MILFORD, Conn. -- Subway is set to close 500 U.S. stores after years of declining traffic. The quick-service-restaurant (QSR) chain is now prioritizing more strategic-build sites and eyeing international expansion opportunities.
“We want to be sure that we have the best location,” CEO Suzanne Greco told Bloomberg. “We focused in the past on restaurant count. We’re focused now on strengthening market share.”
Greco also announced the chain’s plans to open more than 1,000 units outside of the U.S., including restaurants in Mexico, Germany, South Korea, India, China and the United Kingdom.
This is not the first round of mass closures for the sandwich brand. In 2017, Subway lopped off more than 900 units after shuttering upward of 350 stores the year before. Since 2012, traffic at the world’s largest restaurant chain has dropped by nearly 25%, according to an internal memo obtained by the New York Post.
The chain has been working to curb tumbling sales with a new store prototype called "Fresh Forward," which features digital menu displays and ordering kiosks, overhauled menus and new packaging and uniforms. Some franchisees reported initial success with the redesign. “Since opening with our new look, we have seen our turnover rate drop by more than half,” said John Dell, owner of 98 Subway restaurants and the first franchisee to adopt the prototype at his unit in Knoxville, Tenn. “At the same time, our customer-service comments have improved by more than 30% over the same time period.”
In March, Subway launched a new loyalty program, hoping to get consumers back in the door with $2 discounts and other freebies.
Despite these efforts, Subway hasn’t been able to shake its shortcomings. After shifting away from the chain’s famous $5 Footlong promotion, the company has struggled to win back a strong value perception from consumers. When the restaurant promoted a $4.99 Footlong, franchisees said the deal could throw their already rickety P&Ls off balance. And, of course, Subway has had to fight to save face after the brand’s former spokesperson Jared Fogle was sentenced to 15 years in prison on child pornography and sex crime convictions.
Subway isn’t the only sandwich QSR struggling in today’s market. Quiznos, Togo’s Sandwiches and Nathan’s Famous saw sales losses in 2017, as fast casual competitors such as Firehouse Subs, Jason’s Deli, Jimmy John’s and Jersey Mike’s chomped at market share, according to Technomic’s 2018 Sandwich Consumer Trend Report.
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