally located, is quite exceptional. Other strengths that
deserve consideration is that Quiznos has plenty of existing clientele because of previous
popularity and consumers still do an internal search before making a purchase even if they arent
aware of it. Another positive for the Quiznos brand is they arent targeting only a certain
demographic of customers they even market to children with their Quiz kids Program. This
was a promotional where kids could eat free at one point. Quiznos probably greatest strength is
its ability to adapt to consumer taste buds because versatility in the food industry is critical to
stay ahead of the competition.

Quiznos used to be on the forefront of the sub sandwich industry with its toasted sub.
Quiznos toasted sub made it unique and different compared to other similar franchises, but
now all chains have adopted the same design turning Quiznos asset into weakness. The loss of
differentiation between Quiznos and all other sandwich franchises is a major blow to Quiznos
brand image. Consumer perception of the Quiznos brand also suffered another setback with
commercial advertisements featuring an ugly monster mascot. The commercials had low ratings
and even worse public perception. Quiznos has been through the four stages of the BCG Strategy
and currently is in a slump so regenerating the cycle will prove to be challenging. Todays
consumer also wants a product that benefits the environment and is health conscious. These are
increasingly popular issues with Generation Y and Millennials, providing various opportunities

BUILDING A BETTER QUIZNOS

for Quiznos to transform weaknesses and turn it into strengths. This would reach more
consumers if the right marketing strategies were applied.

Various opportunities exist, in order to turn Quiznos around into a positive direction. For
instance, creating a new and unique novelty would help us be set apart from our competition.
Quiznos main slogan, for a while, was Mmm Toasty. Our identifier at the time was that we
would toast our subs, but then most of the other sub shops began toasting their subs as well.
Second, now a days very many more people are health conscious about a variety of things
especially what they take into their bodies as aliments. This provides us with the opportunity to
improve nutritional quality of the food. Improving international markets, in Asia and Europe, by
implementing some of these strategies would help boost business overseas. Also, if we focused
on expanding catering and delivery sales, this would definitely help boost our overall sales.

Just as we were able to view health conscious consumers as an opportunity, we could also
view this as a threat this being that if we are not able to meet up to the expectations of this
consumer group, it could essentially turn business and sales away. Secondly, other major
competitors such as Subway, Jimmy Johns, Potbellys, and Jasons Deli are major threats; as
they seek consumers within the same market. Lastly, rising food costs would only obligate us to
increase menu item pricing. Most consumers prefer consistency within the pricing of menu
items, and the fluctuation of pricing would only have a negative impact, overall.

STP Analysis

BUILDING A BETTER QUIZNOS

Before Quiznos started to fail around the years 2008 and 2009, they were considered a
relatively upscale submarine sandwich franchise because of their higher quality ingredients.
The menu prices were a bit more expensive compared to Subways, who still dominates the
cheap sub market currently, but that was part of the appeal of Quiznos customers; pay more and
get better food. However, rival restaurants such as Potbellys and Jimmy Johns began to emerge
into Quiznos niche upscale submarine sandwich market. To make up for the loss of customers
to these new establishments, Quiznos began to lower their menu prices in an attempt to attract
some of the Subway customer base. IBIS World claims that this change might have proved to be
the downfall, as the use of premium ingredients in inexpensive menu items squeezed
profitability at locations that already faced declining sales. Quiznos has since filed for
bankruptcy in 2014, clearly proving that this move to try and compete with Subway by lowering
prices while maintaining the same level of ingredients is unfeasible.

Since directly competing with Quiznos obviously failed after the first attempt, the only
remaining option that is on the table is for Quiznos to return to its roots as an upscale sub shop.
This is where Quiznos became successful in the beginning and there no reason why it should not
be able to return to its former height, despite new competitors such as Jimmy Johns.

Segmentation:
Geographic: Urban environments
Cities are the obvious choice for most fast food restaurants and Quiznos is no exception. The vast
majority of Quiznos customers will live in a major city or the suburbs.
Demographic: White-collar middle income working adults and college students.

BUILDING A BETTER QUIZNOS

One study showed that 90% of Quiznos customers are between the ages of 20 and 36. This puts

the vast majority of the customer base as either an adult or university student that can support his
or herself.
Psychographic: The health conscious consumer and sandwich lovers
One of the main draws of the sandwich market is its relative healthiness compared to other fast
foods. If Quiznos wants to be successful in the fast food business, then it is essential to target the
individuals that desire a healthy, convenient, and satisfying meal. Quiznos should also attract
Sandwich enthusiasts.

Targeting:
After examining the different market segments discussed above, the target market that Quiznos
should focus on is middle-income health conscious adults that are located in urban areas. The
middle class should make up most of the customers at Quiznos, as lower income individuals will
likely eat at cheaper establishments like Subway.

Positioning:
Quiznos is a healthy fast food chain that is dedicated to bringing premium quality food in an
affordable, convenient, and tasty manner to its customers. The dedication to maintaining a high
level of quality ingredients despite financial struggles demonstrates to consumers that Quiznos
will not compromise the health and quality of their products.

Marketing Mix

BUILDING A BETTER QUIZNOS

Our first step in improving the marketing mix will be to establish an oversight and
testing process for advertisements. Historically, Quiznos has made several severe errors when it
comes to the creation and approval of new commercials. There are many examples of these
mistakes including the Sponge Monkeys - We Love The Subs campaign, the Toasty Torpedo
campaign, and the 2 Girls 1 Sub commercial. (YouTube.com, 2007, Edwards, 2009)
Establishing a review process that includes top managers within the organization and external
testing will make these kinds of inappropriate advertisements less likely to make it on air. The
value proposition involved in this change is the efficient use of the firm's marketing budget.
Quiznos currently spends approximately $90 million per year on marketing so any reduction in
waste will generate millions of dollars of value for the company. (Daszkowski, 2014)

Another aspect of the marketing mix that we wish to alter is the product itself. There are
two improvements that could raise the value of Quiznos meals to consumers. The first is creating
more variety in terms of healthy eating options. This will appeal to consumers by offering the
versatility to eat at Quiznos whether they are making special efforts at healthy dietary habits or
not. The value of this change can be seen from studies indicating a secular trend upwards in
customers' awareness of health related issues especially related to diet. (Dutta-Bergman, 2004)
The second improvement we wish to make to the product element of Quiznos marketing mix is
developing a process focused on continuous innovation in the selection of new menu items
including the development of higher quality options. Because competitors are able modify their
own menus to whatever is currently popular, Quiznos must seek to be a leader instead of a
follower and seize the first mover advantage from their competitors. This involves experimenting

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and trying to find the next valuable product rather than trying to optimize a static menu that
slowly becomes stale as the firm fails to adjust to consumer's changing tastes.

Closely related to providing higher quality menu options is selecting a pricing approach
that allows the firm to cover the cost of these new additions while still maintaining enough
apparent value that the consumer will opt for these new products. Odd-even pricing is an
established marketing practice, but there is one issue with the scaling of the effect that needs to
be addressed. That is whether the effect remains potent when the number of options is large. It
would seem that the effect would diminish as the number of prices the consumer must evaluate
grows as they economize on time spent contemplating each option; however, Schindler and
Warren have shown that the effect remains stable over a variation in menu size of over three
times. (1988) This has particular significance in aiding the firm in creating a sales mix that is
most valuable for the firm.

To improve on the place element of Quiznos marketing mix, we plan on increasing the
focus on new venues where consumers will be able to enjoy their products. While the restaurant
itself is closely bound to its current format, we can use the catering element of the business to
drive exposure and encourage habitual consumption in other settings. This will be effective
because fast food is the quintessential convenience product. By exposing customers to Quiznos
via office catering, box lunch sales to schools, and other options, we will overcome the barriers
imposed by the very low search effort that individuals employ on convenience purchases. The
company will encourage these sales through custom advertising directed to organizational

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BUILDING A BETTER QUIZNOS

decision makers and aggressive pricing understanding that value will be generated primarily
through new customer relationships and not catering sales directly.

Conclusion
In summation, we believe that we could definitely build a better Quiznos, if we were to
implement the marketing strategies we listed above. Just as this rule could be applied to so many
other aspects of life, identifying the problem is the first step towards solving any problem. We
formulated potential solutions to resolve the business issues addressed, and brainstormed through
a variety of marketing methods to implement these actions. After having completed our
marketing research through our SWOT Analysis, STP Analysis, and Marketing Mix for Quiznos,
this submarine shop should be able to positively transition from having hit rock bottom towards
maneuvering its way up and should be able to look ahead, through the periscope over the
waterline.

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BUILDING A BETTER QUIZNOS

References

Berman, J. (2014, March 14). How Subway Toasted Quiznos In The Sandwich Wars. Retrieved
December 6, 2014, from http://www.huffingtonpost.com/2014/03/14/subwayquiznos_n_4966030.html
Brennan, A. (2013). Sandwich & Sub Store Franchises. Choice Reviews Online. Retrieved
December 9, 2014.
Quiznos | SWOT Analysis | BrandGuide | MBA Skool-Study.Learn.Share. (n.d.). Retrieved
December 9, 2014, from http://www.mbaskool.com/brandguide/food-and-beverages/9773quiznos.html
A, E. (n.d.). Post navigation. Retrieved December 9, 2014, from
http://www.instant.ly/blog/2013/08/can-market-research-predict-what-your-customers-want-forlunch/
Maze, J. (2013, January 1). Why Quiznos Is Near Bankruptcy Again. Retrieved December 9,
2014, from http://www.restfinance.com/Restaurant-Finance-Across-America/December2013/Why-Quiznos-Is-Near-Bankruptcy-Again/
Daszkowski, D. (n.d.). Quizno's Franchise Review. Retrieved November 1, 2014.
Dutta-Bergman, M. (2004, May 28). Health Attitudes, Health Cognitions, and Health Behaviors
among Internet Health Information Seekers: Population-Based Survey. Retrieved November 1,
2014.
Edwards, J. (2009, March 29). Quiznos Airs Gay "Torpedo" Ad -- Not That There's Anything
Wrong With That. Retrieved November 1, 2014.
Edwards, J. (2009, May 20). Quiznos Continues Porn-Themed Advertising with "2 Girls 1 Sub"
Playboy Tie-in. Retrieved November 1, 2014.
Quizno's. (2007, November 1). "Spongmonkeys - We Love The Subs" Retrieved November 1,
2014.
Schindler, R., & Warren, L. (1988). Effect of Odd Pricing on Choice of Items From a Menu. NA
- Advances in Consumer Research, 15, 348-353.