DATE: Thursday, July 24, 1997               TAG: 9707240429

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   39 lines

ZERO'S PLANS TO GROW - WITH HELP, IT HOPES, FROM STOCK OFFERING

Next to its ``two subs for the price of one'' coupon, Zero's is making Hampton Roads residents another offer: a stake in a local company that wants to make it big.

On Wednesday, Zero's Mr. Submarine Inc., a Virginia Beach-based chain of fast-food restaurants, began soliciting interest for a public stock offering it hopes will raise $1 million. The notice is tacked onto its newspaper advertisement.

The offering, which will solicit funds only from Virginia investors, will help Zero's anticipated expansion, which may lead to more than 1,000 stores within the next decade.

In preparation, the company needs to set up a new marketing plan, beef up its technology and experiment with new types of stores, company officials said.

Zero's also will use the funds to hire managers experienced in growing fast-food chains, said

Martin Palacios, the company's chief executive officer. Palacios said he hopes to recruit executives who've worked with the likes of Burger King and Taco Bell.

``I'm serious about finding top management for the company,'' Palacios said. ``That is critical to our development.''

Palacios' cousin, Gene Schmidt, opened the first Zero's store 30 years ago in Virginia Beach. Since then, the company has grown to a chain of 46 stores, including 38 franchised locations, in Virginia and North Carolina.

The company had gross sales of about $11 million last year. Earnings were not available, though the company says it has been profitable. Zero's plans the offering under the Small Corporation Offering Registration, a simplified and cheaper way for small businesses to raise money locally.

Federal and state regulators must first OK the offering - a process that can last up to four months. If approved, Zero's is considering selling 225,000 shares at $4 each.

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