Why Subway is Failing: An Analysis from The Infographics Show

Introduction

• Subway was once a popular sandwich chain known for its $5 footlongs.
• Recently facing a crisis: losing money, closing stores, losing customers.

Public Relations and Scandals

• Jared Fogle Scandal:
  • Jared became a famous spokesperson due to his significant weight loss by eating Subway.
  • In 2015, Jared was convicted of distributing child pornography and engaging in commercial sex acts with minors.
  • His conviction severely damaged Subway's image, as he was closely tied to the brand.
• Food Quality Concerns:
  • Ireland ruled Subway's bread can't be considered bread due to high sugar content.
  • Allegations that Subway's tuna is not actually tuna but a mix of different meats.
  • This damaged Subway's healthy food image.

Pricing Issues

• $5 Footlong:
  • Introduced in 2008 as a temporary promotion but became iconic.
  • Discontinued in 2018 due to increased costs; footlongs now cost between $7-$15.
  • Customers feel the value doesn't match the price, leading to loss of sales.

Business Practices

• Franchise Model Issues:
  • Subway's franchise agreement allows competition among its own stores.
  • High fees (12.5% of gross sales), long-term agreements negatively affect franchisees.
  • Competition from other brands like Jersey Mike’s and Jimmy John’s.
  • Other fast-casual chains offering healthier options, diminishing Subway's niche.

Attempts at Revitalization

• Subway has tried to address issues by:
  • Installing meat slicers in stores for freshness.
  • Revamping menu and store renovations.
  • Expanding internationally with some success.
  • "Eat Fresh Refresh" campaign launched in 2021.
• Sale to Roark Capital:
  • Sold for over $9 billion in 2024.
  • New ownership sees potential for recovery.

Current Challenges

• Subway’s market share in the sandwich and deli market has decreased from 34% in 2017 to 23% in 2024.
• Recent sales drops triggered emergency meetings with franchisees.
• Future remains uncertain despite efforts to improve.

Conclusion

• Subway faces a complicated mix of public relations damage, pricing challenges, business model issues, and intense competition.
• While there are efforts for improvement, the path ahead remains challenging.