Friday, June 5, 2020

Subway’s Mistakes of the Past Haunt its Future Success

Success does leave clues and it is clear that the $ 5 Dollar Footlong promotion that began during the last recession, ignited retail foodservice sector sales and propelled Subway to recorded growth for years, ran too long according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.
That promotion helped place Subway in an industry leadership position with the most relevant messaging at the time, one of price/value with the ‘halo’ of better-for-you via freshness. What happened along the way is that other restaurant chains adopted the $ 5 price point diluting Subway’s message and relevance with the consumer.
The consumer is dynamic not static and Subway remained stuck on price, all the while forgetting the importance of the halo of better for you.  Clearly, price had been top-of-mind with the consumer.  However, consumers began refocusing on the ‘halo’ of better for you more as they worked their way out of the recession mind-set.  When the consumer moves on brand leaders need to as well.
It’s now 12 years later and we are in another recession.  The consumer definition value has evolved since then and franchisees are now faced with increased labor cost, packaging cost, food cost and delivery cost. The North American Association of Subway Franchisees (NAASF) has become a stronger voice and increasingly vocal about the brands seeming single focus on price point rather than value and brand messaging.
The consumer has continued to migrate from Subway, and many other restaurant brands for the past 7 years if you look at year over year same store customer counts.  The customer migration has hurt the industry and Subway’s franchisees sales and profits.
Battle for Share of Stomach

Consumers are looking for meals and meal solutions for a single product and price point even during these troubling times. Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meals and meal components that can be mixed & matched then bundled into a family meal continue to garner incremental consumers.
At the intersection of the consumer, Subway, and its franchisees is the grocerant niche. If top line sales and bottom-line profits are central to Subway’s brand growth the team at Foodservice Solutions® recommends invigorating Subways’ brand messaging with the ‘halo’ of better for you once again via inviting consumers with interactive participatory grocerant niche offerings.
Consumers are dynamic not static.  Millennials and Gen Z consumers are looking forward not back.  They want discovery not recycled.  If success doe leave clues, one clue that branded food retailers should never want to forget is your brand must move forward with the consumer. Are you winning the battle for Share of Stomach?

1 comment:

  1. The bigger problem is that Subway is not better for you. It’s mostly bread with a few slices of stale looking, low quality meat in between paper. That is what they need to fix.