Exclusive: Quiznos exec speaks, may 'compensate' customers for botched sub offer
Filed under: Bargains, Extracurriculars, Food, Consumer Complaints
Quiznos execs spent the weekend reading the complaints about its Million Subs promotion stack up here on WalletPop. Today, its Chief Marketing Officer, Rebecca Steinfort, contacted us to explain what went so wrong.
The crux of the issue, from her standpoint, is that Quiznos is trying to turn itself into a less expensive brand, and it's using this promotion to give customers a tour of the changes. Unfortunately, not all of its franchise owners wanted to come along for the ride. Here's what she told us:
Why did Quiznos decide to do this promotion?
"Quiznos is making some pretty big changes to its value proposition to try to make it better for customers. In early January, we lowered the majority of prices on our menu. We want to go to an everyday lower price menu. So what we're trying to do in the first quarter of the year is bring people in so they can see that really understand that we really are affordable everyday. The Million free sub giveaway is really an extension of some of the earlier activities in the quarter."
Did you get inspiration from the Denny's free breakfast promotion during the Super Bowl?
"Actually, no. We've had this in the works since November. We communicated this campaign to our franchise owners through back in a series of market meetings in December."
How much did the promotion cost Quiznos?
"I don't want to give you specific numbers because I'll be wrong if I get specific. But you know, we had to build the website. We are reimbursing our franchisees for the cost of all the subs that they give us. We did a little bit of advertising just to activate the campaign, which didn't take much to get this thing going. We spent about $25,000 activating this, whereas Denny's spent, what...$2 or $3 million on a Super Bowl ad. I'd say that probably wasn't necessary for them. "
Do you pay franchises completely for the free subs, or is it just a subsidy?
"It's the majority. It's not all of it. We're paying about 90% of the cost of those subs."
What are the problems with the promotions as you've seen them develop over the past week?
"I think subs certainly got consumed faster than we would have anticipated. As I said, we spent very little in activating and advertising the campaign, and we had over a million people respond in less than three days.
"I think as a by-product of that, our franchise owners got a bit overwhelmed. They've known about this since December, but I think the volume in which [customers] were coming in surprised a lot of people. As you know, we've had some franchise owners not participate or not participate fully, and that has caused some issues with consumers. So, again, we are doing everything we can to get them to participate. We are largely subsidizing the food costs for the free subs. And we'd love to hear from any consumers who have had issues. We've set up a dedicated helpline [millionsubs@quiznos.com] to help sort things out with people who've had issues. We don't want anyone to walk away with bad experiences, and we certainly don't want our franchise owners to suffer for this.
"The internet is an amazing thing. The term I use is "We've caught a tiger by the tail" for this one in terms of how fast these things spread around. So we're working to mediate any issues customers have had."
May franchise owners opt out in the middle of the promotion?
"They are all independently owned-and-operated businesses, so they can choose whether or not to participate at any point in time. But we don't want customers to be dissatisfied. We encourage them to e-mail us and we'll do our best to make things right. If they didn't get the deal they thought they should have had, they should e-mail us."
What will you do for customers who e-mail you with a complaint?
"It will depend on what their issue is and what their complaint is, but we will work with everybody to make it right."
Does that mean giving them a coupon if their complaint is legitimate?
"It might. We don't want to say specifically what we're going to give out to various people. We're going to look at what people's issues were and we will make sure that we compensate them for their issue appropriately."
So there will be forms of compensation of some kind?
"Yeah, we will make it right. Again, there are a lot of different experiences that people had. Let's just say we're going to talk to customers and we're going to see based on what happened to them what it's going to take to make it right with them."
Can you estimate what percentage of franchise owners have declined to participate in the promotion?
"I don't have a precise number. We know the vast majority are participating based on what we can see and what we're hearing from our field people."
There have been a fair number of angry comments from franchise owners on WalletPop.com. How many coupon redemption problems have been an issue of franchise-owner revolt?
"Some of the challenge right now is we are trying to reposition the brand to be more value-oriented. Strategically, that requires us to change our pricing and to do some discounting to bring people in... It's a little bit of a tough time period for franchise owners as we go through this repositioning. And that's a little bit of what you're seeing."
So Quiznos is going to be a value-priced brand from now on?
"No business is going to be successful if you don't give customers what they want. We've done a lot of research that says Americans love Quiznos' food. It's just too expensive. It was considered a "pay day treat" for many people. What we need to do for our franchise owners is come up with a value proposition that appeals to more of the mass consumers in this country. That's what we're trying to do right now: Bring our pricing in so it's more value-oriented. We don't want to be the low-price player in the market, but we think we need to have the right price for this food and the food quality that we've got, particularly in this economy. It was the right thing to do before the economic meltdown, but it's absolutely necessary given the state of the economy right now."
Should Quiznos ever decide to do another promotion like this, what has it learned?
"I think we would focus on getting better alignment with our franchise owners in advance. No question. But on the consumer side, there's clearly interest in the offer. I think we learned a lot about how powerful the internet is. I think it is something that you're likely to see from us again in the future, but no doubt we need to get every single one of our franchisees on board before we try this again."
The crux of the issue, from her standpoint, is that Quiznos is trying to turn itself into a less expensive brand, and it's using this promotion to give customers a tour of the changes. Unfortunately, not all of its franchise owners wanted to come along for the ride. Here's what she told us:
"Quiznos is making some pretty big changes to its value proposition to try to make it better for customers. In early January, we lowered the majority of prices on our menu. We want to go to an everyday lower price menu. So what we're trying to do in the first quarter of the year is bring people in so they can see that really understand that we really are affordable everyday. The Million free sub giveaway is really an extension of some of the earlier activities in the quarter."
Did you get inspiration from the Denny's free breakfast promotion during the Super Bowl?
"Actually, no. We've had this in the works since November. We communicated this campaign to our franchise owners through back in a series of market meetings in December."
How much did the promotion cost Quiznos?
"I don't want to give you specific numbers because I'll be wrong if I get specific. But you know, we had to build the website. We are reimbursing our franchisees for the cost of all the subs that they give us. We did a little bit of advertising just to activate the campaign, which didn't take much to get this thing going. We spent about $25,000 activating this, whereas Denny's spent, what...$2 or $3 million on a Super Bowl ad. I'd say that probably wasn't necessary for them. "
Do you pay franchises completely for the free subs, or is it just a subsidy?
"It's the majority. It's not all of it. We're paying about 90% of the cost of those subs."
What are the problems with the promotions as you've seen them develop over the past week?
"I think subs certainly got consumed faster than we would have anticipated. As I said, we spent very little in activating and advertising the campaign, and we had over a million people respond in less than three days.
"I think as a by-product of that, our franchise owners got a bit overwhelmed. They've known about this since December, but I think the volume in which [customers] were coming in surprised a lot of people. As you know, we've had some franchise owners not participate or not participate fully, and that has caused some issues with consumers. So, again, we are doing everything we can to get them to participate. We are largely subsidizing the food costs for the free subs. And we'd love to hear from any consumers who have had issues. We've set up a dedicated helpline [millionsubs@quiznos.com] to help sort things out with people who've had issues. We don't want anyone to walk away with bad experiences, and we certainly don't want our franchise owners to suffer for this.
"The internet is an amazing thing. The term I use is "We've caught a tiger by the tail" for this one in terms of how fast these things spread around. So we're working to mediate any issues customers have had."
May franchise owners opt out in the middle of the promotion?
"They are all independently owned-and-operated businesses, so they can choose whether or not to participate at any point in time. But we don't want customers to be dissatisfied. We encourage them to e-mail us and we'll do our best to make things right. If they didn't get the deal they thought they should have had, they should e-mail us."
What will you do for customers who e-mail you with a complaint?
"It will depend on what their issue is and what their complaint is, but we will work with everybody to make it right."
Does that mean giving them a coupon if their complaint is legitimate?
"It might. We don't want to say specifically what we're going to give out to various people. We're going to look at what people's issues were and we will make sure that we compensate them for their issue appropriately."
So there will be forms of compensation of some kind?
"Yeah, we will make it right. Again, there are a lot of different experiences that people had. Let's just say we're going to talk to customers and we're going to see based on what happened to them what it's going to take to make it right with them."
Can you estimate what percentage of franchise owners have declined to participate in the promotion?
"I don't have a precise number. We know the vast majority are participating based on what we can see and what we're hearing from our field people."
There have been a fair number of angry comments from franchise owners on WalletPop.com. How many coupon redemption problems have been an issue of franchise-owner revolt?
"Some of the challenge right now is we are trying to reposition the brand to be more value-oriented. Strategically, that requires us to change our pricing and to do some discounting to bring people in... It's a little bit of a tough time period for franchise owners as we go through this repositioning. And that's a little bit of what you're seeing."
So Quiznos is going to be a value-priced brand from now on?
"No business is going to be successful if you don't give customers what they want. We've done a lot of research that says Americans love Quiznos' food. It's just too expensive. It was considered a "pay day treat" for many people. What we need to do for our franchise owners is come up with a value proposition that appeals to more of the mass consumers in this country. That's what we're trying to do right now: Bring our pricing in so it's more value-oriented. We don't want to be the low-price player in the market, but we think we need to have the right price for this food and the food quality that we've got, particularly in this economy. It was the right thing to do before the economic meltdown, but it's absolutely necessary given the state of the economy right now."
Should Quiznos ever decide to do another promotion like this, what has it learned?
"I think we would focus on getting better alignment with our franchise owners in advance. No question. But on the consumer side, there's clearly interest in the offer. I think we learned a lot about how powerful the internet is. I think it is something that you're likely to see from us again in the future, but no doubt we need to get every single one of our franchisees on board before we try this again."
Reader Comments (Page 1 of 3)
3-02-2009 @ 5:13PM
Rich Piotrowski said...
As the only former Quiznos Franchisee that can publicly speak out against them (being I beat them in court, and they will sue any other franchisee that says anything that they consider "negative"), I can tell you what Ms. Steinfort is telling you is not entirely true. Quiznos did come out with a plan to reimburse franchise owners, but it was two days into the promotion. However, it definitely does not cover, "90% of the cost of those subs" and not all franchisee owners will get any reimbursement.
Quiznos is a company that has one of the worst reputations for a reason. They are known to do everything to purposely NOT work with Franchisee since they do not consider them "partners" in any true sense of the word. Not unlike the stories of the Robber barons in the past, they treat their franchisees as indentured servants. Franchisees signed up for one thing, but only after the fact did they discover that the devil is in the details. What are those "details?" They are forced into a situation where they often have to work at a store with little or no pay just to keep it open, and it they want to close, Quiznos will threaten to sue them for "liquidated damages" saying they harmed the brand. In my case, they tried to sue me for $250k before the judge ruled that Quiznos materially breached my contract and that they were responsible for me being forced to close my location.
In many cases, franchisees do not want to risk losing what little money they have left, perhaps it could be their savings or even their home, as these liquidated damages are often over a quarter of million dollars, which is in addition to losing their investment they made in buying & operating their store. Many of these franchisees do not have that much in net worth and file bankruptcy, which is why the Wall Street Journal last week rated Quiznos as having the largest default rate on SBA backed loans.
Getting back to Ms. Steinfort's claim that they are paying 90%, this amount is based strictly on the food cost portion of making that given sub. Consider the costs of rent, electricity, labor, insurance and paper goods, in addition to reducing the number of paying customers. It is worth noting that the the parent company of Quiznos makes more money off of selling food to its franchisees then it does from royalties. Other systems, such as Subway sell that food at cost and derive 100% of their income from the royalties that the franchisee pay. The incredible profit from the sale of food is why the owner of Quiznos is able to live in one of the largest homes in Denver, a house that has an annual property tax bill of about $77,000 a year. Under different circumstances this would be fine, but it is unconscionable when his franchisees, who often have to work for free, have to give away food that he profits from.
So is Ms. Steinfort telling the truth, I'll let you be the judge of that.
Reply
3-02-2009 @ 9:36PM
Rob said...
I talked to an owner and that is not the story I got. He said they are giving them .75 per coupon and there was no help in lowering the food cost. She is not telling the whole story.
3-02-2009 @ 9:45PM
jeannette said...
Good for you. You by telling of your experience you just saved people from investing in a crappy company.
3-04-2009 @ 8:56PM
Kathy said...
No She isnt. I want to fight them for ruining my life too. But I dont have a penny to my name. Can someone help me?
3-02-2009 @ 11:03PM
david said...
Ceo luanches this program,then resigns next day. That's chicken shit! Never met corporate employee that did not lie about something!
Reply
3-02-2009 @ 10:08PM
kira said...
Richard....just stfu. We really don't care.
Reply
3-03-2009 @ 1:06PM
Floyd Newman said...
We spent considerable time trying to obtain the coupons and when we went to the local Quiznos in the rain we were told that they had seved their quota and we left with a very poor taste considering the advertisement did not indicate there would be any quotas.
Reply
3-02-2009 @ 10:16PM
Sean said...
I was excited to see this deal online, and signed up for it immediately. When i went to print the coupon, IT NEVER PRINTED. Also, i could not try a second time as the page would load only once then close immedately after trying to print. Quiznos needs a desperate change in management, especially after reading the comment above mine. Good food, crappy "free sub" promotion bullshit.
Reply
3-02-2009 @ 10:24PM
MyTwoCents said...
I am finished with Quiznos after having been a customer 2-3 times a week. Their February and March newspaper coupons and this latest free small sandwich promotion were a horrible ordeal for me and boarder on false advertising, and I will tell you why I feel that way.
In February in the Sunday newspaper there were four coupons for different offers. The two I was interested in were the 2-1 sandwiches and the 2-1 sandwiches with the purchase of one drink.
I noticed that the company tried to cover themselves by using the term participating locations...that to me NOW means only a few will honor this coupon as written and this is a hoax to get you in the store.
I phoned my local store and asked, "do you accept the coupons that ran in the Sunday paper". The person who answered the phone said, "yes we do".
So I got dressed, drove over, found a place to park and went in the store. I presented the coupon and they said we only take the coupons that do not give a free sandwich...I said I phoned and asked if you took the coupons...they said we take only the no sandwich ones. I was annoyed that they did not say that on the phone...guess they knew I would not come in if they did, and they probably figured that since I was there I would pay full price for the sandwiches and use the lesser coupons for chips or whatever. What a scam...but that was just the beginning.
I left the first store and went to another after phoning and asking if they took the 2-1 sandwich coupon. They said they accepted both of them. I arrived there and went up to the counter and found that the sandwiches were priced $2 more than all the other stores I had been in. So of course, that sort of defeated the coupon value, but I decided to take it, then they charged me extra for Parmesan bread which no other store had done. I thought what a racket. Then the next week I tried to use the remaining 2-1 coupon and three stores flat out refused to take it.
Then what happened two weeks later? Quiznos offers the same coupons for MARCH! Now the stores were wise, and put crudely written signs saying that "we do not accept coupons OR you must buy a drink AND chips to redeem".
Then what happens? Quiznos offers a free small sandwich promotion. I just couldn't resist trying to redeem it. What a trip.
Quiznos needs to get it's act together...I suggest that they contact TGIFridays. Those people know how to make a coupon promotion work and make the customer not only feel good about using it, but make us want to come back!
I do not think that Quiznos needs to reimburse the total cost to stores, as it is advertising for each store, but there should be a fair arrangement so the stores give a pleasant experience to customers. But that is not my problem, it is theirs.
Reply
3-02-2009 @ 10:35PM
Frank said...
Quiznos has never been much of a favorite of mine! Substandard size sandwitches is my largest complaint. They hand you a 4" bite and try to call it a "Sub". I LOL the frrst and ONLY time I tried Quiznos. Very pricey for what you get (not much).
Reply
3-02-2009 @ 10:35PM
Fran said...
QUIZNOS WAS OUT FLANKED BY SUBWAY.
Who in their rite mind would buy a Quiznos?
AND they taste terrible - cheap meat - Burger King
deIfnite winner:)
AND ANYONE WHO RESEARCHED 'BUSINESS' KNOWS
FRANCHISES MAKE MONEY FOR THE FRANCHISEE!!!
GIMMEE U MONEY, GIMMEE U MONEY, GIMMEE U MONEY!
Reply
3-02-2009 @ 11:28PM
david said...
My two cents,your blaming the store owners. Putting blame on wrong people? Corporate quiznos promised me three yrs ago I would never see free sub coupons again,then they ran them any way,then CEO of Quiznos tells owners in email,that we will not run the million deal becuase of lowered prices,and the fact that not one owner in country wanted to run deal. 4-5 days later,Ceo luanches program,then resigns next day? Maybe that Ceo should put up what he was paid to run apology letters to all quiznos customers,owners,who been burned by this bullshit!
3-02-2009 @ 10:44PM
PORNO THE CLOWN said...
quizzno can stick their burger.
Reply
3-02-2009 @ 10:49PM
CALIGULA said...
QUIZMO CAN STICK THEIR BURGER.
Reply
3-02-2009 @ 11:10PM
John said...
I find Sean's comment interesting because I also thought my coupon would not print. I clicked the print coupon button and it stayed greyed out, but did not print. I at first thought my PC had "froze", but opened another window and continued working. I simply left the print window open to see what would happen. After about ten minutes, (I am NOT exagerating), the coupon did print.
I was a little surprized that it had my name, email address on it and said I would need photo ID to use it. Being house bound, I will not be able to use it. I had planned on giving it to a family member. I guess Quizno's knew things like this would happen, so I will tell my family to NOT buy at a business that has such dishonest business tactics!
This dishonesty could well spell the end of their business in this bad economy. I think they may deserve it from reading the other comments. How about you?
Reply
3-03-2009 @ 5:35AM
Sub eater said...
That is so you and all the other crooks hat requent WalletPop couldn't just make multiple copies of the coupon.Each one is unique and can only be used once.At least that is ow it is supposed to be but I am sure many still went around and got free subs from many dfferent stores.I had a problem with AOL not being sent the initial link to my email but got a reminder with link in it 3 days later. Ate my sub last night and it tasted good.
3-02-2009 @ 10:58PM
David said...
The problem I found in dealing with the Quizno's chain is that there is no continuity of product among the individual stores in my area. Because the franchise is a relativly cheap investment, many are owned by foreigners recently immigrating here from places like India and the Middle East who scrimp on the meat and re-hash stale bread from a previously slow day which they justify as simply "good business sense". They are unkind to their employees (mostly local kids) who transfer their hostility to the end product and the customer. I stay out of Quizno's anymore, even though when their product is sold and prepared properly, I find that is a good sandwich.
Reply
3-02-2009 @ 11:00PM
Gunny said...
TRY Subway!!! The workers & OWNERS are always fun happy to own the shops and honor SUBWAY deals found online or any other media... Ive know two QUIZOS owners and both said it was a HUGH MISTAKE in their life...
Reply
3-02-2009 @ 11:01PM
Arlene said...
I was excited to get this coupon and went to Quizno's and was told no, they did their quota and not going to honor the coupon, so I went to three others , using my gas and wasting my time and to end up with no sandwich and went home and typed a nasty note to Quizno's,who did forward my email to the first Quizno's I had gone to, and Bryan the manager there called me and apologized, but said he wasnt being compensated and was losing too much money to give out free subs. I appreciated the phone call and the apology, but I think the apology should be from Quiznos themselves not the franchise. What a farce for free advertising they pulled
Reply
3-02-2009 @ 11:17PM
stacieann74 said...
I saw the promotion the first day it was posted. I easily printed the coupon. I went to my neighborhood Quiznos in Sidney, Ohio and they happily accepted it and gave me a free small sub. No complaints.
Reply