There was a time when every person in America had ordered a $5 footlong at least once from that classic, all-American sandwich shop chain - Subway. But in the last few years, Subway is facing a crisis. It's losing money, closing stores, and customers are turning away in their thousands. What happened? Today on The Infographics Show, we’re going to take a look at the real reasons why Subway is failing. You’re walking back from work and suddenly feel your stomach rumble. You look around, thinking you want to get something fast, on the go, but not too unhealthy…you’re trying to get lean and fit for bathing suit season. Like you tried to last year… and the year before that. Across the street, you spot a Subway. “Perfect”, you think, “I can’t go too wrong with that”. Of all the fast food chains, Subway has a reputation for having somewhat healthier, leaner options. So you walk in, step in line, and wait to order. As you wait, something starts to nag at you. When exactly did you start thinking Subway was a healthier and non-fattening option to begin with. Then, it hits you… Jared. One of the problems plaguing Subway in the last decade is through no real fault of its own. It’s no secret the franchise has gotten some bad press, starting with their one-time super famous spokesperson. If you were around in the 2000s or early 2010s, you definitely remember Jared. He wasn’t a celebrity. He wasn’t a fitness guru. He was just... an average guy. But that was exactly the point. Subway made Jared a star because his story was kind of incredible. In college, Jared battled obesity and weighed about 425 pounds. Then, he switched his diet to two Subway sandwiches a day and proceeded to lose 245 pounds. When the franchise heard Jared’s story, the opportunity was too perfect to pass up. What better way to prove Subway was the “healthy” fast food option than showcasing a guy who had lost more than a kangaroo’s worth in weight by eating there?! Jared became a spokesman for Subway from 2000 to 2015. For 15 years, he shared his unbelievable weight loss journey, just as obesity rates were climbing across the country and people were desperate for healthier options that wouldn’t empty their wallets. Then on August 19, 2015, something unexpected happened. Jared was charged with distributing and receiving child pornography, and engaging in commercial sex acts with minors. We’ll spare you the details, and just say that Jared Fogle immediately pled guilty to all charges. The whole ordeal created a PR nightmare for Subway. You might be thinking - “it’s one spokesperson - why does it matter?” But here’s the thing- Jared wasn’t just a spokesperson. He was Subway. The company’s entire image had become tied to him, and that story drove a huge chunk of their profits. After Jared’s first commercial aired in 2000, Subway sales increased by 20%. In 2005, when Jared’s contract expired and he stopped filming commercials for the franchise, same-store sales dropped by 10%. Subway saw the writing on the wall and quickly rehired him. But after his conviction, that was all gone now. The family-friendly, healthy, wholesome image of Subway and their spokesperson had been completely destroyed, in one of the grossest ways possible. Back to the Subway shop, where you’re lost in the memories of the Jared scandal and how disgusting that was all around. You’re so distracted you don’t even hear the woman behind the counter asking you what you want. Snapping out of it, you look down to quickly scan the ingredients and…pause. What is this?! These can’t be the healthy Subway options. They look like day-old hospital food. You watch as the employee grabs a limp, sad-looking slice of turkey- so thin it’s practically see-through- and suddenly, you’re questioning everything about what you’re about to put in your body. And you definitely should be wondering because it turns out…you’re not about to eat the ingredients you think you are! At least not totally. See, one of the many scandals that plagued Subway after Jared, was the quick change in perception about its food, from relatively healthy to…absolutely gross. When Subway expanded to Ireland, they tried to get out of paying the country’s VAT - Value Added Tax - by filing an appeal in its court system. According to Irish food laws, staple foods like bread, coffee, milk, meat, and eggs are not subject to VAT- so Subway argued that its bread could not be taxed. That turned out to be a big, big mistake. Because here’s the thing: what Americans classify as “food” and what the rest of the world considers edible? Yeah, those two don't always line up. In 2020, the Supreme Court of Ireland took one look at the soft, doughy loaf in front of them and ruled that Subway had to pay the VAT because its bread…did not actually qualify as bread! That’s right, Ireland found that the sugar content in Subway’s alleged “bread” was so high that the franchise couldn’t really call it that anymore. Irish law says that the sugar content of bread should clock in at 2% of the flour’s weight. The sugar content of Subway bread came in at 10% of the weight. And it’s not just the bread that’s the problem. There have been ongoing lawsuits against Subway regarding their tuna as well, alleging that….it’s not actually tuna. So what is it? If DNA tests are to be believed, some mixture of chicken, pork, cattle, and…other things no one really understands. And it’s not just a few samples either. A lawsuit filed in 2021 attached lab reports from UCLA’s Barber Lab- part of the Department of Ecology and Evolutionary Biology. Researchers collected 50 grams of “tuna” from 20 different Subway stores across Southern California and ran tests. According to the lawsuit, 19 of the samples had “no detectable tuna DNA sequences whatsoever”. Which is absolutely crazy, because anyone with a cat has more detectable tuna DNA than that on their hands right now. Now, we should note that Subway has denied these claims and the lawsuit was dismissed in 2023. So there is no concrete proof that this is the case, and Subway set up a page on its website explaining its “tuna facts” to customers, assuring them that their tuna is real tuna. But the damage had already been done. If you have to start a campaign to convince your customers that the food you’re selling them is actually food…you’ve already lost the battle. Along with these controversies, Subway’s claims of being “healthy” also went out the window. The Journal of Adolescent Health published a study in 2013 saying that teens weren’t getting much better food at Subway than McDonald’s. The average Subway meal came out to 955 calories, while the average McDonald’s meal contained just over 1,000 calories. Not a huge difference. Dr. Lenard Lesser, the head of the study at the UCLA Fielding School of Public Health, said “the nutrient profile at Subway was slightly healthier” but still contained three times the salt recommended by the Institute of Medicine. It turns out, Jared lost the weight because he ate very strict portions with the healthiest possible ingredients, and almost none of the toppings or sauces most customers would get at Subway. So, you stand in line, rattling off your sandwich ingredients, now way less excited than you were five minutes ago. This Subway order is not looking so healthy after all. But at least it’s cheap, right? Subway may have changed in a lot of ways, but they’ll always be the home of the $5 footlong. Smiling again, you approach the cashier, take out a $5 bill, and tell her you’re ready to pay for your sandwich. She stares back at you, and points to the sign above her head. You could have sworn it said $5 footlong…but it says…$15?! A $15 footlong? When did this happen? In March 2008, Subway ran what it thought would be a temporary promotion, but instead became one of its most famous offers ever: the $5 footlong. It was supposed to run for four weeks but stayed on indefinitely. It quickly became legendary, with fast food chains copying the model and offering $5 deals on all their products. Jeffrey T. Davis, who runs the restaurant consultancy company Sandelman and Associates, said, “it was the poster sandwich for the recession: it was cheap. It was all-American. It was big enough that you could share it “with a co-worker or a friend.” Some people saw it as a relatively healthy meal, which is mostly to say it was not fried. But we’ll come back to that point later, because it’s way more important than you may think. The campaign was slowly phased out, until 2018, when Subway announced that it would discontinue the $5 footlong deal. But by that point, the costs of supplies, utilities, and…well, everything had skyrocketed compared to 2008 and franchise owners were left feeling the costs. The Washington Post interviewed one franchisee in 2017 who was already having issues with the $5 footlong. They said it costs “well over $4” to make one footlong sub, between the price of labor, ingredients, utilities, transactions fees, and rent. To them, the numbers simply didn’t work. By 2024, the footlong ended up costing between $7 and $15 to buy, depending on the Subway location. But, to put it simply, most customers don’t feel the Subway sandwich was ever worth that much. As one user online perfectly said, “they forgot that their niche was okay food at a price anyone could handle.” The Subway sandwich was never thought of as amazing. It was…fine. And cheap. And fast. For $15 you can get a better sandwich with better ingredients at an actual sandwich shop. Fearing it was losing customers, on August 26, 2024, Subway did approve a deal for a $6.99 footlong to improve the sandwich’s value. But making those sandwiches was so expensive that the deal was a money-loser for the stores. It didn’t last long. After just a few months, it was quietly shelved. So Subway is in a bit of a bind. They can either offer better value and make their stores unprofitable, or charge more, risk losing customers, and squeeze profits from what little they sell. You take your credit card out to pay for the $15 footlong - a number you still can’t believe - and sit down at a table by the window to eat it, wondering why you ever walked into a Subway today in the first place. As you’re eating your completely average sandwich, you look down the street and do a double take. Wait. Is that…another Subway? Well, your eyes aren’t playing tricks on you. It is, in fact, another Subway. One block over from the one you’re currently sitting at. Which is empty ... You’re no business expert, but having two Subway stores this close together-when neither is doing well- feels like a terrible plan. And you’d be right. It’s just one of many reasons why Subway’s business practices are a mess—frustrating franchise owners and crushing their growth and profits. One of the reasons Subway grew so fast in the 80s and 90s is because it was one of the cheapest brands to franchise. The franchise fee was $15,000 and start-up costs were generally lower than for other fast food chains. Over time, it became clear that Subway’s founder, Fred DeLuca, wasn’t running things the right way. DeLuca, who started the franchise as Pete’s Super Submarines in Bridgeport, Connecticut back in 1965, was responsible for the brand’s initial success. But he was feared by many of his closest employees and ran the franchise with an iron fist- which also ensured that almost no one within the company would get to know its inner workings like he did. This created a real problem when, in 2015, he died. Those of you with a good memory might recall that’s also when Subway spokesperson Jared was publicly outed as a pedophile. Just a bad, bad year for Subway overall. But the problems had already started when DeLuca was alive. The biggest problem was a clause in Subway’s Franchise Agreement that says “we and our affiliates have unlimited rights to compete with you”. So franchisees can set up different Subway stores in each other’s territory and trample each other’s customer base and marketing areas. Subway also added very high fees for their franchisees, including a royalty fee of 8% and an ad fund fee of 4.5%. This meant franchise owners had to pay 12.5% of their gross sales, minus sales tax, directly to Subway. This makes their fees the highest in quick-service restaurant franchising. Why these costs? Well, part of the ad fund fee goes directly to the pockets of Tom Brady, Serena Williams, and Patrick Mahomes. Because let’s be honest, they probably asked for a massive payday just to stand around on camera and pretend they eat anything like Subway’s Steak & Cheese on the regular. Not to mention, Subway offers a 20-year agreement, while most other franchises offer a 10-year agreement. Longer-term agreements, for higher fees, and worse overall terms, do not lead to happy franchisees or customers. No wonder Subway is being bludgeoned by its competition. QSR Magazine- a magazine devoted to quick-service restaurants- agrees that Subway is being destroyed by its competitors. They said that the chain’s three top competitors - Jersey Mike’s, Firehouse Subs, and Jimmy John’s - make around $1 million per location, while Subway stores make less than $500,000 per location. Part of the problem is the aforementioned deals that Subway is now offering, trying to get customers back. Even when they work, it doesn’t help the stores or franchise owners actually make money. One franchisee said Subway is “doing crazy coupons.” He continued, “our gross sales are not even at 2012 levels, and profit then was five times what it is today.” The other problem with the competition goes back to Subway’s image as the “relatively healthy” option. Back when other fast food chains were best known for offering insane, artery-clogging options like KFC’s Double Down - a sandwich that uses two massive pieces of fried chicken instead of bread - Subway did seem relatively healthier. But now, a lot of fast-casual restaurant chains have sprung up, like Panera, that serve decent food and have healthier - and sometimes tastier - options.. That puts extra pressure on Subway. You finally exit the Subway store, throwing half of your $15 footlong in the trash because there’s no way you can eat it all, and vow to stick to Jimmy John’s from here on out. And sadly for Subway, a lot of their customers have made the same decision. However, all is not lost. In the past couple of years, Subway has done the unthinkable for a corporation - listened to its customers’ main complaints and tried to fix some of its major problems. Instead of importing pre-sliced meat to save a tiny amount of time, they’re installing meat slicers in all the stores to give a better impression of freshness, and to save money. Pre-slicing meat off-site and transporting it turned out to be pricier than shipping raw ingredients and slicing them fresh in-store. Subway has also focused on revamping its menu, renovating its older and more dated stores, and bringing its shops to international consumers, who seem to be responding well. Over 750 new Subway restaurants opened around the world in 2022. It also launched an “Eat Fresh Refresh” campaign in 2021, in which it tried to make its ingredients healthier and improve its overall impression of freshness. In April 2024, Subway was sold to Roark Capital for over $9 billion. The company that acquired it emphasized that it sees huge potential in Subway, and believes the measures the company has implemented are working to bring customers and profits back. The purchase reflects a belief in Subway’s future. So perhaps better times are ahead. Or…maybe not. An over $9 billion sale is impressive, but Subway was valued at $12 billion just a few years before the sale. And its customer base continues to flee. In 2023, the trade magazine Restaurant Business said that Subway no longer held the crown of the sandwich market. It was estimated that in 2024, Subway had 23% of the sandwich and deli market in the U.S. While that still puts it at or near the top, it had 34% of the same market in 2017. An 11% drop in just seven years is not good news. This summer, Subway experienced another shock when 1,000 East Coast Subways in the U.S. saw same-store sales fall by 8.7% in a month, compared to the same time the previous year. Other numbers showed same-store sales drops of up to 10% in other regions. The news was so worrying that in August, executives called a meeting with the franchise owners of 19,000 North American Subway shops. According to the New York post, the invite said, “this conference is essential. Join us…to discuss the state of the industry and an update on our business.” That sounds like corporate speak for “WHAT IS HAPPENING, GET OVER HERE NOW” followed by a bunch of words we’d rather not say on YouTube. In other words…maybe Subway’s future isn’t that bright after all. Did you know why Subway is failing? If you have an opinion about Subway, tell us in the comments below! Now go watch The Real Reason McDonald’s Is Failing or click on this video instead.