Subway closed hundreds of stores in the US - is it a sign of an impending downward spiral?

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Konstantin Sheiko
April 11, 2018

Subway Restaurants, the largest restaurant chain in the US, shut down hundreds of locations in 2016- 2017. The chain's store count dropped by 359 locations in the US in 2016 alone - the first time in history that Subway experienced a net loss in locations. By the end of 2017 Subway's US store count fell by more than 900. 

According to an internal memo obtained by the media outlets, the chain’s traffic declined 25 percent in the past five years. The world's largest restaurant chain is being left behind as consumers seek healthier, fresher food and as competitors offer them better options. The chain has struggled to keep up with fast-casual competitors like Panera and Sweetgreen better suited to meet Americans' swiftly evolving health trends. 

All the franchisees spoke on the condition of anonymity because of their relationship with the company. Subway is not publicly traded, so it does not have to disclose much of its financial details. So far, experts and insiders alike say Subway has struggled to keep up with trends in recent years. Subway once advertised itself as a fresh, healthier alternative to chains such as McDonald's. Now, however, even some franchisees say it is falling short. 

What's more, as grocery chains increasingly add takeaway options, freshly prepared sandwiches are becoming ubiquitous. Subway went from a staple for health-conscious Americans to forgettable. The company also faced negative publicity from a scandal involving its former spokesperson Jared Fogle. Fogle is currently serving a nearly 16-year prison sentence after being charged for having sex with minors and possessing child pornography. Subway cut ties with him 2015. 

However, the company’s spokesman would not comment on the number of store closures expected in 2018. For years, Subway has seemed more invested in opening locations than making sure stores can increase sales. Subway frequently signed off on franchisees opening locations near existing stores. The chain got more money in franchise fees, but franchisees ended up competing against one another for sales. 

Photo via Wikipedia Commons

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