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SUBWAY CALLS ‘EMERGENCY’ MEETING WITH FRANCHISEES AS SALES PLUMMET: SOURCES
By
Josh Kosman
Published Aug. 14, 2024, 6:28 p.m. ET
851851 Comments
Subway has called a hasty meeting with franchisees of its 19,000 North American
sandwich shops as they grapple with faltering sales and profits, The Post has
learned.
The fast food giant — which sold itself in April for $9 billion to Roark
Capital, owner of Dunkin, Arby’s and Baskin Robbins — told franchisees it will
reveal plans to improve traffic and win back market share at the Thursday
meeting.
“This conference is essential,” Subway said in the invite. “Join us … to discuss
the state of the industry and an update on our business.”
6
Kansas City Chiefs quarterback Patrick Mahomes has been trying to get customers
to buy subs and snacks. Subway
6
Subway CEO John Chidsey would like falling same-store sales numbers to at least
start leveling off. Subway
The confab — which one franchisee called an “emergency” meeting, noting that the
invite was only mailed out last week — will include a recap of promotional
offers that are being tested in restaurants.
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“There is no emergency virtual conference,” a Subway spokesperson said,
disputing the “emergency” characterization of the Thursday meeting.
“We consistently and proactively communicate with our franchisees to share
business updates and plans.”
Discounting has become a contentious topic of late.
A Subway franchisee with nearly 20 stores told The Post his same-store sales are
down 5% to 10% in recent weeks compared to the prior year.
He blames the chain’s recent price promotions as customer traffic has dropped.
6
Steph Curry is encouraging customers to score two Subway subs for the price of
one. Subway
“They are doing crazy coupons,” the franchisee griped.
“Our gross sales are not even at 2012 levels, and profit then was five times
what it is today.”
The franchisee added that his stores barely break even with the discounts. In a
recent national ad campaign, NBA great Charles Barkley has been urging customers
to “Buy any foot-long in the app and get one free.”
“Charging $6.99 for any sub while they are $11 on the menu,” the franchisee
lamented.
“Offering three sandwiches for $17.99.”
6
Subway is offering promotions on its best-selling items like turkey and tuna
subs. NurPhoto via Getty Images
Subway does not give its franchisees national sales information, but an Eastern
US region with about 1,000 Subways saw average weekly same-store sales slip by
8.7% between June 25 and July 16 compared to a year earlier, according to data
shared with The Post.
Subway’s meeting “seems very unusual,” said restaurant consultant John Gordon,
who noted that he recently has seen Subway sales numbers in West Coast and East
Coast regions that show same-store sales drops of 10% in the last few weeks.
Los Angeles and San Diego same-store sales are down 8% for the week ending Aug.
6, a Subway source said.
In the Southern California suburbs, they are off 2% to 5%, the source added.
That’s versus last year, when Subway boasted that its North American same-store
sales were up by 5.9% chainwide.
6
Subway sandwich artists are hard to replace with robots. Getty Images for Subway
Subway is discounting its best-selling items so it’s hard for it to compensate
for the lost revenue, sources said.
The hope was the new $3 foot-long hot dipper snacks introduced in June would
boost sales, but they are not selling enough of them, sources said.
Subway last year had more success when offering Sidekicks — foot-long cookies,
pretzels and churros, which helped fuel positive same-store sales despite a 1.7%
traffic drop.
But the buzz surrounding that snack offering has died off, according to Gordon.
Subway, which owns none of its restaurants and makes its money through 8%
royalty fees it collects from franchisees, now faces interest payments on debt
following its sale to Roark and can’t afford to have declining earnings, sources
said.
6
McDonald’s is also offering discounts but its same-store sales are down only
about 1 percent. AFP via Getty Images
Other chains increasingly are offering discounts to entice financially strapped
customers.
White Castle slashed the price of its famed sliders to the lowest level in more
than a decade, as The Post reported this month.
Nevertheless, fast-food restaurants excluding pizza joints in July saw
same-store sales down 2.9% compared to negative 1.9% in June, according to Bank
of America credit and debit card numbers.
851
What do you think? Post a comment.
Taco Bell was up 5%, while Wendy’s and Burger King in the second quarter were
flat, according to data firm Technomic. McDonald’s is extending its $5 value
meal into October.
The Golden Arches reported last month that same-store sales in the second
quarter were negative for the first time in four years, dropping 0.7%.
“This shows the discounting wars are not working in total but are improving
traffic a bit,” Gordon said.
Filed under
* chain restaurants
* fast food
* inflation
* subway sandwiches
* 8/14/24
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Kansas City Chiefs quarterback Patrick Mahomes has been trying to get customers
to buy subs and snacks. Subway
Subway CEO John Chidsey would like falling same-store sales numbers to at least
start leveling off. Subway
Steph Curry is encouraging customers to score two Subway subs for the price of
one. Subway
Subway is offering promotions on its best-selling items like turkey and tuna
subs. NurPhoto via Getty Images
Subway sandwich artists are hard to replace with robots. Getty Images for Subway
McDonald's is also offering discounts but its same-store sales are down only
about 1 percent. AFP via Getty Images
You are viewing 1 of 6 images Previous Image Next Image
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