‘Downward Spiral’: Why Subway Closed 909 US Locations in 2017

(ANTIMEDIA) — The sandwich franchise Subway has been hit with a consistent stream of negative press, and its recent business forecasts show the chain is in a “downward spiral,” as Business Insider described it.

In 2014, the chain was the target of public outcry when headlines focused on their bread, which used a type of rubber also found in yoga mats (though other fast food chains and food companies use this additive, Subway bore the brunt of the criticism and eventually phased out the ingredient). In 2015, its longtime spokesperson, Jared Fogle, was convicted of having sex with minors and possessing child pornography. He was sentenced to fifteen years in prison. Last year, a CBC Marketplace investigation found its chicken was not entirely chicken and actually contained more soy than meat. Subway vehemently denied the story and launched a lawsuit over it, but CBC stood by its report.

The inexpensive sandwich shop, along with many other chains, has also drawn rebuke for its use of antibiotics in its meat, though it has made some improvements.

Amid the crises, the company has experienced flagging sales. As Business Insider noted:

The sandwich chain’s US store count dropped by 909 locations in 2017, according to figures that a Subway representative provided to Business Insider. That represents more than 3% of the chain’s 2016 US stores.

“The chain has 25,835 shops open and operating in the US, according to the representative, compared with 26,744 at the end of 2016.”

The company’s 2016 sales dropped 1.7% and it closed 359 locations — the first time it closed more shops than it opened.

This year, 909 stores in the U.S. closed, and the number may increase in 2018. The New York Post reports that the chain’s traffic has fallen 25% in the last five years.

In response, the chain has leaned heavily on promotions, but franchise owners apparently disapprove. Just last week, they protested the company’s plan to bring back it’s $5 foot-long sandwiches. In a letter to the company signed by 400 franchise owners and obtained by the New York Post, they wrote:

The national promotional focus over the past five years … has decimated [us] and left many franchisees unprofitable and even insolvent.

Though Subway once enjoyed a reputation as a “healthy” option, with Jared Fogle touting his weight loss while promoting the brand, America’s changing preferences have sparked more competition that offers arguably cleaner options.

Today, people are ever more educated on nutrition, food sourcing, and ethical holistic business models,” Sara Bamossy, the chief strategy officer at ad agency Pitch, told Business Insider. “To create (or to rekindle) loyalty and sales, it is not enough to label something as ‘natural’ and it’s not enough to be affordably priced.”

Nevertheless, according to a memo obtained by the New York Post, Subway plans to roll out a wrap option, as well as “all-natural turkey.” However, this may not be enough to sway consumers who have come to expect healthy options in the marketplace.

Further, Subway faces another battle in its effort to focus on promotions. McDonald’s, another massive chain that faced flagging sales, has recently made a comeback with its value menu and other promotions, creating still more competition for Subway.

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  • Henry James

    They got rid of their famous Five Dollar Foot Long campaign… Making it $6 and $7 puts your into a lot of competition in an already crowded market with newcomers that millennials would rather spend more money on. Jared’s fiasco had nothing to do with it, Americans memory are short term and can care less if it was cheap eats which is a tight market between the fast food giants already.