Subway execs confirm franchisee fears that it will continue to disappear in America

  • Subway executives confirmed they expect more locations to close in the coming years.
  • In 2017, the chain's US store count fell by 909 as it lost almost three times as many locations as the year before.
  • Executives say that the chain hopes to emerge with fewer, stronger locations.

Subway just confirmed franchisees' fears that more locations will close in the coming years. 

More closures are in the works at the struggling sandwich chain, executives told Restaurant Business, though they declined to provide any exact figures. 

10 money-saving fast-food hacks:

10 money-saving fast-food hacks
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10 money-saving fast-food hacks

Restaurant: McDonald’s

Hack: Order two four-piece nuggets instead of one six-piece. It’s cheaper, you get more nuggets and you get more sauces. Score.

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Restaurant: McDonald’s

Hack: Order a McDouble without the ketchup and mustard but with lettuce and Big Mac sauce. You'll pay for the Big Mac taste for the price of a McDouble.

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Restaurant: Chipotle

Hack: Order half of one protein and half of another kind (like chicken and steak). You’ll almost always get more than half of each and end up with up to 1.5x the protein in your burrito or bowl for the price of a normal portion.

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Restaurant: Arby’s

Hack: Order two junior roast beef sandwiches instead of one regular classic. You'll end up with more meat for a lower price.

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Restaurant: Jamba Juice

Hack: Substitute any ingredient in any smoothie for the same price. If you’re craving a smoothie with non-fat yogurt instead of mango, or extra strawberries instead of blueberries, customize it to your liking without any extra charge. It will save you more than being charged for creating your own smoothie from scratch.

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Restaurant: Jack in the Box

Hack: Order two Jr. Bacon Cheeseburgers and combine them into one for a much cheaper version of a Bacon Ultimate Cheeseburger. 

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Restaurant: McDonald’s

Hack: Order a sausage McMuffin off of the dollar menu but ask for the sausage to be substituted with egg—an egg McMuffin for a dollar.

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Restaurant: Any pizza place

Hack: When you call to order delivery, ask if there were any orders that weren’t delivered—the pizza place will often give you those orders for a discounted price (perfect if cold pizza is your thing.)

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Restaurant: Subway

Hack: Order a Double Steak and Cheese Sub instead of the Philly Cheese Steak Sub—you’ll get the same sandwich at a normal foot-long price.

Photo credit: Getty


"We think there will be additional closures," Don Fertman, Subway's chief development officer, said. "Over the next five to 10 years, we might see fewer restaurants but a stronger, more robust franchisee base and a stronger, more profitable system."

The sandwich chain's US store count fell by 909 in 2017, losing almost three times as many locations as the year before.

Franchisees and other internal Subway sources told Business Insider in recent months that up to a third of the chain's more than 25,800 US locations were not profitable, and that franchisees were bracing for more closures. 

Franchisees said that Subway has tended to focus on growing its store count over helping franchisees increase sales. 

"I believe that Subway was more interested in the opening of stores," a former corporate employee said. "That is where they made the most money — the franchise fee."

DeLuca "made his money from the franchise fee," the person said, adding: "The more stores he opened, the more dollars he made."

"I saw the handwriting on the wall with the focus being on opening as many units as possible, even if it angered franchisees," Scott Godwin, who owned three Subway locations in Virginia until the early 1990s, told Business Insider.

Now, executives say the company wants to turn over a new leaf. 

Fertman told Restaurant Business the chain is focusing on same-shop profitability, instead of simply growing locations. 

"Our focus is on market realignment in North America," Fertman said in an email to Business Insider in January. "We want to make sure we have the right locations with the right franchisees in every market."

The chain is increasingly relocating struggling locations — one of the few Subway initiatives that franchisees with knowledge of the situation told Business Insider successfully boosts sales. The company relocated about 500 shops in 2017, according to Restaurant Business, and plans to double that figure in 2018. 

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SEE ALSO: 'Subway is dying': Battles at HQ are killing the world's largest fast-food chain — and many franchisees are turning against the CEO

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