CHICAGO (AdAge.com) -- The company that gave America a man sucking on a wolf teat is at it again. Seeking to return to its identity as an edgy upstart, Quiznos is undercutting rival Subway's $5 foot-long with a $4 version called the Toasty Torpedo, pitched as a product with "12 inches of flavor" by a smoky-voiced toaster that asks a chef to "Say it sexy" and "Put it in me."
It's the latest attention-grabbing bid by the nation's second-largest sandwich chain, which has struggled in recent years because of problems with franchisee profitability (it closed 300 restaurants last year) and the perception that the food is expensive. In the past five months, Quiznos has swapped its chief marketer, agency and CEO, and is reverting to its scrappy roots.
"The reality is that we are a challenger brand," Chief Marketing Officer Rebecca Steinfort said in an interview. "Our main competition is Subway, which is an 800-pound gorilla. We may be 200 pounds, but they're 800."
Quiznos built a following with toasted, high-quality subs and envelope-pushing marketing (remember the Spongmonkeys?) After reaching about 5,000 units in 2007 internationally, Ms. Steinfort said, the chain began to lose its "mojo." While the recession hit Quiznos hard, rival Subway has gone gangbusters with its $5-foot-long promotion, which helped to fuel double-digit increases in same-store sales. At Quiznos, marketing failed to drive traffic and closed stores. The chain now has about 4,500 locations worldwide, by Ms. Steinfort's estimate. The company is private and does not disclose sales figures.
Creative aside, the $4 price point might just be a magic bullet for Quiznos, undercutting its rival in a recessionary market where every dollar counts for consumers. "I think the right price point is very important in the sandwich business," said Dennis Lombardi, exec VP-food service strategies at WD Partners, a Columbus-based design and development firm. He added that Subway's foot-long "changed the paradigm. So the trick now is: How do you create a product that counters that? And a $4 sandwich sounds like a good start."
Restoring leader, profitability
Earlier this year, Quiznos revamped its menu to reduce prices and come closer to the critical $5 mark. A January campaign from then-agency Cliff Freeman & Partners featured Quiznos chefs on the street talking about lower-priced subs. But the chain parted with the agency after about 18 months and has shifted its $90 million business to Nitro. While Quiznos describes the agency's work as "on a project basis," Nitro is handling the new campaign, and the chain is not in the process of looking for additional agencies. Quiznos has a history of ongoing, project-based relationships, forgoing an agency of record.
Last month, founder Rick Schaden returned to Quiznos' chief-executive spot. One of his first orders of business was to help franchisees renegotiate their leases, and Mr. Schaden has said one of his top priorities will be restoring franchisee profitability.
This month, Quiznos offered a "Million Sub Giveaway," an online effort that e-mailed a coupon to the first million customers to give their names and e-mail addresses. While the promotion was an overwhelming success in terms of data collection, a few problems ensued. Quiznos had 1 million e-mails within three days, but some consumers didn't get their coupons, and others couldn't print them. A few flustered franchisees turned coupon holders away.
Mr. Lombardi said Quiznos will have to be careful of the promotions it uses to survive the recession, but "it's much easier to go from premium product to bargain product than it is to go from bargain product to premium product."
"You might buy a small Mercedes," he said, "but would you buy a Yugo limousine?"
After just five months on the job herself, Ms. Steinfort said the chain's recent marketing efforts have already begun to pay off. Quiznos' consumer research shows that most customers come into Quiznos and notice the prices are lower, and 70% say they plan to come back. She described the results as being "significantly better," or showing "hockey-stick-type improvement" over last year, when the chain's prices were on the rise.
Challenger vs. leader
|2008 SALES||$1.9 billion (estimated)1||$9.6 billion|
|NO. OF STORES||4,3421||21,881|
|SAME-STORE SALES||Negative||Up double digits|
|2008 AD SPENDING||$90 million2||$369 million2|
|AGENCY||Nitro||McCarthy Mambro Bertino, Boston|
|MEMORABLE MARKETING||Baby Bob, Spongmonkeys||Jared Fogle/$5 foot-long|