A BIG MAC ATTACK
Subway sets $25M, footlong plan vs. archrival
Subway is staring down at a menu of scary problems that’s way more than a foot long.
The struggling sandwich chain has seen customer traffic plummet a troubling 25 percent over the past five years amid fierce price competition and a slew of scandals that have battered its image, The Post has learned.
In a Nov. 30 memo to franchisees that revealed the stomach-churning drop, Subway’s owners promised a $25 million cash injection to boost marketing this spring for the company’s 44,000 locations and to bring back a limited-time, $4.99 footlong promotion.
Concerns focus squarely on two points: that consumers no longer see the menu items as a bargain compared with McDonald’s, its archrival, and that food choices are not keeping up with changing tastes.
The chain said in the memo, obtained by The Post, that it wants to offer healthier and more natural fare, including wraps and “all-natural turkey.”
But the crucial footlong deal, which takes aim at McDonald’s popular dollar menu, is in danger because of a revolt from franchise owners, who fret that doubling down on discounts will further shave their already-thin profits.
More than 400 of them have signed a petition to protest the two-month footlong deal that’s slated to begin in January.
“The national promotional focus over the past five years … has decimated [us] and left many franchisees unprofitable and even insolvent,” petitioners led by Virginia franchisee Mitesh Raval said in the Dec. 6 letter to Subway.
A Subway spokeswoman declined to comment, while insisting most franchisees sup- port the promotion.
“The shareholders do understand the magnitude of this situation,” Subway Chief Executive Suzanne Greco had said in the memo a week earlier, referring to Subway’s private holding company, Doctor’s Associates, which is controlled by co-founder Peter Buck and the family of the late Fred DeLuca, who co- founded the chain with Buck in 1965.
“However, the shareholders’ commitment to provide these significant additional resources is contingent on solidarity,” said Greco, who is DeLuca’s sister and took over the chain upon his death in 2015.
Subway this month has been calling town hall-style meet- ings with franchisees, trying to persuade them that discounts will prop up profits instead of pinching them.
“The erosion of baseline traffic and related profitability decline is the overwhelming primary issue for our brand,” Subway said in the memo.
Diners have fled Subway amid a spate of public-relations nightmares. In 2013, it got slapped with a suit claiming its footlongs measured 11 inches — a case only recently dismissed by a judge.
A year later it was revealed Subway’s bread contained a chemical that’s used to make yoga mats. Then, in 2015, expitchman Jared Fogle was jailed on child-porn charges and for crossing state lines for underage sex.
Most recently, Subway sued a Canadian TV network over an exposé that alleged the chicken in its sandwiches was mostly soy filler. The case is still being litigated.
Looking to offset customer defections and minimumwage increases, Greco has lately moved to ax dozens of highly paid “development agents” — contractors who for decades expanded outlets in exclusive territories and supervised their day-today operations.
“They are taking over territories and these territories are doing worse,” says Yogesh Dave, a former development agent who was fired in 2016 after overseeing 215 Subway restaurants in New Jersey.