On Friday, Denver-based toasted-sandwich chain Quiznos Corp has declared itself bankrupt just days after pizzeria company Sbarro LLC sought protection from its creditors in court. According to a market pundit, the filing of Quiznos is an indication of the current fast-food restaurant market in the US.
Executive vice president Bob Goldin at Chicago-based restaurant researcher Technomic Inc told Bloomberg today over the phone before Quiznos' filing, "It's a survival of the fittest. The market is not growing, or it's barely growing, so the weak players are getting weeded out."
According to court papers filed in the US Bankruptcy Court in Wilmington, Delaware, Quiznos claimed that it has over $500 million in debt. The company also revealed plans to shear off $400 million of its debt via a debt restructuring plan. Part of the plan, the company said, will be a $15 million loan from its senior lenders which the sandwich chain will use to continue with its operations as the company goes into a reorganization. Quiznos said in a statement that senior lenders had already given their support to the proposal and that the loan will await court approval. Quiznos added in a statement that it is confident that it will be able to bounce back from bankruptcy on an accelerated basis once the restructuring plan has been executed.
The news agency said that veteran businesses are being challenged by newcomers in the restaurant business in the US. As new restaurants expand quickly, Panera Bread Co, Chipotle Mexican Grill Inc and Subway Restaurants had reduced their businesses. Hot Dog on a Stick filed for bankruptcy protection last month.
Commenting about Quiznos' descent to bankruptcy, Goldin said, "They expanded too fast, they had a weak franchisee network. Once the Paneras of the world came along, I think, many consumers thought that was a better quality price point. And Subway came in on the lower end and aggressively promoted themselves as fresh."
