The Rise And Fall Of Subway
With more than 42,000 restaurants in over 100 countries,
Subway has the most locations of any fast-food chain on the planet. And at first, that sounds like a sign of a thriving sub giant. However, Subway is anything but. Subway’s closed thousands of stores in the last three years and saw a 25% fall in
business from 2012 to 2017. So what happened? The chain began as Pete’s Super Submarines in Bridgeport, Connecticut, in 1965. Three years later, cofounders Fred DeLuca and Peter Buck rebranded
it to simply Subway. Announcer: Subway’s famous
giant foot-long sandwiches are made right before your
eyes, the way you want ’em. Len Van Popering: What
was so compelling then and still is today about Subway is really an open-kitchen format. In many ways, they really pioneered that and the ability to
customize your sandwich. Narrator: The brand redefined fast food with fresh ingredients
that customers could see. Compared to other fast-food
chains at the time, it felt healthy. And it worked. By 1981, there were 200
locations across the US, and soon after, Subway went international. Joel Libava: In the late ’70s, and in the ’80s, and in the ’90s, everyone knew about Subway. I mean, they were everywhere. They’re still everywhere. Narrator: That’s Joel Libava,
an expert in franchising. While each store looks
and smells the same, they’re all independently
owned franchises. Libava: The format is pretty simple. You buy a franchise, you get trained, they help you secure a location. They help with a grand opening, and you’re open. You’re open for business. Follow the several-hundred-page
operating manual, do the advertising, and customers will come in. Narrator: Not only were
Subway franchises successful, they were, and still are, one of the cheapest chains to franchise. It costs between $116,000 and $263,000 to open a Subway franchise. Compare that to opening a McDonald’s, which costs up to $2.2 million. Because Subways were easy to open, the number of stores skyrocketed. Between 1990 and 1998, store locations rose from 5,000 to 13,200. And in that same period of time, gross sales rose by about $2.1 billion. Subway’s success continued
into the early 2000s. At a time when obesity was
rising rapidly in America, Subway continued to market itself as a healthy alternative to fast food. Kate Taylor: One of
their biggest successes for sure was the Jared Fogle story. Everyone remembers those ads, where it’s him in those huge pants where he’s showing how he
lost all of this weight. And that just made them so much money, and it really made people think about Subway as a really
great health brand. It was one of the biggest advertising wins that any chain’s had in recent decades. So that was a huge, huge
part of their brand. Narrator: Subway carried
Fogle’s success story for nearly a decade. But by 2008, the world was suffering from the effects of the Great Recession. And for many Americans, hunting for deals replaced the
obsession with weight loss. So Subway changed up its message. In March 2008, it
introduced a new promotion that would come to define the chain. ♪ Five ♪ ♪ Five dollar ♪ ♪ Five dollar footlongs ♪ Narrator: By August 2009, as other restaurant chains were struggling through the Recession, the
$5 footlong had pulled in $3.8 billion in sales for Subway, a 17% jump in US sales
from the year before. But even the best deals run their course. ♪ Five dollar ♪ ♪ Five dollar footlong ♪ Narrator: Starting in 2014, Subway’s sales began steadily dropping. Behind the scenes, many of the reasons for Subway’s success had turned on them. Quiznos was once Subway’s
main competition, but tons of sub chains, like Jimmy John’s, Firehouse, Potbelly, and Jersey Mike’s, and fast-casual chains like Panera, were offering seemingly
fresher and healthier options. And they started stealing market share. Taylor: They were competing
against people who bring in fresh produce every day. A lot of Subway locations only bring in fresh produce
once or twice a week. Narrator: On top of that, fast-food chains that had been around as long as Subway were coming up with healthy
alternatives of their own and getting creative with new menus. Taylor: More and more
fast-food chains really want to have that innovation pipeline where they’re bringing something
out new almost every month. Fast-food places are looking for ways to bring in new customers, drive traffic, and Subway has not tried to do that in the same way other places have. Narrator: But other fast-food chains weren’t the only competition
for Subway franchises. With Subway’s franchising
model making it so easy to open locations, stores
inevitably started opening up around the corner from each
other in lucrative markets. Take downtown Manhattan, for example. Within a 15-minute walk in
less than half a square mile, there are 10 Subway locations. And these locations in close proximity began cannibalizing each others’ sales. Libava: The Subway franchise
agreement, the contract, it says they can open anywhere. There is no protected territory. So franchisees really have no say-so in where the other
franchisees are going to open. It’s a problem. Narrator: And Subway
corporate wasn’t stopping it, because the company benefited from a high number of locations. More locations meant more franchising fees and high royalties to Subway corporate, which diminished the effect of falling sales from a single location. Taylor: When franchisees’
sales are kind of slipping, as long as they’re staying open, it doesn’t necessarily hurt Subway as much as it would some other chains. If everyone’s kind of,
like, chugging along, like, opening new locations,
then they can kind of keep on keeping on, and it’s not gonna be the end of the world for
the corporate office. Narrator: Franchise
owners, on the other hand, took the hit. In 2012, each Subway franchise generated an average of $482,000 a year. Four years later, that number had slipped to $422,000 a year. For comparison, the average annual revenue of a McDonald’s franchise in 2016 was $2.6 million. And to make matters worse, Subway would lose the face of its company. In 2015, the man who had embodied Subway’s “eat
fresh” mission was charged with possession of child pornography and having sex with minors. Subway cut ties with Fogle, and he was sentenced to 15
1/2 years in federal prison. Taylor: And the Jared Fogle
thing kind of basically went from a huge positive to huge liability. Like, the worst things possible that your brand could be associated with. Narrator: All of these things created the perfect storm for Subway. And soon, locations started to close. In 2016, Subway closed
359 stores in the US. It was the first year the
chain closed more locations than it opened. In 2017, that number was over 800, and by the end of 2018, over
1,000 locations had closed. With all these sour ingredients, it’s hard to imagine
Subway could bounce back. But the chain is certainly trying. In 2017, Subway launched
its Fresh Forward program, starting with remodeled stores. The revamped locations
featured new menu boards, WiFi, USB ports, updated
furniture, and music. Libava: I will give Subway credit. They’re doing something interesting. They are offering grants where, if a franchisee applies
and everything’s in line, they can get up to $10,000
towards remodeling. Narrator: By the end of 2020, over 10,000 locations will have
this new restaurant design. But Subway says food is its next priority, and it’s backing it up with
an $80 million investment in updated menu items. Subway’s partnered with
the media company Tastemade to develop hundreds of new menu ideas, like the Green Goddess Tuna Melt and the Southern Style French Dip. In 2018, the chain introduced
its cheesy garlic bread, its most successful promotion
in the last five years. And in 2019, a line of ciabatta sandwiches and Halo Top milkshakes hit stores. Van Popering: Historically,
Subway would evaluate about six or seven new
menu items per month, but we’ve set up a process
and invested in capabilities where we’re literally testing at least 100 new menu items every month. Narrator: As for whether
or not all these menu items and revamped designs will
stop shuttering stores and dropping business,
only time will tell. Taylor: They need to figure out who they want their customer to be. I think it’s really an
uphill battle for them. But if they kind of go back to the basics, think about what people want, ask people what they want and think about it a
little bit more innovation, that’s kind of going to
be a good start for them.
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Love Sub Way. I can get fresh veggies in a sandwich and it's inexpensive. Good healthy food without a fat overload that one gets with a burger and sloppy hash browns. 😜
Still love it, no pedo for an announcer either so its even better!
Bring back the fake seafood and crab!
Yeah brown lettuce, over $5 now, and out of dressings. Went from getting subway always to never.
I remembered There was a Subway near a Walmart and then they opened up a Subway in Walmart so the one near Walmart is now closed
By the way The Subway in Walmart Used to be a McDonald's
To much DRAMA
Their sandwiches are Tasty and that's all you need when you are hungry 😄
The girl with the fry voice comes on at 2:40 . I’m gone. Can’t stand it.
subway never fills me up but I love it. : p
subway forgot my cheese today
2:45 That woman needs more vocal fry
5:00 I've seen that with my own eyes in London, two Subways in one shopping centre, one died at the worse Location at one end. The other is thriving.
Once at subway the guy put tomatoes in my sandwich and I didn’t wanted them so I told him and he told me « It’s good for you » 😂😂😂
We call them Yoga sandwiches, because the bread taste like a Yoga mat .
I know everything about Subway. I spent a good five years of my life working at Subway. If you have any questions I can answer them.
The cookies are made by Otis spunkmeyer. Now you know.
No subway it was the crackheads behind the counter kind grossed everyone out
Main problem franchising. You get cheap Indian and asian owners that like to cut spending on everything they can
2:38 the vocal fry queen
Subway jimmy johns < goodscents firehouse
The Subways in Canada run and are super awesome, they actually taste good.
Well no duh americans are fat so they will buy micdonalds cuz its more fat endusing
Subway is good in Toronto
21 ingredients in bread … Yuck!!!
Subway is like Apple, price went up while quality either stay as it is or fall, except that subway is willing to fight back trying their best to improvise.
Damn I didn't even care about that advert dood subway was just always good to me.
Most overrated sandwiches ever.
Honestly I'm saying that Subway still is my favorite thing ever to enjoy ateast 4 times in a month…
It's heathy and tasty..
I still remember when I was like 10 and I ate a whole footlong sub for the first time ..
Damn you childhood
People who don’t like subway just have gross orders.
This made me go get subway lol
I still think subway is great fast food
Subway is still lit in Australia and still has that awesome smell when you walk in
Taking away options, PR hit from their long time spokesman’s scandal and getting rid of the very thing that spurred its rapid growth bugs $5 foot long, yeah I’m not surprised it’s struggling.
The other day in ate at subway!! Beef, omelette, avocado, lettuce, tomatoes and onions. It wasn't cheap, but man it was delicious and more or less healthy.
1:09 Hebrew
Some sud way needs to train his employees every 6 months ….
I still eat subway
I don’t know if we just got more educated and our tastes buds matured, but the smell of subway and the taste of their sandwiches now just feel off to me. I feel like I’m going to get food poisoning after I eat there now. Jimmy Johns taste much better and I have a jersey mike’s near my house where the staff are so friendly and it tastes much better.
i just realized i haven’t had subway in three months..
its okay people the kpop and kdrama industry is there to save subway
Never thought I’d see the day where my local subway would be featured in a video 😂
I ate Subway on the 2019, 10, 18th.
And it was like not tasty.
about £6 for a footlong in the uk
here in australia they removed beetroot and a whole bunch of people where pissed off
Maybe that's because you charge 9$ for a sub that cost you less than 17 cents to make
McDonalds stores make much more, but are a ton more to buy or develop and its crap food
Tastes shit and not even healthy. It's a no brainer
Pret a manger all the way! I mean how hard is it to make a healthy tasty sandwich?
Don’t forget about the stamps
I literally still get subway every single day lmao
SOOUBWAY
They removed ranch sauce and black bread with oats
They're to expensive now, $10 for a sandwich
They need to figure out how to move faster. If there is more than one person in line, be prepared to wait for 20min+
Way too much bread.
This problem might be America's Subway. Not sure if this is happening where I live (Ireland) or other countries.
Prices went up so I just make my own shit. Happier, cleaner, and better.
Tbh i Would eat there if it wouldnt be expensive af
Jared. Jared happened
6:59 dang bro. Don’t be wasteful
They went all in on Jared. He buried that company. I'm surprised there still standing.
It's always been a cheap feeling choice but it worked when the sandwiches were only $5, no one could compete with them. Now that they've gotten rid of that and sandwiches are $7, $8 (including seemingly every new sandwich they come out with) there's far better quality options out there at the same price. Jimmy Johns is at worst equal quality for the same price but usually better, places like Firehouse and Jersey Mikes are only a little more expensive but the quality is on a different planet.
They started pandering to Islam stopped using real bacon I stopped using subway and then most of their meats are reconstituted it’s awful shit it’s disgusting
Kang Daniel is there to save them. 🙌
Eat fresh ? So many chemicals, last time I ate subway I ended up having to take a Benadryl
More like soobway
I still love it
Why is there always a rise and fall with you people 😂
I have never been to fond of subway. I’d rather go to firehouse subs or jimmy johns. (Sorry if you don’t have those where you live)
Am I the only one that realizes that business insider does not have a profile picture
But I like subway😕
Only 15 an 1/2 for child porn , someone needs to put a bullet in this guy
I used to really enjoy Subway their subs were delicious until they started scrimping on the quality of the bread then the cold cuts started getting thinner and smaller then the staff turned into Pigs abusing their Customers and treating them bad, I haven't been there in over 5 years and I'll never ever go back again Screw Subway they're not worth a Damn and they deserve to go down permanently.
No more $5 footlong. The end.
Bring back the $5 footlong
it’s so expensive now and if you think about it it’s only a sandwich 🥪
Watching this while eating subway tuna sandwich
I still prefer subway to maccas…and also Burger King to maccas and also kfc to maccas 😁😁😁😁
Potbelly’s just better. The huge oven is part of the spectacle and always cooked my food better than a toaster oven
Jared Fogal
The quality in their bread went downhill, am I the only one who has trouble digesting their bread. I had to stop eating there because I would get such bad stomach pains after
Smh at Jared
keep fresh, stay away from new calory bombs items, change the way wrap the sandwichs
they fall because they became greedy and jacketed prices of sandwiches to $8. I can save you 8 minutes of your life. The girl on the video and the anylisis make no sense.
Pretty much the same story in Australia. Subway has been depressing for a long time and has a very poor reputation. The only time you see people in their stores are during the lunchtime trade and it's only out of desperation. Nobody actually ever feels like eating Subway because there's just so many tastier options with superior produce and choice. Their business model is fundamentally flawed because their ingredients and breads are culturally outdated and lack flavour. And nobody wants to watch a depressed kid reluctantly make their lunch with the bare minimum of ingredients like it's Soviet Russia and there's a food shortage. The whole experience is unpleasant. For $5.50 I can get a pork or chicken banh mi from any Vietnamese bakery that's infinitely tastier than anything from Subway.
miz poke a dot has the most nasty raspy voice thou has almost ever heard.
I'll tell you what happened, a lot of the employees r just plain rude. & the suds have shrunk down to a fraction of what they were. To hell with subway.
In India a subway sub is of $3 …..
Is Subway really that bad? Like personally for me, I’ve never had problems. Just get a sandwich, leave, doneso.
At subway it's practically all bread no wonder there having poor sales . Potbelly's is much better even if does cost more your still getting a better deal
Farm Animal murderers!
Well only in the USA maybe
Not in Europe, as far as I know, Subway kicks ass here
Also maybe is Subway "to healthy" for the average american (even if it's not)
I stopped going to Subway when they replaced the omelettes with poached eggs. Why replace instead of offering something extra. Also, why is Subway unable to source a good coffee bean and coffee machine. Their coffee is literally worse than any other fast food outlet. From the UK.
This video: The rise and Fall of Subway
James: it’s only a matter of TIME
until They GO OUT OF BUSINESS!
😭
(If you don’t know what I’m talking about you better watch every single sooubway video from TheOdd1sOut)
I love subway
jErSeY mIkEs
Wow I didn't realise how bad Subway was in other areas. I live in a town just above London and there's 3 Subways here. All 3 are good and all the staff seem very passionate about their job. The food is great too, tastes a lot better than other sandwich shops.
aw man subway is falling? i live where its not really a thing but when i do go on holiday to other countries i love subway, im just a submarine sandwich guy, mcdonalds and stuff i used to kinda like but now its just pretty shit for me… kfc and subway all the way
Most of you just don’t know how to to associate and talk to people. I don’t kiss ass but I still say please and thank you. And for that they throw in free cookies. And I always buy them anyway. Let’s record y’all and see you how you talk to someone when they make your food.
The only good thing about my subway job is getting the cookies for free (not officially 😉 )
I live in Luxembourg europe and the subway here in Europe is so good and McDonalds and stuff and then I go to florida and subway was so trash and McDonalds