Denver-based Quiznos on Friday filed for Chapter 11 bankruptcy reorganization to reduce debt.
The struggling sub-sandwich chain said its senior lenders voted to approve the restructuring that will reduce Quiznos’ debt by more than $400 million.
Quiznos said it does not expect any changes in operations at restaurants during the reorganization.
The chain has been plagued by declining sales, tough competition, restaurant closures and friction with franchise owners. At its peak in 2006, Quiznos had 5,125 restaurants. It now has about 2,100 worldwide, including about 1,200 in the U.S.
Steve Bond, who operates a Quiznos on the 16th Street Mall, said he is hopeful that the restructuring will help franchise owners, many of whom are losing money.
“This could be a good thing for the brand if it results in some genuine structural changes,” Bond said.
The bankruptcy filing is the second attempt in two years to reverse the company’s declining fortunes by having lenders swap their debt for equity.
Before the 2012 restructuring, Quiznos was controlled by Consumer Capital Partners, a Denver investment firm led by Quiznos founder Rick Schaden and his father, Richard, and CCMP Capital Advisors, a private-equity firm spun off from JPMorgan Chase.
Analysts say Quiznos has lost market share to industry leader Subway and fast-growing sandwich chains such as Jimmy John’s, Jersey Mike’s and Firehouse Subs.
In a statement issued Friday, Quiznos said its senior lenders have committed $15 million in debtor-in-possession financing to fund operations during the Chapter 11 proceedings.
“The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners,” CEO Stuart Mathis said in the statement.
Mathis said a component of Quiznos’ new business plan will include reducing franchisees’ food costs — a key point of contention between the company and its franchise owners.
Quiznos in 2009 agreed to pay $95 million to settle a class-action lawsuit filed by franchisees, but many owners say they continue to be charged too much for food. Some have filed a new round of lawsuits.
“Franchisees are really concerned,” said Janet Sparks, a Denver-based reporter for franchise-industry publication Blue MauMau. “We know they’re not making money, and they’re wondering what to do next.”
Steve Raabe: 303-954-1948, sraabe@denverpost.com or twitter.com/steveraabedp
