Quiznos' Downfall: Company Never Differentiated

Quiznos is on the verge of defaulting, but that shouldn't come as much of a surprise.

Since 2007, the sandwich maker has lost 1,500 of its 5,000 stores, a remarkable 30 percent downsize.

Quiznos claims that the recession and a bad leveraged buyout deal are the main causes for its current financial woes, but it goes deeper than that.

A bad deal with CCMP Capital Advisers brought in hundreds of millions of debt, severely hampering the company.

The company has also suffered from more than a fair share of franchisee lawsuits. Franchise owners have long had issues with the Denver-based company.

One of the biggest issues was Quiznos forcing owners to buy all products through it, even though owners claim they could get the same products cheaper through independent suppliers.

All of these issues undoubtedly contributed to some of Quiznos' downfall, but the sandwich maker actually had a very simple reason for failure.

The real reason the company struggled is because it never did enough to differentiate itself from the competition.

There are thousands of different sub shops throughout the country, including major sub chains such as Subway, Potbelly Sandwich Works, and Jimmy Johns. In order to succeed in such a highly competitive market, a company has to do a fantastic job at showing its worth.

Quiznos was never able to do that.

It put a lot of its hopes on its hot sandwiches concept, but clearly underestimated the ease in replicating that method. While Quiznos might have thought it was revolutionary stuff, Subway and Potbelly clearly didn't.

How'd those two companies respond? They simply added toasters to their stores, thereby eliminating Quiznos' one and only advantage.

Now it no longer offered a unique food option, nor was its pricing competitive. With a bland option at a bad price, why would any customer go there?

Even worse is that Quiznos was never able to combat Subway's creative and popular advertising campaigns. Over the course of the years, Subway utilized sports stars, such as Michael Phelps, Michael Strahan and more, to help push its products.

It also had the remarkable story of Jared Fogle losing 245 pounds in a year eating simply Subway. Subway sales doubled to over $8 billion after the start of the Fogle campaign. Pure coincidence? Possible though a dip in sales in 2005 when Subway stopped featuring Fogle in its ads would suggest otherwise.

But Jared Fogle was just one blow to Quiznos. The ultimate deathblow was likely Subway's $5 dollar foot-long. It had a catchy tune, a great name, and most importantly a great price.

The $5 dollar foot-long sandwich craze took the nation by storm and Quiznos had no way to react to it. Sure it had a $4 torpedo sandwich, but never gained much traction with it.

Quiznos' marketing efforts did little to inspire. Michael Clarke Duncan saying Mmm....toasty, just didn't have the same appeal of the $5 dollar foot-long song.

Subway had better prices, better marketing, and better name recognition. How exactly did Quiznos expect to survive?