Subway heats up in fighting off underdog Quizno's

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Subway restaurants is lacing on oven mitts to go head to head with fast-growing, quirky sandwich chain Quizno's.

Following two years of tests across 400 units in San Diego and Phoenix, Subway will soon begin a market-by-market expansion of high-speed ovens in more than 20,000 units in order to offer its own version of toasted sandwiches.

"They'll provide us a huge advantage in terms of rolling out additional new products," Chris Carroll, VP-marketing for Subway's Franchisee Advertising Fund Trust said, adding that they will also improve the taste of existing products.

"They're going after the Quizno's market," said Bob Goldin, exec VP at restaurant consultant Technomic. "They're adapting and reacting to the times." Quizno's has been a hot growth concept thanks to the popularity of its toasted subs and off-the-wall advertising from Interpublic Group of Cos.' Martin Agency, Richmond, Va.

A Quizno's spokeswoman declined to comment.

With 46.7% more units in 2003 than the year before, Quizno's was the fastest-growing chain by percent of store growth, according to restaurant consultant Technomic. It now has 2,184 outlets. The chain ranked behind only McDonald's Corp.'s Chipotle by percent of increased sales in the consultant's top 100 ranking. Its sales in 2003 grew by about a third over the year before to $818.2 million.

Subway's sales have begun to level off in the past year after a long period of double-digit growth. Subway ranked fourth in sales growth among the top 100 chains, adding $499 million in 2003 to $5.70 million. Only McDonald's, Starbucks and Wendy's had higher total sales increases. Still, in the sandwich segment, Subway controls more than half of sales and more than two-thirds of units. Quizno's is a distant third behind Arby's with 8.2% of segment sales and 9.4% of units. The sandwich segment overall is outpacing the restaurant category, growing 6.5% last year.

During the rollout, Subway will continue to use ads created for the tests by former agency Havas' Euro RSCG MVMBS, New York, that focus on taste.

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