Quiznos has dug itself into a big pile of shit. The Denver-based chain, which was founded 32 years ago “was once among the few national sandwich chains that could credibly challenge the dominance of Subway,” the WSJ writes. At its peak in 2008, the company—which became known for its toasted subs—had 5,000 restaurants worldwide. Now, its total number of franchises has plunged from 3,000 to 2,100 in just two years.

The company is currently $600 million in debt, and has struggled with store closures and tension with franchisees. So what exactly happened to poor Quiznos Sandwich Restaurant?

Issue #1

For many years, franchisees have complained that Quiznos requires them to buy food and supplies from a Quiznos subsidiary, which allegedly charges more than what they would pay to purchase those goods themselves.

Current and former franchisees told the WSJ that high costs decreased stores’ profitability, causing closures. With fewer stores contributing to an advertising fund, the chain’s advertising campaign predictably went to shit. This effectively hurt sales, which resulted in more store closures.

“It’s a vicious cycle,” Brian Peticolas, who owns a Quiznos in Alton, told the WSJ. “I almost closed my store five months ago, but I didn’t have any other prospects so I kept the doors open.”

Sad story.

Issue #2

Quiznos messed with their sandwich production process, which seriously confused customers. Quiznos changed the sandwich assembly process so that most vegetables were placed on the sandwich after it went through the toaster, instead of the vegetables going through the toaster with the meat, cheese, and bread.

This alteration seemingly makes sense because warm, soggy lettuce and tomato on a sandwich usually tastes awful, right? But regular customers were confused: they expected to tell the sandwich maker upfront if they didn’t want certain ingredients. They became very disappointed when the person on the other side of the toaster automatically added those ingredients. And confused, angry customers usually don’t come back.

What can we learn from Quiznos’ failure? Upset customers = loss in profit. Assuming American consumers are more intelligent than they are = $600 million in debt.

[via Gawker]