Posted on 05/06/2016 6:31:27 AM PDT by JoeProBono
Subway Revenue Drops as It Closes Hundreds of U.S. Restaurants
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.
Net income declined 87 percent to $1.15 million from $9.19 million in 2014.
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.
I never understood what was so special about Subway.
Mr. niteowl77
They need to embrace food diversity. People with plenty of grub money want some fat food.
Over priced, stinks up Walmarts......
Hmmm, I wonder if it’s the Jared affect?
I never understood what was so special about Subway.
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My guess would be lots of advertising combined with consumers at least knowing what they are getting even though it’s incredibly average.
Try putting some meat in the sub
Mediocre food (at best) and creepy employees...
I never understood what was so great about Subway either. It’s really just a sandwich. For the odd time I need to grab fast food, which isn’t often, I want a good ol’ burger....
Subway prospered because a sub shop has a small square foot requirment and they use cheap processed food. They are getting their clocks cleaned by fast casual restaurants that offer better food for the same price basically.
“I never understood what was so special about Subway.”
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They had less competition before. Wawa and others are putting them out of business. Better quality and value.
They put so little meat in their sandwiches. You have to upgrade to “extra meat” and even then it isn’t enough. Terrible value.
It's quick. You can custom order your sandwich. And they make it in full view, so you know you won't be getting spit or "special sauce".
Agreed. Subway sandwiches taste like the came out of a can. While I’d normally say taste is subjective, in this case I’d assert that it’s a raw fact that Firehouse, Jersey Mike’s, and Jimmy John’s all taste significantly better.
Never been to a subway. There are just too many great pizza places that have killer sub sandwiches.
Lousy and cheap processed cheese.
Their locations. We have one in the little town we live in, and it was the only decent sub shop in 20 miles.
Till the local gas station chain Casey’s put in an expanded food line. They now have great pizza (3rd largest pizza chain in the US) and good subs. Subway has a lot of competition.
It’s been years since I’ve eaten at one. No particular reason, I just got bored with it. It was never really all that good anyway.
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