Subway brought back the $5 footlong -- and it reveals a huge internal battle brewing at the chain

Subway
  • Subway has debuted a new take on its popular $US5 footlong: the $US4.99 footlong.
  • As of January, five Subway sandwiches are $US4.99.
  • Some Subway franchisees protested the deal.
  • Subway’s store count dropped by more than 900 and national sales declined in the US in 2017, people with knowledge of the situation told Business Insider.

Subway has brought back the $US5 footlong two years after officially retiring the popular deal. On Monday, the sandwich chain announced it would sell the larger size of five of its classic sandwiches for $US4.99.

The decision, which applies to the Veggie Delite, Spicy Italian, Black Forest Ham, Meatball Marinara, and Cold Cut Combo sandwiches, was a controversial one – and comes at a critical point for Subway.

The sandwich chain’s US store count dropped by more than 900 in 2017, or almost three times as many locations as closed the year before. National sales declined at stores across the US last year, people with knowledge of the situation told Business Insider.

Franchisees in crisis

Subway restaurantJoe Raedle/Getty Images

Roughly 400 franchisees signed a petition protesting the chain’s plan to bring back the $US5 footlong deal, the New York Post reported in December.

Responses to the return of the promotion were mixed among the more than a dozen current and former franchisees who spoke with Business Insider (many on the condition of anonymity, as franchisees are not allowed to talk to the media).

“I don’t understand the backlash,” one franchisee said. “For one, the promotion only includes five of our footlongs.” Further, the person said, unlike when customers create their own sandwiches at the chain, the five sandwiches being promoted have “controlled formulas,” which the person said would “enable franchisees to have better control over food cost.”

Other franchisees indicated that concern over this specific deal was less pressing than other issues.

“We are upset about doing the $US4.99 footlongs, but them doing a coupon drop for three straight months is more upsetting than that,” another franchisee said, referring to Subway’s promotion strategy toward the end of last year. “We believe that the problems are really at headquarters.”

Franchisees and Subway employees also expressed concerns over the chain’s ability to keep up with trends and serve fresh produce. Some said the most pressing issue – a direct cause of hundreds of closings – was that Subway had opened too many locations, with nearby stores cannibalising one another’s sales.

Of course, not all franchisees are unhappy with their situation. Some franchisees told Business Insider that they thought the store closings were a natural part of Subway’s maturation and suggested the return of the $US5 footlong could be a key opportunity to grow traffic at the chain after years of decline.

“We have support from the majority of franchisees on this program and many others we are testing,” Subway said in a statement in December, when reports emerged of franchisees’ backlash against the coming deal. “However, we typically do have a number of restaurants that don’t participate in our national promotions. It is always optional.”

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