HARD TO DIGEST

Quiznos looking at a world without bread

Hedge fund billionaire Marc Lasry’s holdings might get bitten in a week, The Post has learned.

Lasry’s Avenue Capital owns the troubled Quiznos sandwich chain, whose monthslong talks with its lenders to restructure about $600 million in debt are nearly toast, sources said.

The lenders on Feb. 21 gave the Denverbased chain one week to reach a deal on a restructuring, and no matter if they strike a deal or not, Avenue Capital likely stands to lose most or all of its equity stake in the ailing firm, sources said.

Quiznos, whose toasted subs once made it one of the fastestgrowing sandwich shops in the country — spreading out to more than 5,100 locations in 2006, according to Nation’s Restaurant News — has been suffering under a controversial franchisee plan for years and in December missed a loan payment putting it in default.

By 2012, Quiznos, which Lasry took control of after an earlier debtforequity swap, was down to 2,300 stores. Today, there are roughly 1,000 US locations and many franchisees are losing money.

Talks with the lenders, including Howard Marks’ Oaktree Capital, Wes Edens’ Fortress Investment Group and Caspian Capital Advisors, could result in the creditors taking control of the chain, sources said.

Neither Lasry nor senior creditors seem willing to pump more cash into the chain, sources said.

The average Quiznos franchisee needs to generate about $425,000 in sales annually to break even, sources said. The average revenue for many is closer to $280,000, sources added.

The long descent of Quiznos, once viewed in the industry a possible challenger to Subway and its 26,000 US stores, could be seen as a cautionary tale on not to restructure a distribution system.

Franchisees must buy supplies, including everything from paper goods to cold cuts, from the compa nyowned American Food Distributors. Franchisees have complained over the years that AFD marks up those supplies too steeply.

The structure, which predates Lasry’s ownership, makes it too pricey for store owners to compete, they complain. About 1,000 stores have closed in the last two years.

That has put a crimp in Quiznos’s profits. It now generates only $60 million in earnings before its debt payments and has an unsustainable $600 million in debt, sources said.

“If [after a possible bankruptcy] they are forced to maintain all their money streams, including American Food Distributors, then we are toast,” one store owner told The Post. “If we can cancel and restructure contracts and terms, including AFD, then we have a chance.”

Since 2012, Avenue Capital ended a 4 percent franchisee rebate program for stores that hit certain performance targets, making conditions even tougher for store owners, according to sources.

The most senior lenders, whether or not they reach a deal with Lasry, will likely put the chain in bankruptcy so they can clean up Quiznos’s balance sheet.

Avenue Capital declined to comment. Quiznos did not return calls.