Subway Restaurants has sported the “Eat Fresh” slogan for years, even as it peddled limp tomatoes and processed deli meats. Now, with new breads, smashed avocado and fresh mozzarella, the sandwich chain is trying to bring back the customers who’ve defected to more modern eateries like Jimmy John’s and Chipotle Mexican Grill Inc.
The closely held company on Tuesday announced what it calls the biggest changes ever in its more than half-a-century history. Dubbed the “Eat Fresh Refresh,” Subway is rolling out two new bread recipes, several on-trend premium ingredients and a handful of new sandwiches, plus nationwide delivery service. It’s hoping those changes will lure diners back to its stores after five straight years of declines. Skeptics of the brand say it won’t be so simple.
Sandwich Shrink
Domestic sales have steadily slipped, dropping more sharply in 2020
Source: Technomic
Subway is one of the most recognizable names in the restaurant industry, and its more than 22,000 U.S. locations makes it the largest by store count, dwarfing even McDonald’s Corp. But its massive size obscures a simple fact: American tastes have changed.
“Subway has sat on its laurels for so long; it’s kind of difficult to pull out of this hole,” said John Gordon, principal at Pacific Management Consulting Group. “The sales have fallen so much in the store.”
Although 2020 was a boom year for many fast-food rivals, fewer than one in 10 Subway stores has a drive-thru, meaning it missed out on much of that low-contact demand. In fact, the Subway app didn’t even offer delivery — it’s rolling that out this summer as part of the refresh. The company closed 1,600 net locations in its home market last year as system sales tumbled 18%, according to Technomic data.
During the pandemic that upended the food-service industry, Subway’s sales depended largely on location, said Trevor Haynes, the chain’s head of North America. Closed stores at some hard-hit locations like colleges and airports have yet to reopen, he said, but overall sales are now “tracking up.”
Falling Footprint
Number of Subway stores in the U.S. has been shrinking since 2015 peak
Source: Technomic
The upcoming changes are meant to reinvigorate the brand, which took a series of high-profile hits in recent years: Ireland’s Supreme Court ruled last year that its bread had too much sugar to be called bread, its tuna’s origin has been called into question and it’s hard to forget Jared Fogle, the company’s pitchman-turned-child-pornography-convict in 2015. Another successful marketing campaign, the catchy $5 footlong jingle, was retired after franchisees said soaring rent and wage costs made the offer untenable.
The makeover is meant to address some of these concerns. “One of the things we heard from both franchisees and from consumers was that there hadn’t been a lot of food innovation in recent years, maybe potentially chasing a lot of shiny objects, and it became apparent to us, really focusing on our core menu items, and really upping the quality and improving that, was the most important thing in terms of improving the guest experience,” said Chief Executive Officer John Chidsey. “It’s a great way to rally franchisees, to show them that we hear them, we understand what we need to do, and it brings a certain amount of pride.”
Subway said the turnaround initiative will have “minimal cost impact to our franchisees,” but declined to provide specific numbers. Keeping store owners happy is key to Subway’s long-term success, said Aaron Allen, principal at consulting firm Aaron Allen & Associates.
“They have been cost-cutting their way into failure for years now,” said Allen, a global restaurant consultant. The company needs to win back franchisees’ “hearts and minds” and “put money into building the top line,” he said.
In addition to the new bread, mozzarella and guacamole spread, the turkey and ham are now thinly sliced, the steak has a new seasoning and there’s a new parmesan vinaigrette. Subway is also upgrading its veggie patty, now offering a vegan option from Dr. Praeger’s. But the sandwiches won’t be getting bigger. “It’s about the same amount of meat,” Haynes said. The popular but much-discussed tuna, which the company says is “100% wild-caught,” won’t change. Subway doesn’t plan to bring back the Beyond Meatball sub that it ran as a limited time offering in 2019.
Fred DeLuca opened the first Subway in 1965 in Bridgeport, Connecticut, with a loan from co-founder Peter Buck. They expanded to 16 shops by 1974 and DeLuca started selling franchises to grow faster. Subway grew quickly in the following decades, peddling its deli meat sandwiches as a healthier alternative to burgers and fries. Although it now seems commonplace, Subway was one of the first to make customers’ food right before their eyes, with “sandwich artists” letting diners customize their meals in a way that was then unique.
But the “Eat Fresh” slogan eventually lost its appeal as health-conscious consumers sought out more low-carb options, and in recent years, the chain has clashed with its franchisees over remodel costs and the requirement to sell breakfast items including eggs.
“They have a positioning and identity crisis,” said Joseph Szala, founder and managing director of Vigor, a restaurant marketing firm. Competitors like Jersey Mike’s and Firehouse Subs offer bigger sandwiches, while Jimmy John’s brings convenience. “Fresh,” he said, is a “banal, forgettable word” and the weight-loss pitch just isn’t sticking.
Still, Chidsey defends the chain’s “Eat Fresh” tagline, even as newer entrants like Sweetgreen offer transparently sourced ingredients as a selling point. “Subway has literally billions of dollars of equity invested in ‘Eat Fresh,’ so I think we own that,” Chidsey said. Marketing aside, he said, “what really differentiates Subway is our ubiquitous nature.”
After all, if there’s a Subway store on every other street corner, maybe that’s advertising enough.
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