Submarina CEO talks turnaround, growth

Staff Writer
Submarina CEO talks turnaround, growth

After acquiring assets of the Submarina sandwich chain in 2009 through the Kerensa Investment Fund 1 LLC, investment banker Bruce Rosenthal said he was forced to make some changes.

The all-franchised chain had a serious negative cash flow, he said, and franchisees were threatening insurrection, saying that he needed to step in or face going under.

So Rosenthal took the helm as chief executive and over the past year and a half decentralized the business, downsizing the corporate office and shifting advertising and marketing to franchisees and area developers.

Now the 53-unit chain is growing again, with sights set on an aggressive move into Texas. Rosenthal plans to move the corporate headquarters to Houston in 2012, and menu upgrades are aimed at further differentiating the brand as a quality alternative to quick-service competitors.

Nation’s Restaurant News spoke with Rosenthal about Submarina’s turnaround.

How did you restructure the company in June 2010?

When I stepped in, I recognized there were major wholesale changes needed in the way the company operated and conducted itself at the franchisor level. The previous management had lost sight of the fact that, fundamentally, we are a retailer and our product is food. You must exceed customer expectations at every visit without exception. As a franchisor, you must make sure your franchisees are all profitable and doing well.

The first thing I did is dramatic decentralization, and I moved control of advertising and marketing essentially to the franchisees and their area developers. I recognized that it was ill advised for the corporate office to have marketing executives that incur tremendous overhead expense, and then you end up with poor advertising. Area developers and franchisees have done their own independent advertising to supplement corporate over the years, and they know what works. I said, ‘Why do I need to micromanage you?’