What happened to the king of foot-longs?: The Whiteboard
For the past two decades, the Subway sandwich chain has been the brand to beat within the quick-serve market. Now you can see why: everyone is beating them.
Though having grown to more locations than McDonald’s both in the U.S. and globally (46,000 to 37,000), Subway has been steadily losing ground, with declining same-store sales reported from many sources for several years running. According to Business Insider, the chain closed 909 U.S. stores in 2017 alone. A leaked internal memo obtained by the New York Post estimated that the chain has lost 25 percent of its traffic over the last five years.
What’s hurting this once soaring company? Submitted for your consideration: Subway has lost its grip on the core of its brand position: fresh.
When Subway first hit the quick-serve scene, it found a way to package a stripped-down deli experience and stick it on seemingly every street corner and half the gas stations in the country. Rather than buy a convenience-store sandwich made the night before and wrapped in plastic, customers could watch their sandwiches being made and customize them on the spot with fresh bread, produce and other add-ons.
Brands like Quiznos made a run at Subway with toasted sandwiches, but Subway quickly responded with its own super-fast ovens and kept them at bay.
Yet, despite rapid growth (perhaps too fast), cracks were starting to emerge in the brand. In recent years, franchisees began to complain that their produce was being supplied less and less frequently. As little as once a week, according to a franchisee who spoke with Business Insider.
While Subway was allowing its freshness position to languish, other chains were starting to cut in on it. Panera Bread, though not a direct competitor, has seen substantial growth and provides fresh sandwiches and soups, as well as a premium bakery, to draw customers. Chipotle has developed a freshness position for its burritos that touts its local sourcing of produce. Other fledgling restaurants like Sweetgreen have their produce delivered daily. Simply put, Subway is being out-freshed by brands all around it.
Add in new sandwich brands like Jimmy John’s and Jersey Mike’s that are steadily eating away at Subway’s market share, while also preparing sandwiches on the spot and made to order.
Subway has been further hurt by a lawsuit claiming its “foot-long” sandwiches were actually more like 11 inches, an exposé by a Canadian TV network claiming its chicken meat is mostly soy, and the conviction of former pitchman Jared Fogle on solicitation and child pornography charges.
With its core brand position damaged, how does Subway fight back? Management is promising interior upgrades to its stores and a rollout of a customer loyalty program. Some have called for a return of its most successful promotion, the five-dollar foot-long. But franchisees have pushed back on the idea, claiming they lose money at that price and it’s just not worth the boost in traffic.
Here’s the problem: a prettier store and points or rewards for frequent shopping don’t address the issues at the heart of the brand. To get back its fresh position, Subway will have to prove it with its produce and meat ingredients, not just new wallpaper and discounts on Tuesdays. Until then, Subway will likely remain sub-par.
David Taylor is president of Lancaster-based Taylor Brand Group, which specializes in brand development and marketing technology. Contact him via www.taylorbrandgroup.com.