Subway - The Rise and Fall

August 07, 2019

Subway - The Rise and Fall

With over 42,000 restaurants in over 100 countries, subway has one of the most locations of any fast-food chain on the planet. At first, this sounds like a thriving restaurant chain giant. However, Subway has closed over thousands of restaurants in the past 3 years along with a decline in sales with as much as 25%.

The History of Subway

Initially known as Pete's Super Submarines in Bridgeport, Connecticut in 1965. Three years later, it was rebranded to simply being known as 'Subway'. The compelling points that made Subway for what it is today is a completely open concept and the ability for you to customize your sandwich however you like it.

The brand redefined fast food which provided fresh ingredients that customers could see. As compared to the other fast-food chains, it felt more of a healthier choice. By 1981, there were 200 locations across the United States. And then, the restaurant went International. At that turning point, everyone knew about the franchise. 

Each restaurant looks and smells the same, they are all individually owned restaurants. The franchise process was mastered from way before. You buy the franchise, they search the right location for you, build, train, and you're ready to open.

The Rise

It costs around $120,000 to 265,000 to open a single Subway franchise. With the ease in the process of the opening was so simple that the restaurant saw a growth of store opening from 5000 locations in the year 1990 to 13000 in 1998. In that same period of time, the growth in sales grew to $2 billion. 

The success of Subway continued, as the rise in healthier options was being opted by the customers and they continued to grow with that aspect of the marker. We all remember the advertisement Subway showcased Jarad Fogle holding a pair of Jeans showing off the weight he had lost choosing Subway meals as a healthier alternative. 

This helped Subway gain success for nearly a decade until 2008 the recession hit. For many Americans, searcing for deals was more of a priority than spending on food at full price. Eventually shifting the pace for advertising, the franchise giant offers the great '$5' Footlong. In the year 2009, the '$5' campaign pulled in $3.8 billion in sales. But unfortunately, all good things come to an end. 

The Fall 

In the year 2014, Subway's store sales slowly started to decline which was an accumulation of different strategies they tried in the tenure of marketing which turned on them. Quizno's once being Subway's biggest competitor but chains like Firehouse, Jersey Mike's, Potbelly, etc as well as fast-casual chains like Panera were offering fresh options. These chains were eating into Subway's profits. Subway bringing in ingredients once or twice a week as compared to its competitors bringing in fresh produce on an everyday basis, the option was clear for its customers. Adding to that, competitors were coming up with different options and a variety of fresh-looking menus to choose from. Subway has been balancing on the string by sticking to its old menu. 

Subway's competitors weren't the only ones stealing the business, due to the ease in the opening, the franchise started to monopolize the business. If you notice, you will see a bunch of Subways in within the same vicinity which means, the Franchisee does not have a protected territory. This resulted in cannibalizing in its own sales. This also caused for franchise owners to take the hit as the franchise giant kept getting its own royalties. This caused its annual sales to dip. 

To make matters worse, Subway's mascot was charged with possession of scandals for which he was charged for 15.5 years in prison. This caused even more of a bad name for the franchise. Subway in the year 2016 closed 359 stores, in the year 2017 that number was on a sharp rise. Due to huge dips, it is hard to predict the direction the chain was heading towards. 

Subway is working towards revamping its decor to give it a fresher look. Soon, it will be working towards offering different menu items for which it is partnering with Tastemade to bring itself up from the situation it is currently in.  

It is surely an uphill battle for them but, when you get back to basics and keep it simple, there is surely hope for the chain to survive. 





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