In today’s fast food industry, digital sales have become essential for growth. However, Subway, a chain that once dominated the sandwich market, has faced challenges in keeping up. As the company struggles to boost sales amidst store closures and financial uncertainty, it’s now focusing on digital deals to bring customers back. With a new $6.99 footlong promotion exclusively available online, Subway hopes to regain some of the market share it has lost over the years.
Subway’s Long Road of Decline And Recent Challenges
Over the last several years, Subway’s financial performance has been shaky. Although the company has seen some growth recently, it has been overshadowed by significant struggles, including the closure of over 7,000 locations since 2015.
The recent acquisition by Roark Capital has brought even more uncertainty for the sandwich giant. According to sources from Restaurant Business, Subway’s sales for 2024 have been turbulent, with expensive updates like the introduction of $6,000 meat slicers yielding minimal returns.
In a bid to address these issues, Subway is reportedly launching a new digital deal to drive sales. According to franchisees who attended a recent webinar, the chain announced a $6.99 footlong promotion that will run from August 26 for two weeks.
This deal, while more expensive than Subway’s iconic $5 footlongs of the past, is still a bargain compared to the current prices of some subs, which can exceed $14.
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The Shift Toward Digital: Advantages And Challenges
Subway’s focus on digital sales is part of a broader trend in the fast food industry. With inflation making fast food less affordable, restaurants are turning to digital deals as a way to attract and retain loyal customers. Digital orders are not only cost-effective for businesses, but they also typically result in higher spending per customer.
Despite this, Subway has lagged behind its competitors in digital innovation. A 2022 report by market research firm PYMNTS revealed that Subway’s digital offerings were significantly underperforming compared to other fast food chains.
One major reason for this struggle may be the poor performance of Subway’s app. In a Tasting Table ranking of 15 fast food loyalty apps, Subway’s app ranked 14th due to frequent glitches and an unappealing interface. This poor user experience has hindered the company’s ability to compete in the increasingly digital food service landscape.
Resistance From Franchisees: A Roadblock To Digital Success
Another challenge Subway faces with its digital push is resistance from franchise operators. Historically, Subway allowed franchisees to opt out of coupon promotions, giving them more control over pricing. However, this policy changed last year when Subway mandated that all franchisees participate in promotional discounts.
This move sparked frustration among some operators who feel that heavy discounts hurt their bottom line. One manager in Des Moines, Iowa, explained her concerns in a 2022 interview with WHO13 Des Moines, stating, “If we keep giving stuff away, we can’t keep the business open. We’re not corporate; we’re individually owned.”
Despite these concerns, Subway remains committed to its strategy. A company representative told Restaurant Business that even after a promotion ends, the momentum created by these offers encourages repeat visits from customers.
Whether franchisees agree with this approach remains to be seen, but the tension highlights ongoing discontent among Subway’s operators—a risky situation for a company already facing significant challenges.
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Will The Digital Deal Save Subway?
The $6.99 footlong digital deal is a clear attempt by Subway to boost its struggling sales by tapping into the growing trend of online orders. By offering an exclusive discount through its app and website, Subway hopes to attract more customers to its digital platform and increase customer loyalty.
However, the success of this promotion will depend on several factors: whether customers find value in the deal, whether the app’s performance improves, and whether franchisees can tolerate the impact of discounted pricing.
Subway’s strategy to embrace digital sales is a step in the right direction, but it’s not without its risks. With a history of store closures, franchisee dissatisfaction, and a less-than-stellar digital presence, the company has a lot riding on this new promotion.
As the fast food landscape continues to evolve, Subway will need to find ways to balance customer demand for discounts with the profitability concerns of its franchise operators if it hopes to remain competitive in a challenging market.
In the coming weeks, all eyes will be on Subway to see if this new digital deal can reverse its fortunes and bring much-needed stability to the brand. Whether the $6.99 footlongs become a success or simply another failed experiment will be a critical indicator of Subway’s ability to adapt and thrive in the fast food industry.
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