Subway crisis: Major fast-food giant calls for ‘emergency’ meeting with 19,000 shops amid sinking sales

American fast food giant Subway has called for an emergency meeting amid a sales crisis. The multinational franchise initiated this meeting with its 19,000 eateries all over North America. As reported by The New York Post, Subway shops have incurred negative changes in their profits and sales.

What went down?

In April 2024, Subway sold its franchisee to Roark Capital, which manages and owns Cheese Factory, Dunkin’, Baskin Robbins, Arby’s and more. Subway, a recent addition to Roark Capital, had been sold for $9 Billion to the company. Due to recent setbacks, Subway has informed all franchisees that they must restructure plans and reveal strategies to revive customer traffic and win back lost market shares.

In its recent invite to its franchisees, Subway noted, “The conference is essential.” Additionally, the invite urged, “Join us … to discuss the state of the industry and an update on our business.”

A Subway franchisee with nearly 20 stores has opened up about the situation at hand, as reported by The Post. A spokesperson mentioned that his same-store sales have dropped by 5% to 10% in these few weeks, which is reportedly more than 2023. For this, he has blamed Subway’s recent price promotions and discounts, which have led to a significant decrease in customer traffic.

“They are doing crazy coupons,” he emphasised, “Our gross sales are not even at 2012 levels, and profit then was five times what it is today.” Subway was also criticised for “charging $6.99 for any sub while they are $11 on the menu” and “offering three sandwiches for $17.99.”

Also Read | Furious NY mom claims Burger King meal for daughter, 4, had ‘blood all over’ it, company responds

What has been reported about the sales?

Even though reports claim that Subway does not disclose its national sales information, the outlet reported that about 1,000 Subways in the Eastern US region saw a weekly drop in sales of 8.7% between June 25 and July 16.

Restaurant consultant John Gordon also claimed that the meeting “seems very unusual.” He also reported that same-store sales had dropped by 10% in Subways all over the West Coast and East Coast. In Los Angeles and San Diego, same-store sales dropped by 8%, and in Southern California suburbs, sales flattered between 2% and 5%.

Also Read | French Fry Day: Chicken tenders to mozzarella sticks, fry-shaped foods to munch on with the classic

What seems to be the problem?

Last year, Subway announced that its sales in North America were up by 5.9%, in contrast to the current year when sales have significantly lowered. Discounting of best-selling products has been named the culprit in this situation. There seems to be no way to make up for the lost profit.

Subway had reportedly hoped to increase traffic by offering a foot-long hot dipper snack for $3 in June, anticipating increased store sales. However, sources claimed they have not been selling enough of the product.

In the previous year, Subway stores offered Sidekicks like foot-long cookies, pretzels, and churros, which boosted sales regardless of a 1.7% decrease in customer traffic. However, the trick seems to have failed to produce the same results this year, and customers are not charmed by this scheme any longer.

Now, Subway has fallen short of money. The company, which has sold itself,f to Roark, only earns through the 8% royalty fees from its franchises. The Post reports they can no longer allow a decline in earnings since they face interest payment on their debt following their recent sale to Roark Capital. It is indeed a tough time for the beloved fast-food chain, and the “emergency” meeting seems to be the only escape from their dreadful failure.

View this post on Instagram

A post shared by @subway

Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.