I never would have guessed that Quiznos was on the verge of bankruptcy since I don't follow the fast food sector all that closely. It has reached agreement with its major debtholders to execute a debt for equity swap, but that just buys time. The fast food sector is really crowded and Quiznos has to compete against low-priced alternatives like Subway in addition to burger and pizza chains. I've always thought of Quiznos as a premium alternative to Subway with its focus on grilled sandwiches with lots of meat - a high-cost way to serve the costliest part of a sandwich. Maybe consumers are tightening belts in more way than one. If they concede the low-price market to Subway then IMHO they can win in more upscale urban areas. That means closing store locations in low-income areas.
Speaking of store closings, Sears has had problems for years. Merging its blue-collar brand with an even more downscale brand like Kmart was always an uncomfortable mix. The genius behind the idea was a hedge fund guy, not a retailer. Now shareholders reap the harvest sown by his knowledge gap as Sears is forced to close the bottom 3% of its stores. Sears needs to come to terms with the dominance of Wal-Mart and Target at the extreme low-price end of the retail spectrum and refocus its branding on the middle market where it belongs. The demise of Montgomery Ward last decade should have been a golden opportunity for Sears to cherry-pick some better store locations.
Two retail brands that used to mean something are now in trouble for wandering outside their core demographics. Growing without thinking first can do that to you. How many Quiznos outlets are located in shopping malls with a Sears as the anchor? In an ideal world, there would have been many.
Full disclosure: No positions in any of the companies mentioned above.
Speaking of store closings, Sears has had problems for years. Merging its blue-collar brand with an even more downscale brand like Kmart was always an uncomfortable mix. The genius behind the idea was a hedge fund guy, not a retailer. Now shareholders reap the harvest sown by his knowledge gap as Sears is forced to close the bottom 3% of its stores. Sears needs to come to terms with the dominance of Wal-Mart and Target at the extreme low-price end of the retail spectrum and refocus its branding on the middle market where it belongs. The demise of Montgomery Ward last decade should have been a golden opportunity for Sears to cherry-pick some better store locations.
Two retail brands that used to mean something are now in trouble for wandering outside their core demographics. Growing without thinking first can do that to you. How many Quiznos outlets are located in shopping malls with a Sears as the anchor? In an ideal world, there would have been many.
Full disclosure: No positions in any of the companies mentioned above.
