"Sandwich Crisis Deepens": Subway Closes 500 Stores In 2018

The accelerating demise of Subway, the world’s largest restaurant chain, will one day be just another case study of how to run a once-spectacular business empire into the ground, as Americans quickly abandon this iconic sandwich chain in droves, seeking healthier and fresher, or just simply "different" food alternatives.

For the first time in its 52-years of operation, the company contracted in 2016, shuttering 359 US locations, which was the most significant retrenchment in its history. In 2017, the company closed another 800+ US locations, as details emerged that some one-third of shops in the US could be unprofitable.

Subway’s crisis could be linked to many factors: demographic shift, healthy eating trends, a disgraced ex-spokesman charged as a pedophile, and or managerial shifts. As we explained in December, it is only the tip of the iceberg for Subway’s closures, as we stated it is the “beginning of a crisis.”

And according to a new report from Bloomberg, the sandwich chain continues to close US stores at a record pace (which is not saying much as it has only had 2 full years of net closures in its entire history). Not even one month into the second quarter, management already announced that as many as 500 stores are closing across the country. While it is evident that Americans did not spend their Trump tax cuts on Subway sandwiches, the company is shrinking its North American footprint for greater opportunities in the U.K., China, India and Latin America, Bloomberg said. Last year, the chain closed +800 stores, bringing its total U.S. count to around 25,908 — well off the highs of 27,103 in 2015.

“We want to be sure that we have the best location,” Chief Executive Officer Suzanne Greco, 60, said in a phone interview. “We focused in the past on restaurant count. We’re focused now on strengthening market share.”

Store count isn’t everything,” she added. “It is about growing the business.”

Greco told Bloomberg that the company is struggling to increase sales in the U.S. as newer, more modern fast-food chains are crowding out the industry.

 

More from Greco:

"Subway had been hurt by fierce competition in the U.S., including from a resurgent McDonald’s Corp., whose domestic system sales rose 3.4 percent last year, according to data from researcher Technomic. Subway fell 4.4 percent. It’s also now faced with supermarkets and gas stations that are selling more grab-and-go fare, putting immense pressure on Subway to be faster and more convenient. Along with the closures, some locations are being relocated, and Subway is now using data from SiteZeus to choose better real estate.”

While the US segment clearly topped out in 2015, Greco told Bloomberg that her concentration today is on international expansion. She added the fast-food chain will add more than 1,000 locations outside North America and will primarily focus on the U.K., Germany, South Korea, India, China, and Mexico.

In summary, the compounding effect of store closures, eatery trends, waning restaurant industry, and poor advertisement choices, have ultimately dethroned the world’s largest restaurant chain, and now forced the company into a contraction phase for the third year in a row. And, as a last-ditch effort to preserve momentum and prevent further hemorrhaging of the sandwich empire, management has opted to shrink the North American segment for more, costlier opportunities abroad.

Comments

Canadian Dirtlump ParkAveFlasher Thu, 04/26/2018 - 10:38 Permalink

It's tough to throw a rock and not hit one of these in Canada, so I can only imagine it is worse in the US. Between too many stores to begin with, and a demographic shift to savages who eat garbage and wipe their ass with their bare hands / mongoloid millenials who need kale avocado toast - I can't say I'm surprised.

 

I'll eat marginal soup at them as long as I can I guess.

In reply to by ParkAveFlasher

FireBrander ParkAveFlasher Thu, 04/26/2018 - 10:59 Permalink

Noon'ish at a Subway inside the entrance/exit at Walmart.

Subway is 1/4 full, 3 people in line...ouch!

That $6.99 wrap thing that's the size of an egg roll..LOL!...yeah right!..that'll save the business!

To your typical, diabetic, Subway "customer", size/quantity matters! When you weigh 400lbs, a sandwich the size of your hand just isn't going to cut it...

https://subculture.subway.com/articles/eat/meet-our-new-signature-wraps

In reply to by ParkAveFlasher

FireBrander StackShinyStuff Thu, 04/26/2018 - 11:06 Permalink

I don't care if the meat is a foot thick; I'm not eating anything "prepared fresh" by someone that hasn't taken a bath in a couple days and is morbidly obese.

Subway is just failing from every angle...

HEY! SUBWAY EXECS!

Go to Chick-Fil-A! Take a notepad with you...I'll give you a summary...Youth and beauty sells shit!

~~~~~~~~~~

Guys, go to You-tube and watch drive-through pranks...Hardees, McDonalds, etc...workers all blacks, mexicans and low ball whites...then find one at a Chick-fil-A...90% young, pretty white girls...LOL..how they are not being sued 24x7 by the NAACP is a mystery.

Edit:
I worked fast food in College...more than 50% hot girls...fish in a barrel!...same restaurants today...YIKES!

In reply to by StackShinyStuff

jin187 RAT005 Fri, 04/27/2018 - 03:31 Permalink

Asians eat cold food.  They just do it backwards.  Drinks and vegetables they like hot, while they prefer raw meats, tubers, and other things you would expect to be cooked.  Subway would probably be the Asian go-to if they started serving seaweed wrapped raw tuna with scraped long potato goo.

In reply to by RAT005

Baron von Bud 44_shooter Thu, 04/26/2018 - 11:24 Permalink

Frank DeLuca grew the business from nothing in 1968 to the world's biggest food franchise. Then he got leukemia in July 2015 and died in September '15. Without his watchful eye the business fell apart. The current management will downsize for the next 10 years while collecting big paychecks. Sorry, Frank but nothing last forever including you and the business you built.

In reply to by 44_shooter

Give Me Some Truth onewayticket2 Thu, 04/26/2018 - 11:57 Permalink

Option 1 - Build better sandwiches with plenty of choice meat cuts and other ingredients. Pass this cost onto customers.

Oprion 2 - Raise prices just a little and save as much as you can via shrinkflation and substitution.

Both options are/were probably losers. It’s the Fed (and inflation), Stupid.

The “work around” for customers is to simply go to these places less. Which is what is happening. I don’t think there is an answer, absent practicing Austrian economics, which is not going to happen. This is only the beginning of Subway closings. And, yes, Jimmy John’s and FireHouse closings are to come as well.

In reply to by onewayticket2

jin187 Moe Howard Fri, 04/27/2018 - 03:46 Permalink

I'm not really a meat guy when it comes to sandwiches.  I like my shit balanced.  If I want to eat a pound of meat, I get a steak, or a pork chop.  The default amount of meat Subway puts on stuff is perfect for me, as I'd rather load up my sandwich with olives, banana peppers, and tomatoes anyway.  That said, if you aren't happy with it, just tell them to put more on there.  Turn your $5 footlong into a $7 or $9 footlong.  I'll never understand how someone can judge a place by the default menu options, when pretty much all of them have upgrades available.  If you're willing to pay $10-$15 for a sub from somewhere else because it has more meat on it, Subway will also 2 pounds of meat on it for that price.

In reply to by Moe Howard

83_vf_1100_c Moving and Grooving Fri, 04/27/2018 - 01:59 Permalink

  $200 to rent a back-hoe. 6 or 8 bags of quick lime. Dih a big hole in your field 4 yds from anywhere you will spend any amount of time. Dump the dead horse in the hole. Empty the bags of lime. Cover up the hole. We own horses. We live in East TX out in the county. I dunno what city folk do. I suppose they spend thousands so some dude can add a flat bed to the method above. Seems like a lucrative biz. I have acreage and could bury several large herds no problem.

In reply to by Moving and Grooving

hondah35 Baron von Bud Fri, 04/27/2018 - 00:18 Permalink

I admire Mr DeLuca but the business has been struggling for at least 10 years. The weakness has been covered up by the aggressive field rep strategy where regional reps got paid decent cash to keep opening new stores. But its beginning to backfire.The model worked well because you didn't need a grill or fryers which are space and labor hogs and everything could fit into a storefront footprint so it was easier to open more locations in more towns. But the declining food quality to maintain price and the onslaught from Jimmy Johns/Firehouse/Jersey Mikes as well as other fast casual expansion has hit them hard. You've got to be a multiple unit owner these days to make a living off of a subway franchise and even then it is getting difficult.

In reply to by Baron von Bud

edotabin 44_shooter Thu, 04/26/2018 - 13:12 Permalink

Yes but perception is reality. They see a clean, well-organized establishment, hear the word "chicken" and magically, it is healthier.

Take a look at the BK nutrition info. Chicken sandwiches have about 2-3x salt when compared to meat products. Look at the chik-fil-a nutrition info. Very loosely, each product contains about 1000mg salt. 

It is said we should consume about 2500mg of salt per day. In reality this number should probably be closer to 1500 mg. Anyone with any type of BP or weight issues should not be eating so much salt, especially in a single sitting.

For fast food to be tasty, there are 3 options: sugar, salt and fat.

In reply to by 44_shooter

cbxer55 edotabin Thu, 04/26/2018 - 23:53 Permalink

Not only blood pressure, but salt is a major contributor to the damn kidney stones. Ask me how I know this. That and lack of proper hydration, which doesn't mean drink tons of horrid soda pop. 

Want to keep the stones away? I'm told by the Universtiy of Chicago, Kidney Stones: Evaluation and Treatment,, limit your daily salt intake to 2300 mg or less. 

In reply to by edotabin