Chapter 11 Bankruptcy: Quiznos and Sbarro
Quiznos is preparing to file Chapter 11 bankruptcy as its 2,100 stores simply cannot compete with rival Subway’s 41,000 stores. Quiznos collects a 7 percent royalty fee and another 4 percent advertising from is disgruntled franchisees, compared to the industry average 6 percent royalty fee and 2 percent marketing fee. The average Quiznos store has about $300,000 in annual revenue, down from $425,000 a few years ago.
Sbarro recently filed for Chapter 11 bankruptcy for a second time in less than three years. The pizza chain blamed its recent financial problems on “an unprecedented decline in mall traffic.” Based in Melville, New York, Sbarro is a privately-held firm with about 800 stores in more than 40 countries.
Source: Based on Emily Glazer and Julie Jargon, “Quiznos Moves Toward Bankruptcy,” Wall Street Journal, February 28, 2014, B1.
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