Senior lenders of American fast-food chain vote for restructuring plan to reduce $400m in debt
Many a fast-food retailer has dealt with insolvency, kicked it in the nuts and bolts and managed to keep the business afloat. For franchises, however, the impact can be much direr because of the number of interested and affected parties.
The latest chain to fall into this quandary is American fast-food sub connoisseur Quiznos. The company, the self-proclaimed pioneer of the toasted sub, has voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Owing in excess of $400m in debt, Quiznos says it plans to increase the company’s flexibility as it executes operational enhancements designed to strengthen its performance, revitalize the Quiznos brand and reinforce its promise as a fresh, high-quality and great-tasting alternative to traditional fast-food offerings.
Its senior lenders voted overwhelmingly in favour of a pre-packaged restructuring plan and also committed $15m in debtor-in-possession (DIP) finance, which will be available to support ongoing operations during the restructuring.
In the meantime, fans of its famed toasties, both here and across the pond, will be happy to hear that the chain expects to continue operating throughout the restructuring process. Franchisees of the chain can carry on with business as usual as the distribution centres will remain open and fulfilling orders.
With nearly 2,100 outlets worldwide including in the UK, all but seven of the restaurants are independently owned and operated by franchisees which means that as separate businesses, these restaurants are excluded from the Chapter 11 proceedings.
“The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners,” said Stuart Mathis, the chief executive officer of Quiznos. “We look forward to continuing to work with and support our global network of franchise owners, who are the backbone of our business.”