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Subway, the once-dominant sandwich chain, is facing a serious crisis as sales continue to decline. In a desperate attempt to reverse the downward trend, the company has called an emergency meeting with its North American franchisees. The meeting’s aim is to find a solution to “improve traffic and win back market share.”
Sources familiar with the matter report that same-store sales have dropped significantly in recent months, with some locations experiencing declines of up to 12%. The situation has become so dire that Subway’s new owner, Roark Capital, is under immense pressure to turn the business around.
The memo went out last week and said: “This conference is essential. Join us … to discuss the state of the industry and an update on our business.”
A spokesperson for Subway countered the emergency declaration and said: “There is no emergency virtual conference”, and set out to cast the meeting in a different light, “We consistently and proactively communicate with our franchisees to share business updates and plans.”
While the exact reasons for the sales slump are still under investigation, several factors are believed to be contributing to the problem. Aggressive discounting strategies, aimed at attracting customers, have reportedly eroded profit margins without generating the desired increase in sales. Concerns about the quality of Subway’s ingredients and the overall customer experience have been raised by both franchisees and consumers.
There’s also the fact that Subway’s very foundation was built on the $5 Foot Long promotion and their mascot marketing campaign protagonist, Jared Fogle. Both have gone by the wayside, the latter being charged with child sex scandals.
And now franchisees are quibbling amongst one another, and lamenting about lower sales. One franchisee said: “Our gross sales are not even at 2012 levels, and profit then was five times what it is today.”
The upcoming meeting is expected to be tense as franchisees confront Subway’s leadership about the declining sales and the impact it’s having on their businesses. Many are demanding immediate action to address the crisis and restore the brand’s former glory. They’re even calling for a new CEO to get them back on track.
Subway’s ability to recover from this downturn will be crucial for its survival. The company will need to implement a comprehensive strategy that includes product innovation, improved marketing, and enhanced customer service to regain consumer trust and drive sales.
And maybe even bring back a promotion comparable to the old $5 Foot Long?
