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48% or More of Quizno's Unprofitable?

Getting any kind of earnings or break-even reports on franchises is not an easy task. But recently one of the members of Franchise Pundit, an outstanding blog in the franchise blogosphere, found an explosive earnings estimate report for Quizno stores (pdf file). The report estimates only 50% of the restaurants in their whole network have positive earnings. The original report is posted on Quizno's independent franchisee association's website. Here's how Pundit describes the report.

"[It is] a document posted at the Toasted Subs Franchisee Association. The document purports to be a summary on Quiznos store profitability. Is it legitimate and accurate? I have no idea, but it’s probably in the ballpark. It’s apparently based on estimates gathered by franchisee sources reporting."


QSR Magazine Awards Best Small Quick Service Restaurants

The best small restaurant chains that have under 300 units have been judged by Quick Service Restaurant Magazine. And who are the top franchise chain winners that were awarded for their attention to quality? They are:

  • Fuddruckers
  • Taco Cabana
  • Donato's Pizza


Subway's Web Campaign a Hit

Subway's marketing campaign is taking off. Its web site, has become one of the top 8 fastest movers and shakers on the Internet. According to Alexa who ranks web traffic, the site has increased in traffic by 1400% in the last week. It was ranked 55,140th most trafficked website and this week is ranked 2,516.

Right after Christmas, Subway launched a marketing experiment aligning its brand even further with weight loss and a healthy lifestyle, an alternate to fattier burgers. The world's largest sandwich chain put spokesman Jared Fogle from its television ads to the phone line. Jared Fogle, whose 245-pound weight loss on Subway sandwiches has recorded motivational phone calls as part of a promotion aimed at people who have resolved to lose weight in 2006.

Subway originally arranged to have customers be able to call a nutrionist for a week to help them along their journey of fitness, which expired January 8. A more traditional TV effort and an in-store sweepstakes promotion supports the "Fresh Resolutions" campaign.

Besides fat losing motivational messages either recorded or for a few winners live chats with Mr. Fogle, participants can also win exercise equipment, a tropical body-buff vacation or other prize.

So, when I slim down through healthier eating habits and exercise, I can show off my new body on a tropical beach while my friends freeze at home? Pure genius.

Give that ad team a bonus for this brilliant scheme of creating a core group of Subway / healthier lifestyle devotees to evangelize the brand.

High Cost of Energy Squeezing Restaurants

Oil is a major ingredient in fourth-quarter restaurant earnings, particularly in casual dining. High energy costs are pinching both fast-food and casual-dining chain operators and their customers. Ruby Tuesday, Sonic Corp., P.F. Chang and others have lowered earnings estimates based on sky-rocketing natural gas prices. "Many restaurant chains are expected to post anemic year-ending numbers", declares a Chicago Tribune story on this sorry state of affairs. It goes on with the following insight:

"Several in the bar-and-grill segment, which is popular with middle-income patrons, experienced sluggish sales in the fourth quarter as consumers cut back on eating out...'Given consumer budgetary pressures from higher fuel costs, we believe the lower-income casual-dining customers are trading down to fast food,' Bear Stearns & Co. advised clients in a recent report."

Carl's Jr. Continues to Heat Things Up

CKE, the parent company of Carl's Jr. and Hardees, continues to impress as Carl's Jr. heats things up, not only with sexy ads featuring millionairess Paris Hilton, rising same store sales but now also with a spicy new product.

Taking advantage of Americans' increasing taste for hot, spicy foods, Carl's Jr. is introducing a Jalapeno Burger in single, double or Six Dollar Burger sizes. At the same time, and one wonders as a result of other such management decisions during the year, the company announced a rise in December same store sales.

Aging Population Eating Out More at Casual Restaurants

The long-term trend for casual and fast food restaurants looks inviting for franchise buyers and owners. According to one analyst interviewed by BusinessWeek, the restaurant business is in for growth.

"The restaurant industry's long-term fundamentals look pretty attractive. People sense that there are growth prospects in it and are willing to pay for them [their public stocks]. In the U.S., you have an aging population that is wealthier, that is looking to eat out. You have a lot of dual-income households where there's not enough time to cook, so people are dining out more and more. As a percentage of overall meals, dining out has been increasing for several decades, and it looks to continue that way."

Restaurant Trends '06

There are some interesting trends predicted to affect the quick service restaurant industry.

  • Battle of the brands. The largest fast-food chains will attempt to encroach on each other's established territories. McDonald's and Burger King lust after Starbuck's morning coffee crowd; Starbuck's wants a piece of McDonald's lunch; and Dunkin Donuts wants a bite of both.
  • Automated food kiosks will be introduced. Fast Food News introduced the story of RoboServer's "Line Buster", allowing customers to place and pay for their order on a touch screen display. Expect the beginnings of food and beverage dispensers too.
  • Technology to attract people into restaurants. Expect WiFi Internet access, DVD rentals, games and more television to be used to bring in new customers and gain favor with families.

Now on to overall food trends in the restaurant industry. Meat & Poultry magazine interviews one well regarded restaurant consultancy, Joseph Baum & Michael Whiteman Co.. They share their vision of food trends for 2006. Chocolate will receive renewed mass-market snob appeal; snacks will appear on more upscale restaurant menus; vinaigrettes will be the new sauces; watermelon will be the new tomato; and fat is back.

The brilliance of All-You-Can-Eat Pancakes at IHOP

The restaurant businesses has been doing this for some time, that is super sizing menus with carb and low cost items. But what perfect timing for the International House of Pancakes. At the beginning of the year in which many have made New Year's resolutions to stay away from restaurants, exercise more, and lay off fat, sugar and carbs, IHOP has announced all you can eat pancakes until February 19 to fill its restaurants. It is a maneuvre of pure marketing brilliance.

Technology Trends: Blackberry fast food finder

Here's news on breaking technology to help consumers find the nearest quick-service restaurant from our friends at Fast Food News. A new Blackberry application called Fast Food Finder will find the closest fast food chain. One Blackberry blog wrote they were able to "query for any of 33,000 fast food locations and get a map, address, and directions." There is also a locator software called "caffeine finder" that helps customers find the closest coffee house for their daily caffeine fix.

Every little bit of marketing, particularly when it is free, helps. So, my next question is how do I make sure that my store is registered so that my customers are finding me? I had to call the company to find out the answer. The company that provides this service, Greystripe, said that if your shop is not on the listing and you want to be on it, send an email with the brand name, location and phone number to


An All-Burger Diet for Wendy's?

It's not just McDonald's anymore. Now it's Wendy's. The competitive burger chains are one by one being asked by shareholders to focus on the core business. Major shareholder Pershing Square (of recent McDonald's fame) asked first but then recanted when satisfied with a Tim Horton's IPO. Pesky Wendy's shareholder and billionaire, Nelson Peltz, known in financial circles for his association with Snapple and Arby's, added his voice in asking to drop all non-Wendy's brands. Both investors claim that Wendy's core restaurants have consistenly underperformed relative to their competitors. Peltz wants Wendy's to say ciao to Tim Hortons, Baja Fresh Mexican Grill, Cafe Express and also arrivederci to Pasta Pomodoro.

Motley Fool online magazine states, "Wendy's claimed it wasn't trying to silence its critics when it announced it was selling 15% to 18% of Tim Hortons in an initial public offering with an expected value of $600 million. The spinoff will use IPO funds plus a term loan to repay debt owed to Wendy's. That would add some cash to Wendy's coffers: Wendy's has a net debt (total debt minus cash) of $458.4 million."