Subway’s $6.99 footlong sandwich deal has sparked a revolt from the chain’s biggest franchise group — which has raised concerns the discount will spark losses for cash-strapped restaurateurs, The Post has learned.
Subway announced the promotion on Friday, joining the fast-food value menu wars to lure back inflation-battered consumers.
Under the deal, which is only accessible through the Subway app, a footlong sub goes for $6.99 — sharply below regular prices between $11 and $17.
In response, Bill Mathis — chair of the North American Association of Subway Franchisees, or NAASF — speaking for its Board of Directors — advised the group’s members to ignore the promotion, which is slated to run through Sept. 8.
“If your franchise agreement allows, DO NOT PARTICIPATE in the $6.99 promotion,” Mathis urged franchisees in a private blog post on Sunday which was viewed by The Post. “NAASF is advising to opt out.”
NAASF — Subway’s only major franchise group — represents about 2,500 franchisees companywide, who operate a significant chunk of Subway’s nearly 20,000 North American restaurants.
Franchisees for most of Subway’s US restaurants have contracts that were signed before 2021 allowing them to opt out of promotions, sources said.
In the Sunday blog post, Mathis, speaking for the franchise organization’s board, took aim at Subway’s management under CEO John Chidsey, who has irked franchisees not only with orders to discount sandwiches but also directives to perform costly renovations despite razor-thin margins.
“NAASF has a variety of talented members including those who are quite proficient with analysis of break evens,” Mathis wrote. “In some people’s opinions, the traffic lift needed to break even on this promotion is as high as 30%.
“If this is accurate or even half accurate, have you seen any promotion that has brought to franchisees that kind of traffic lift from the current Subway leadership group?”
As previously reported by The Post, the $6.99 deal was revealed to franchisees on an Aug. 15 conference call that one franchisee dubbed an “emergency” meeting as it was organized just a week earlier.
One Subway franchisee with about 25 stores who is honoring the promotion said that 20% of customers on Monday in one of his busier locations ordered a $6.99 footlong sub.
But traffic in that store was the same as it was a week earlier, he griped.
“McDonald’s doesn’t put a Big Mac on its $5 value menu. But we put on all our best-selling subs,” another Subway franchisee vented. “We could do one-third or one-half of the menu and not be killed by this promotion.”
Fast-food sales this year have dropped industrywide, and Subway privately has admitted it is doing worse than its peers, sources said.
Subway is seeing 5% to 10% sales declines in recent weeks in some regions, The Post reported.
Franchisees have been struggling to make money as the chain has shrunk due to stores closing to just over 20,000 US locations at the end of last year versus more than 27,000 at the end of 2015, according to public records.
Some franchisees are suspicious as Subway and its operators have different incentives.
Subway owns none of its own restaurants and makes an 8% cut on gross royalties regardless of whether franchisees make profits.
Credit: Source link
