Subway Is In Big Trouble

Subway Restaurants revenue fell in 2015 for the second straight year, a sign one of the fast-food industry’s stalwarts is losing ground to newer chains.

Revenue dropped 4.3 percent to $1.11 billion last year, according to the company’s Franchise Disclosure Document, which was filed with the Minnesota Department of Commerce last week. Subway owner Doctor’s Associates Inc. also is slowing its pace of new restaurant openings and shuttering hundreds of underperforming locations.

Fast-casual chains such as Panera Bread Co. have been taking share from Subway restaurants in the U.S., bringing its once-torrid growth phase to a halt. Founded in 1965 by Fred DeLuca and Peter Buck, the submarine sandwich shop had expanded quickly over the decades by aggressively franchising.

It now has more than 44,000 locations worldwide. Lately, though, Subway has struggled to keep pace with more modern rivals, which cater to millennials with items such as quinoa salads and Greek yogurt.

While Subway opened 911 new locations in the United States last year, it closed 877. That means it netted just 34 restaurants in 2015, a slowdown from 313 the year before. Subway had a total of 27,129 domestically at the end of 2015, all of them franchised.

Last year, the company said it was putting new store development on the back burner while it focused on making its restaurants more profitable. “That hasn’t changed,” Subway said in a statement on Tuesday.

“The outlook for 2016 is more optimistic based on the terrific feedback we received from our guests about our culinary improvements and exciting new menu offerings,” the company said.

Still, Subway is feeling more pressure from traditional fast-food chains. McDonald’s is luring back customers with an all-day breakfast push and aggressive discounts, such as offering two sandwiches for $5. To fight back, Subway just started promoting a buy-one-get-one-free sandwich deal in the morning during May.

The Milford, Connecticut-based chain had a tumultuous 2015. DeLuca, the co-founder and chief executive officer, died in September, putting the company in the hands of his sister, Suzanne Greco. In November, former spokesman Jared Fogle was sentenced to more than 15 years in prison after pleading guilty to child-pornography charges, capping a scandal that had rocked the sandwich chain for months.

In December, the company named former Coca-Cola Co. veteran Joseph Tripodi as its global chief marketing officer, a sign it’s looking to revamp its image. Subway’s longtime “Eat Fresh” slogan lost cachet in an industry where most every chain now touts its ingredients.

Well, I know that was being floated but did posters with her mug ever show up in the stores?

I remember seeing news/press release pictures of her at a Subway (or at Subways); I think they had "Let's Move" blurbs posted in the franchises, I can't recall if they had anything akin to a lifesize cardboard MO glaring at the customers. I do remember - and did find - this:

For Immediate Release

SUBWAY® RESTAURANTS ANSWERS FIRST LADY MICHELLE OBAMA’S CALL TO MARKET HEALTHIER CHOICES TO KIDS

The chain commits to its largest marketing effort to date to get kids to pile on the veggies; announces the standards it commits to meet in all marketing to kids and in children’s meals.

Milford, CT (January 23, 2014)—First Lady Michelle Obama today announced that SUBWAY® restaurants joined the Partnership for a Healthier America (PHA) in a three-year commitment to promote healthier choices to kids, including launching its largest kid-targeted marketing effort to date. As part of its commitment, the SUBWAY® restaurant chain will launch a series of new and fun campaigns aimed at increasing fruit and vegetable consumption in children; set and implement new marketing standards to kids; and strengthen its already-nutritious children’s menu offerings.

“I’m excited about these initiatives not just as a First Lady, but also as a mom,” said First Lady Michelle Obama. “Subway’s kids’ menu makes life easier for parents, because they know that no matter what their kids order, it’s going to be a healthy choice.”

The commitment follows the first-ever White House convening on food marketing to children this fall, during which Mrs. Obama called on the private sector to leverage the power of marketing to promote healthier products and decrease the marketing of unhealthy products to kids.

The SUBWAY® restaurant chain is the first and only quick service chain to join PHA, which works with the private sector and Mrs. Obama – PHA’s honorary chair – to broker meaningful commitments to help end the childhood obesity epidemic.

As part of its commitment, the SUBWAY® restaurant chain will only offer items on its kids menu that meet strong nutritional guidelines informed by federal standards for the national school lunch program, including offering apples as a side and low-fat or non-fat milk or water as a default beverage. Additionally, the chain will deliver $41 million in media value in the next three years to market healthier options to children and families, with a specific focus on increasing consumption of fruits and vegetables. This is the brand’s largest kid-focused marketing campaign to date, and includes general marketing, in-store merchandising, television, social and digital media and public relations. Training materials will teach Sandwich Artists to encourage kids to choose apples, and in-store merchandising and marketing will focus on these healthy options.

“SUBWAY® restaurant’s commitment today builds on the brand’s already strong track record of offering healthier choices to kids, for which it has been lauded by families and health advocates alike,” said PHA Board Chair James R. Gavin, III, MD, PhD. “The new and significant investment it is making today will not only help make fruits and vegetables fun for kids, it will also offer busy moms and dads easy, healthy choices for their families when they’re on the go.”

“Ending childhood obesity is a cause that has been near and dear to SUBWAY® since we introduced the Fresh Fit for Kids Meals in 2007,” said Suzanne Greco, vice president of R&D and Operations for the SUBWAY® brand. “With this partnership with PHA, we will now reach millions of kids as part of a healthier eating education campaign, making it our largest outreach campaign to date. From a sign on each restaurant’s door that says ‘Playtime Powered by Veggies’ to a video collaboration with Disney’s The Muppets, we will build upon our ongoing efforts to create even better choices for families. We hold ourselves to the highest standards in the industry when it comes to speaking to children and their families. Now we are letting everyone else know what that standard is.”

And so on…

The first time niteowl77 and I dined out after Michelle Obama revealed that she was an expert on everyone's sodium chloride intake, I felt compelled to put more than the usual amount of NaCl on our french fries. I may have simultaneously made a brusque remark about where MO could inventory her dietetic wisdom, and if so, I was probably quite specific.

Mr. niteowl77

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