Denver-based sandwich chain Quiznos is struggling in the face of store closures and massive debt, the Wall Street Journal reported.
Quiznos was once a grand sandwich chain along the likes of Subway, drawing customers in with toasted subs. Now the franchise, formally known as QIP Holder LLC, has lost nearly 3,000 stores since 2008, The Wall Street Journal reported.
One reason for the closures is a claim that Quiznos overcharged franchise owners for food, which drove down profits. The store closures led to less money for the company to advertise, which then lead to more losses, The Wall Street Journal reported.
"It's a vicious cycle," Brian Peticolas, who owns a Quiznos in Alton Illinois, told The Wall Street Journal. "I almost closed my store five years ago, but I didn't have any other prospects so I kept the doors open."
Quiznos is currently in negotiations with creditors to alleviate some of its $600 million debt load. Creditors have agreed to grant Quiznos a forbearance that gives the company more time to come to a deal, The Wall Street Journal reported.
"We have reached an agreement with our lenders and equity partners, and look forward to continuing to work constructively together to establish a framework that will position Quiznos and our franchisees for future growth and success," Quiznos said in a memo obtained by the The Wall Street Journal.
Last year, Quiznos settled a deal with creditors out of court that reduced its debt almost $570 million. But the company has been unable to consistently keep up with payments. The franchise continues to fade from the public eye.
"I've had two Quiznos close near me recently and I've been getting calls from people asking if I'm still open," Peticolas told the Wall Street Journal.
Other sandwich chains have crushed Quiznos in competition. Subway has close to 41,000 locations around the world, up from 34,000 three years ago. Potbelly Corp now has 300 locations, up from 200 in 2008, The Wall Street Journal reported.
