Subway, the world’s largest restaurant chain, may have reached its tipping point.
According to Business Insider, the sandwich giant isn’t nearly as popular as it used to be. Consumers once turned to Subway for healthy, fresh food. Now, they’re going elsewhere. Franchisees, meanwhile, complain the chain’s promotions have proven unprofitable.
Oversaturation has created internal competition, so store count has dramatically dropped. Further closures are expected in the upcoming year.
Business Insider reports:
The sandwich chain’s US store count has dropped by 909 this year, almost three times as many locations as the year before. Subway has 25,835 shops open and operating in the US, according to a representative, compared with 26,744 at the end of 2016.
But this year could just be the tip of the iceberg for Subway’s closures.
Business Insider spoke with three franchisees from different regions of the US about the state of the chain. They all say others are bracing themselves for more bad news and speculating on the state of the business.
Citing internal conversations and national sales numbers, one estimated that up to one-third of Subway’s locations were unprofitable.
Another cited conversations with Subway’s development agents — franchisees responsible for developing an entire region — who are speculating that many more closings are on the way.
[…] Last week, the New York Post reported that roughly 400 franchisees were protesting the chain’s plan to bring back the $5 footlong deal. On Monday, Subway’s head of North American marketing, Karlin Linhardt, resigned from the company.
And traffic has fallen 25% over the past five years, the Post reported, citing an internal memo it obtained.
Subway said it was “realigning markets to ensure the right Subway restaurants are in the right locations,” remodeling restaurants, introducing new products, and refining operations. A spokesman wouldn’t comment on the number of store closures expected in 2018.
Subway is no longer seen by the public as a reliable source for fresh food. One franchisee told Business Insider that the company has stopped ordering local food on a daily basis. Apparently, it’s become far more common for Subway to order once a week, opting for longer refrigeration.
Without its healthy edge on other, greasier fast food options, Subway is having a hard time maintaining its niche in the market.
Lettuce is a staple for sandwiches, and it doesn’t refrigerate well. According to BI’s franchisee source, if demand is high, Subway will order fresh food twice a week.
Business Insider continues:
“By the end of the week … the lettuce is just a massive problem,” she said, describing its taste after a few days as “shredded paper.”
“I can’t eat the lettuce, and that’s a problem, and I’ve told them,” she said. “They’re just not listening.”
The franchisee said the company’s reliance on specific suppliers and refusal to entertain the idea of adding fresher options was especially frustrating as customers demand cleaner labels and higher-quality food.
In a statement to Business Insider, Subway said it worked with more than 100 family farms and suppliers in the US to help make sure its restaurants have fresh produce. But the company would not say whether shipments were delivered only once or twice a week.
That’s an old trick that just isn’t working anymore. Consumers, particularly those once loyal to Subway, are more educated on nutrition today.
Sara Bamossy, the chief strategy officer at Pitch, an advertising agency, told BI that “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.”
That means promotions such as the $5 foot long aren’t as profitable as they once were. Modern consumers want to know that their food is fresh, and they’re no longer willing to make an exception if the food’s cheap. New Antibiotic-free updates to Subway’s menu, apparently, just aren’t enough.
While other fast food restaurants have produced more menu options, Subway has remained relatively stagnant.
Promotional options are limited as well. The company needs to make a change fast, but they obviously can’t turn to their shamed former spokesman Jared Fogle, who plead guilty to possession of child pornography and sex with minors.
When the face of Subway is in prison for such despicable crimes, it’s hard to start over.
Subway still has 25,835 locations in the US. If they continue their downward spiral, however, the company could be in big trouble.
from The Federalist Papers http://bitly.com/2ludqVO
via IFTTT America’s Favorite Fast Food Chain Is In Danger Of Going Out Of Business http://bitly.com/2ludqVO