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.
The old store in my town was pretty greasy. They built a new building and upgraded the ovens. The pizza from that store is pretty good.
But it is greasy.
Subway was poised to start a new marketing campaign, based on Jared feeding Subway (as a healthy choice) to his own children. I saw the first commercial, and I imagine they already had a half dozen commercials ‘in the can’, and a warehouse full of cardboard cut-outs of Jared and his kids.
Then he got caught with kiddie porn.
This seems to have been a huge marketing setback for Subway. I honestly don’t remember the last Subway ad I saw, or what their current marketing is geared towards.
Fast-casual chains such as Panera Bread Co.are fine if you want to pay 8 bucks for bread and a half slice of meat.
Thanks for the reminder, I forgot about that.
I love Subway...the only fast food I really frequent (coffee at McD’s, though. Subway’s coffee really stinks!).
Jimmy John’s is better. Larger sandwiches and better food product. (nope, not a shareholder). They have this one sandwich called “Gargantuan” for under $8.00
Amen on Sheetz. There are two very close to my house. Both stores have older women working in the mto area. NEVER have we had an order wrong or anything “look” or taste “off.”
Sheetz is great!
I know, and it's always by the check out. Smells like barf at times. Way to entice the costumers.
That or Jimmy John’s.
And, per the article, they actually had a net increase in stores. They are trying to adjust. They just built a new one in my town with a drive through...something I have only seen once before. And this one lets you touch screen order, so you’re not yelling into an intercom.
I found Which wich. It’s a good Subway alternative.
“They partnered with Michelle Obama and I haven’t been back since.”
They became active in other liberal politics. My lunch buddies decided there were better options.
It’s corporate food for people who have never had access to a genuine hoagie.
The nine grain honey bread is actually pretty nice.
In my experience, the “left side” (cheap) of their menu is lame; the “right side” (more expensive) is fairly good.
I love their BOGO coupons.
Good to know.
I still occasionally go to Subway, but they do have a lot more competition these days. More and more, I see them doing best in small towns, paired with a gas station, etc. even a medium sized city will now have a couple other sub shops, and other ‘fast casual’ options to compete with them now. In my area, there is Jason’s Deli, where the sandwiches are piled so high with meat, its hard to take a bite...at the same price point as Subway.
And, yes, they seem to hire a lot of local housewives that look like school lunch ladies. The ladies at my favorite Sheetz even greet me by name.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.