(FORTUNE Magazine) – Burger King Chief Executive Barry Gibbons recently told an audience that more than archrival McDonald's he feared smaller chains like Miami Subs. Miami who? The chain in question is headed by former Burger King President C. Ronald Petty, 46, who once reported to Gibbons. Last March, Petty told his employers to have it their way, and quit after 12 years with the company. Says Petty: ''What I found out was that I make a lousy No. 2.'' So he joined forces in September with Greek immigrant Gus Boulis, who had taken over a money-losing chain of Florida taco shops. The partners sold most of the old stores and converted the rest into Miami Subs outlets. Their 52 neon-emblazoned stores now sell sandwiches, chicken wings, and $89 bottles of Dom Perignon -- available even to drive-through customers -- and often do double the business of their Mexican predecessors. Asset sales have helped lift the company into the black. But to give Burger King even the slightest real shiver, Miami Subs needs to expand while generating solid operating returns. Petty's track record suggests he knows what it takes. As head of Burger King International from 1984 to 1988, he boosted sales from $180 million to $800 million.