Fill 'Er Up With Quiznos
Go to a gas station. Try not to spill that $3 gas on your hands. Run to the bathroom. Try not to have germaphobic nightmares. Order yourself a toasted sub. Try to get it down with whatever appetite you have left.
Last June, Quiznos CEO Greg MacDonald invited me to the Quiznos cube, a shimmering plate-glass palace outside corporate headquarters in downtown Denver. It is a pristine sandwich shop in what looks like a giant, jewel case--on par with something Apple (NASDAQ:AAPL) would build. Yet this is not the future for Quiznos.
MacDonald (not McDonald) was excited about a deal he'd just cut to put Quiznos in 50 Hess Corp. gas stations in Tampa, Fla. He seemed to want Quiznos in gas stations everywhere.
"People are more time crunched," MacDonald explained. "You see that throughout the whole food sector. People want to be able to eat better food--better-tasting food, better-quality food--faster."
Fill up your tank. Fill up your gut. It doesn't get any faster than that without an intravenous sack full of glucose. When I worked at an Amoco gas station in the 1970s, there were vending machines for pop, candy and cigarettes. The evolutionary chain that followed brought the gas station hotdog, sometimes dried to a crisp on hot metal rollers, and then the gas station burrito, nuked in a dirty microwave.
Then came the professional fast-food purveyors--from Taco Bell and Popeyes to McDonald's and Dunkin" Donuts--marketing their grease beside Pennzoil and Valvoline.
The latest wave of gas station eateries is something I counted as a desperate bid to roll out more stores in a weak economy. MacDonald insisted it had less to do with the economy and more to do with Americans' increasing lack of time.
"We're all more crunched for time now than we were five years ago," he explained.
MacDonald served me tasty samples of Quiznos' many new offerings. When I asked about a big round of layoffs Quiznos took earlier in the year, he characterized it as a simple right-sizing move designed to improve profitability for franchisees.
"To be honest with you, we were probably a little fat at headquarters, so it wasn't that hard of a move to make," he said. "We took that savings .. and essentially gave it to our franchise owners.
"That's a huge reason why we've had such a successful year here this year," he said.
MacDonald is a handsome guy with rock-star hair, hip attire, and a pleasant demeanor. He calls himself a "Canerican," being from Canada, but living in the U.S. And he says the parents of his kid's friends often think he works behind a counter making classic Italian subs.
"Profitability is the way I'm going to actually build this company--and build it aggressively," he continued. "I truly think we're right-sized to grow in the future. But I wasn't the No. 1 ranked person around headquarters here when I did this move."
Besides the right-sizing layoffs, MacDonald boasted of the exponential growth plans he had for the 3,500-store chain. In the years to come, he said we will see hundreds more Quiznos in the U.S. and thousands more abroad. "We're very well structured to grow moving forward," he said.
"Were going to have a great year this year," he reiterated. "When it comes to sales volumes of our stores, we're going to beat budget. On our development numbers, we are going to beat budget. On our average unit volume, we are going to beat budget.
"We are privately held. I can't predict the future, but our two partners that own the company are very happy. The performance of the company has been strong this year.
"My view is that even with the economy not improving, I think we have the right business plan to keep this thing on the right angle.
"Trends have been real nice for us, even during a tough economy. We're not depending on the economy to get better to keep this going.
"We're building a strategy moving forward where we're not dependent on unemployment going back down to 6% or 7%," he said. "We're not $29 for dinner. We're not $14 for lunch. You can get in and out of here for $7."
I often look to write about businesses that are succeeding amid tough economic times. But this interview has languished in my digital audio recorder until now.
Not long after meeting MacDonald, I started seeing reports that Quiznos was having trouble restructuring its $875 million in debts. By July, Quiznos reportedly had to inform its lenders that its results would come in below expectations, and that it was in violation of its loan terms.
On Friday, Quiznos announced that its major creditors have agreed to a restructuring deal, but warned it might have to file Chapter 11 bankruptcy.
The restructuring calls for Avenue Capital Group, a hedge fund controlled by billionaire Marc Lasry, to take 70% ownership. Quiznos's current owners--CCMP Capital Advisors LLC and Consumer Capital Partners, an investment firm owned by restaurateur Rick Schaden--are not likely to recover any of their investments, The Wall Street Journal has reported.
These are the guys MacDonald--with his outside public relations counsel at his side--characterized as "very happy." But I suppose if you are happy eating fast-food at a gas station, you can be happy eating anything.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at al.lewis@dowjones.com or tellittoal.com)