Subway said its No. 2 executive is set to leave the fast-food giant, even as a prolonged auction of the company continues to stall.
The Miami-based sandwich chain revealed in a Tuesday memo to franchisees that North American President Trevor Haynes will exit the company at the end of the year, Subway said in a Wednesday press release.
Haynes will be succeeded on Sept. 5 by Douglas Fry, a veteran of McDonald’s and Kraft Heinz who joined the company two years ago and currently heads up Subway’s operations in Canada.
“For the remainder of the year, Fry and Haynes will work closely together to ensure a smooth transition, with Haynes in a strategic advisory role,” the company said in a statement.
Haynes, who is responsible for the growth, expansion and profitability of Subway’s brand in the US, according to Subway’s web-site, “has been the idea guy for Subway,” a large franchisee requesting anonymity said.
Haynes — considered Subway’s second-highest-ranking executive — was also the first non-founding family member to lead Subway being its acting CEO from May 2018 through November 2019.
The chain replaced Haynes with current CEO John Chidsey, a former Burger King executive who lately has been pressuring franchisees to remodel stores on their own dime, even as he presses for a sale, according to sources.
“Trevor has played a pivotal role in shaping the brand’s vision, strengthening our position in the market, and enriching the lives of our guests, franchisees and employees,” Chidsey said in a statement.
Subway said Wednesday its sales have increased for the 10th straight month as the chain has revamped its menu, remodeled stores and tapped sports celebrities including Tom Brady, Steph Curry and Megan Rapinoe — with the latter backfiring miserably for the chain two years ago.
“The results from the Subway Series launch and the positive reaction from guests and franchisees demonstrates that our transformation strategy is working,” Haynes said in an October release.
Nevertheless, Subway put itself up for sale in February and has yet to find a suitor willing to come close to meeting its initial $10 billion asking price, sources said.
Subway has been trying to convince suitors the chain has turned the corner and is gaining momentum. But suitors have expressed concerns that the chain does not own any of its roughly 37,000 restaurants, and about half of them are losing money, sources said.
Subway generates almost all its revenue from charging 8% royalty fees.
Last month, Subway made Katie Pesce the director of field operations for the Northeast including the New York City area. In an email this month to the more than 1,000 restaurants she oversees, Pesce admitted she had scant experience with Subway before recently joining the chain.
“If I’m being totally honest, before I started working at Subway I was not a regular guest,” Pesce wrote. “After the second or third sub and the third cookie I learned why there is such a cult following.”
“This email was oddly condescending,” a franchisee said. “She has no clue what we are doing.”
Mostly, Subway is pushing franchisees to remodel their stores and stay open longer hours, sources said.
Subway average restaurant revenue adjusted for inflation from 2012 through 2022 is down 24%, Restaurant Business Magazine reported. McDonald’s, by comparison, is up 11%.
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