Subway announced that it will bring back its popular $5 footlong deal in January for a limited time, allowing customers to buy one or more featured 12-inch subs every day for $5. In early 2016, the brand ended the deal, and a $6 footlong deal replaced it, but it did not generate as much excitement from guests. The return to the value price is meant to make the brand more competitive in the crowded quick-service space, especially as brands like McDonald’s revitalize their value offerings. Subway has also announced that it will spend $25 million on marketing through spring 2018 in further efforts to draw consumers back into stores.
Though the return of the famous deal might drive more customers to purchase subs, franchise owners are unhappy with the move. The original promotion ended in 2016 because the price hurt franchise owners’ profits, and hundreds have signed a petition to protest the new deal. Subway, however, has been hosting town hall meetings with regional franchisees to explain how the deal will boost profits.
While franchisees are worried about the impact on sales, the brand is focused on drawing more traffic amid recent declines. Subway closed 359 stores in 2016, which is more than it opened for the first time in its history. Bloomberg noted that its sales fell 1.7 percent in 2016 from $11.5 billion in 2015 to $11.3 billion. The New York Post also reported that traffic fell 25 percent over the past five years. The chain attributed falling sales to a shift in its focus toward international growth. Additionally, rising labor costs have put further strain on the brand.
The brand’s decline has largely occurred amid numerous public relations issues in past years. A lawsuit claiming that the brand’s footlong sandwiches only measured 11 inches was only recently dismissed, and news that Subway’s bread contained a chemical found in yoga mats hurt the brand’s image. Recent claims by Canadian TV that the brand’s chicken was only 50-percent real chicken has done little to reassure customers, despite Subway’s argument that the claim is untrue. Further increasing pressure on the chain was Jared Fogle’s arrest for child pornography and sex with minors, though the brand did sever its relationship with the spokesman.
Subway is also banking on a fresh design to take its brand forward. Read more about the new look and vision here.
Though the focus on value is likely to regenerate fan interest, it remains to be seen if franchisee profits will be hurt as predicted or how the move will play out for Subway.
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