Quiznos Expansion Strategy Focuses On C-stores

Monday, October 03, 2011

Quiznos is growing its footprint domestically and globally and tapping into the convenience store market as part of that strategy.

Since Quiznos began its new platform rollout, in the spring of 2010, it has sold more than 100 new c-store locations and is expecting to double that amount within the next 12 to 18 months, according to Shultz Hartgrove, senior vice president of Convenience Store Development of Quiznos.

Of the nearly 4,500 restaurants in the Quiznos' system, its c-store portfolio makes up less than 10 percent. The company expects this number to grow to 15 percent with the strategy underway.

Thus far, the chain has established partnerships with convenience industry companies such as HESS, Mapco and Champlain Farms.

The chain entered the Florida c-store market earlier this summer, after signing an agreement with Hess, the largest independent gasoline-convenience retailer, that calls for more than 50 Quiznos restaurants to open inside Hess locations throughout the state.

The partnership is the largest to date in terms of Quiznos convenience locations.

"Through our convenience store growth strategy, we have successfully developed regional partnerships with leading convenience store operators, evolving our c-store platform to best meet their regional needs," Hartgrove said. "This opportunity with Hess represents the culmination of that evolution as we now focus on growing the number of locations." Executives from both Quiznos and Hess predict a long-term partnership with significant growth potential throughout Hess' 1,350-plus locations along the East Coast.

Quiznos' c-store strategy, according to Hartgrove, includes a heavy focus on Texas and New England. The chain took another big step toward one of those targeted regions in mid-September, signing a partnership with Vermont-based Champlain Farms. The plans include 40 units to open in high-traffic locations such as college campuses and interstate exits beginning as early as next month.

Catering the menu to the 24/7 crowd The Quiznos/Champlain Farms locations will feature a menu tailored to the convenience store customer and retailer, including Quiznos' signature toasted sandwiches and breakfast items prepared and packaged to eat on the go. Breakfast offerings rolled out in several c-store locations for the first time in March 2010.

Quiznos' c-store menu is flexible, depending on space and equipment, and was developed based on consumer and partner feedback. It focuses on all dayparts, which is critical in the 24/7 space.

"Convenience stores are able to feature either the full menu, like a traditional location, or a modified menu that is a bit more limited in that it offers the top-selling subs, salads, soups, and special limited time offers," Hartgrove said. "From an operational standpoint, the limited menu can be less complicated for some locations, and it takes less back-of-house storage." Whether a location features a limited or full menu, the subs remain the centerpiece and complement the nontraditional 24/7 locations. Sandwiches make up a multi-billion segment and provide several key advantages for convenience retailers looking to expand into quick-service to drive additional revenue and traffic to their stores, according to Hartgrove.

"Sandwiches are easy to make and are perfect for dashboard dining," he said. "Secondly, they leverage all dayparts from breakfast, lunch, dinner and the increasingly important snacking occasion." Sandwiches also don't require fryers and offer additional sales opportunities with catering and boxed lunch occasions, "something that burgers are not as operationally efficient to provide," Hartgrove said.

Staffing, equipment benefits The c-store units all franchised also offer a modular platform that takes advantage of existing facility infrastructure, including staff. This is part of the reason Quiznos began embracing the nontraditional market in the first place.

"We had gotten so many requests to develop an innovative convenience store platform, one that leveraged the current infrastructure of the existing location," Hartgrove said.

Since rolling out that platform more than a year ago, the chain has tweaked some of the details. For example, when Quiznos began opening c-store locations, it required separate entrances and a separate end-cap. But the company quickly learned that this setup forced consumers to make a choice between door A and door B.

"This wasn't a smart integration with our partners," Hartgrove said. "We listened to them and decided to enhance the consumer experience by removing that obstacle and making the shopping experience more convenient and enjoyable." Expansion plans beyond the c-store Although Quiznos has made much progress toward its c-store goals, it has also taken other nontraditional and global locations toward a much broader expansion plan.

For example, about two weeks after the ink dried on the Champlain Farms' deal, Quiznos signed another partnership with Michigan-based grocery retailer Meijer.

"Meijer saw an opportunity to better serve their loyal customer base by offering Quiznos as a dining option. This made Meijer the ideal choice to extend our nontraditional store offering," Hartgrove said. "Quiznos and Meijer will benefit from the store becoming a one-stop shop for groceries, household goods and lunch." Quiznos is also speeding up its international growth plans. The chain opened its first unit in India in August and plans on having as many as 200 restaurants in operation there by 2016.

Quiznos' global initiative, announced in August 2010, entails opening new stores in about 15 new countries and territories within two years.

The plan targets Central and South American markets, as well as Europe, the Middle East and Southeast Asia.

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