Subway is now shuttering a huge number of stores, and new reports reveal that the mass closures have just brought the chain to its smallest size in almost two decades. The company has been struggling financially for years, and right now executives are trying to sell the decaying franchise to the highest bidder. The retail apocalypse, recent controversies, and higher competition are just some of the issues that are devastating the largest sandwich shop chain in the world, and in today’s video, we decided to expose what is truly behind Subway’s downfall. The chain’s financial problems are well documented. The company overexpanded, often forcing franchisees to build stores near existing locations. Continued below the video
The sheer number of restaurants meant that each individual store generated less revenue per unit. And that started to erode Subway’s operations from within. After years of facing increasing operational costs, falling sales, and declining profitability, many franchisees had no other choice but to start eliminating the stores that were reporting disappointing financial results. According to data released by Reuters, over the past 12 months alone almost 600 Subway restaurants closed doors in the US. But these closures are added on top of the thousands of stores the franchise shuttered in recent years. Citing over-expansion, outdated operations and decor, stale menus, and $5-footlong deals that hurt profits, the chain closed over 1,000 in 2021 and 1,609 in 2020, according to an April 25 disclosure document obtained by Reuters that Subway provides to franchisees interested in purchasing locations.
Since 2016, more than 6,500 Subway restaurants, or one in every four locations, have disappeared from the US market, as reported by Restaurant Business. In 2023, Subway’s store Count hit the lowest total since 2005, and franchisees continue to report growing problems inside the company, with some of them exposing that the fast food giant charges operators markups of up to 700 percent on products. The worsening problems between corporate executives and franchisees, mass closings, financial difficulties, and a dozen lawsuits have greatly accelerated the demise of the fast food titan. Now Subway is trying to sell its business to the highest bidder.
In May, dozens of multi-unit operators – the more sophisticated, financially sound franchisees that Subway desires – examined the possibility of entering the chain’s system by buying swaths of restaurants but walked away after seeing how little money they made, according to two of their advisers. Although Subway has not revealed the average annual sales volume for its U.S. restaurants, industry experts and insiders estimate the figure is less than $500,000, which would make it one of the lowest in the entire industry. Rival sandwich shops Jersey Mike’s and Firehouse Subs generate more than $1.1 million and $900,000 respectively, according to QSR Magazine.
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For now, no one has shown interest in saving the struggling chain. It will be hard to find a buyer that would want to get involved with the company’s mess. It is looking like Subway’s empire is crashing down right before us, and what we’ve seen so far is surely just the beginning of its collapse.
Navigating Choppy Waters: The Struggles of Subway Franchises and the Fast Food Industry in the U.S.
The fast-food landscape in America is one of fierce competition, relentless innovation, and shifting consumer preferences. In recent years, one of the most prominent names grappling with these challenges is Subway, the world’s largest fast-food chain by number of locations. It serves as a case study for the difficulties faced by the entire fast-food industry in the U.S.
Subway’s challenges began surfacing in 2015 when it closed more stores than it opened. The primary concern for many franchisees was the $5 footlong promotion, which they argue eroded profits and devalued the brand. Many owners felt squeezed by the high costs of running their franchises, including lease expenses, and royalties to Subway’s corporate arm, all while being pressured to maintain low prices.
This operational difficulty was compounded by Subway’s rapid expansion strategy. With so many locations, individual stores found themselves competing against each other for the same customers. The intense internal competition, coupled with aggressive price competition from rivals, has left many franchisees struggling.
But Subway isn’t the only fast-food chain facing headwinds. Across the industry, restaurants are grappling with changing consumer habits and preferences. The health and wellness trend has made fast food a less attractive option for many consumers. People are seeking fresher, healthier, and more customizable options, which many traditional fast-food chains struggle to provide.
Fast-food chains are also grappling with the rise of digital technology and changing customer expectations. Consumers are increasingly demanding convenience, including mobile ordering, delivery, and curbside pick-up options. These demands require significant investments in technology and new operational models, which can be a substantial burden for both franchisors and franchisees. Continued below…
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The recent COVID-19 pandemic has further intensified these issues. On one hand, restrictions on in-person dining hit fast-food chains hard, especially those without robust takeout or delivery systems. On the other hand, the pandemic also accelerated some trends that could benefit the industry, such as the shift towards online ordering and delivery.
Facing these challenges, many fast-food chains, including Subway, are reevaluating their strategies. Some are focusing on improving food quality and healthiness, others on enhancing the dining experience, and still others on embracing digital technology. There’s a sense of urgency to adapt, but also a recognition that there’s no one-size-fits-all solution.
For Subway and its counterparts, the road ahead is challenging. The company announced a “fresh start” initiative in 2021 aimed at improving store conditions, modernizing menus, and enhancing the overall customer experience. However, it remains to be seen how these efforts will play out and whether they’ll be enough to turn the tide.
The fast-food industry in the U.S. is at a crossroads. Brands like Subway have become ingrained in American culture, but they now find themselves needing to adapt quickly in a rapidly changing landscape. Amid these challenges, the key to survival may be the ability to listen closely to what customers want and to evolve in ways that meet those needs while staying true to the core brand. Whether they will manage to do so successfully will be one of the key narratives of the industry in the years to come.
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