Denver - 9 May, 2005 -

Denver-based Quiznos Sub, a chain that is known for its toasted sandwiches, is experiencing a rapid growth spurt. The franchisor, which currently operates just over 3,500 units in 15 countries, opened just under 1,000 units last year. Another 1,300 are planned for this year, and in 2006, the company projects an additional 1,500 to 1,600 sandwich shops. Company executives claim that a new store is opening somewhere in the world every eight hours. Virtually all of the Quiznos' stores are operated by franchisees, with the exception of a handful in the Denver area, including the city's airport. Dominick Vosa, the chain's EVP of development and operations spoke with GSR about his company's growth plans, real estate preference and other issues. GSR: What real estate do you prefer in a best-case scenario? Voso: In a perfect world we look for the 1,400-sf to 1,600-sf end-cap in a high-density area with a good mix of retail and daytime population, which would be office towers and low-lying industrial. But we do mostly in-line spaces. We do very few freestanding, unless we find an old Arby's or something that is a good opportunity. Ninety-nine percent of our development is in-line and mostly grocery-anchored or has another traffic generator, like Home Depot or Wal-Mart. GSR: So the types of tenants you like to be near are grocery stores? Voso: From a traffic generator standpoint, we like anything that brings people to a center, whether it's a Home Depot, a movie theater or a grocery store. We're not pompous enough to believe that we're a traffic generator on our own. Where there's no traffic generator we don't do nearly as well as we do when we're in a space that has something that's going to bring people to that area. After we get into the consumer's mind, we'll become more of a destination, but the reality is that we're still impulse, and we need those traffic generators in order to succeed. GSR: Has the company looked at opening stores in non-traditional venues? Voso: Absolutely. It's become part of our development strategy to look at more non-traditional venues, from airports to colleges and universities. We have an entire department dedicated to the contract feeders that control most of that. We will do some in-fill convenience and gas, but we certainly are not going to go the way of some of our competitors and sell our soul to that world. We get a lot of those people coming to us saying, "We want to do this many Quiznos," and we will do them in certain rural situations or in the Southeast, but it's not the majority of our strategy. GSR: Are there any other real estate types that you have no interest entering? Voso: There's nothing that we won't look at. With the speed and the rate that we're growing, we're out looking for real estate, everything from flex space and warehouse and industrial to bottoms of large office towers. There's nothing we won't look at, but the majority of our development is going to come from that anchor-based, in-line shopping center. GSR: What is the attraction to non-traditional real estate, a lack of favorable shopping centers? Voso: A captive audience and sales. When you have a non-traditional venue like the Denver International Airport, you have a captive audience, so it make's the marketing department's job a lot easier, and they do high volume. Our highest-volume store in the chain is in the Denver International Airport. It also drives brand awareness, with the thousands of people who walk through that airport. The exposure to the brand and the name recognition is a big factor for us. GSR: What are the biggest challenges in the sandwich sector? Voso: The biggest challenge is that when I started with the company, back in 1993, oven-toasted subs were something I'd never heard of. I didn't know at the time that any other concept was toasting its subs. Now our biggest competitor, Subway, is putting ovens in all of its stores. McDonald's has followed suit in certain markets and rolled out a line of toasted subs. Obviously, the industry has recognized that the consumer has welcomed that as part of what they want to eat. Now our biggest competition is chasing us. GSR: What is your international expansion strategy? Voso: There have been master agreements signed for many countries in the Middle East and South America. We're north of 300 stores in Canada. I know our development strategy is to open about 100 stores a year there. It's really becoming something that is part of our strategy. GSR: Why did the company decide to mostly franchise units and not own them? Voso: We had company stores, and we found out we were a world-class franchisor. Our focus was scattered between running stores and becoming a franchisor and great development company, and there was a conscious decision made to sell off company-owned stores. We had all of the processes and systems to teach franchisees how to do it because the chain is really built on ex-franchisees. We certainly understand the ins and outs of running units every day. We realized we were a much better franchisor company. We had managers running the stores. And through experience we've learned that the formula of owner-operators running their own units certainly ran their stores much better than we did. That's why our single-unit philosophy works. We are 85% to 90% single-unit operators. We don't sell multi units. We don't sell those big investment chains where they would buy 10 or 30 or 30 Quiznos. We sell them one at a time, and when that store's profitable, we let them at that point. But they have to be profitable and owner-operated with them in the store every day. GSR: Does Quiznos have any new concepts or chains on tap? Voso: I've heard grumblings. We talk about the future and what's best for Quiznos. Right now, our scope is to continue to drive this chain. We hope the branding department is looking at other concepts and the development of different brands. But right now 100% of our sole focus is on building out the Quiznos brand.

This article has been read 1632 times .