Subway, once the biggest fast-food chain in the world, closed hundreds of stores in the U.S. last year and is now looking for a buyer at $10 billion. What happened?
Subway’s decline
It began in 2015, when the private, sandwich franchise company’s pitchman Jared Fogel went to federal prison. In an April 2023 report from Restaurant Business, Subway CEO John Chidsey said the company stagnated under the leadership of co-founder Fred DeLuca in his later years, too.
DeLuca died in 2015. Financially, Subway struggled with a popular but unprofitable $5 dollar sandwich promotion which ran from 2008 until 2014. The other co-founder, Peter Buck, died in November 2021.
According to a May 2023 report from Reuters, Subway’s U.S. restaurant count fell to 20,576 in 2022 from 26,772 in 2016. In 2021, Subway launched a new menu and an updated marketing plan focused on protein and famous sports figures.
In May 2023, CNBC reported offers for Subway came in between $8.5 to $10 billion from private equity groups. The company wants to close a deal this year.
Turkey and lunch out
Subway, a major buyer of turkey breast meat in particular, hitting a long skid coincides with a nearly decade long decline in turkey production in the U.S. Between 2013 and 2022, overall turkey slaughter fell by about 13%.
What’s next is a mystery. Will other sub shops fill the void? Jimmy John’s, Jersey Mike’s and other chains are certainly upping their marketing efforts lately.
I think it will be a long road ahead for lunch-focused concepts and lunchmeat like turkey breast. Many American downtowns, office buildings and commercial centers are permanently emptying out as workers demand to stay home in the post-pandemic world.
Without a real recovery in commuter, office and downtown daily walk-up business, I predict the sandwich business will struggle going forward.
