Denver-based Quiznos has filed for Chapter 11 bankruptcy protection to reduce its debt by more than $400 million after the chain lost ground to competitors.
The toasted sandwich company said Friday that it voluntarily filed to reorganize to implement a pre-packaged restructuring plan.
Quiznos says the move won’t affect its customers.
The company only owns and operates seven of the nearly 2,100 Quiznos restaurants. The rest are owned and operated by franchisees and aren’t part of the bankruptcy proceedings.
Quiznos also says its distribution centers are open and fulfilling orders.
Quiznos, founded in 1981, says the restructuring plan has been approved by its creditors so it expects to emerge from reorganization quickly.
Darren Tristano, executive vice president at Technomic, Inc., a food industry consulting firm, said Quiznos operates in a crowded field where other “fast casual” choices for consumers include Jimmy Johns, Firehouse and Jersey Mike‘s. All were hurt by the recession, but Quiznos had added pressure from franchisees, several of whom have filed lawsuits accusing the company of putting corporate profits ahead of the concerns of franchise owners.
In a statement about its Chapter 11 filing, Quiznos CEO Stuart Mathis said the company was taking steps to support franchisees that included reducing food costs and making loans available to some franchise owners for restaurant improvements.
Tristano said that while Quiznos might be able to slow its decline, the chances of returning to its heyday, when more than 4,000 Quiznos restaurants were operating, are slim.
“There’s too much competition,” Tristano said.
SOURCE: The Associated Press