Saturday, February 26, 2022

Subway is no Longer Stagnant It’s Back on Track

Success does leave clues and at times chain restaurants need to refocus, renew, and rewrite its brand message to edify relevance with consumers according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. 

Johnson stated, “Under pressure from franchisee Subway raised prices, shifted it brand messaging, and went adrift with once loyal customers.  Then in an effort to reclaim some loyal customers they returned to brand messaging with the ‘halo’ of better for you.” Well guess what it worked.

Last week Subway stated that its sales performance improved steadily throughout 2021, sending its average unit volumes to their highest level since 2014. That is a big step forward.

While Subway did not provide the exact number of its average unit sales.  Technomic went to work and calculated that Subway’s “average unit volumes in 2014 were $446,000. They would fall to $425,000 the next year. That suggests the 2021 figure was somewhere in between.”

Technomic continued saying “For the system, same-store sales were flat for the full year 2021. But for the top 75% of its locations, about 16,000 locations in all, same-store sales were up 7.5% over 2019 levels.”

Subway did say that sales improved throughout the year for that group. By December, same-store sales were up 8.7% on a two-year basis. Subway also said that same-store sales for the entire system were positive the last three quarters of the year.

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Subway’s CEO John Chidsey, stated, that the results “indicate we have the right team and strategy to bring our multi-year transformation journey to life,”.

But the data also suggests that about 5,000 locations are still well under what they were before the pandemic. Many are believed to be in urban areas, business districts and in retail shops such as Walmart.

Technomic suggest that much of that recent improvement in sales at Subway can be chalked up to store closures. The brand has closed about 4,900 locations since 2017. That includes about 1,000 locations in 2021, based on an unofficial count of its online store directory.

So, let us be clear for Subway, the 2021 sales results represent the first real green shoots in what has been a long and difficult decade for the brand. The chain has seen thousands of closures since that 2012 peak. It also lost its founder, its spokesman and went through multiple changes in management and executives.

We must note that, Chidsey took over the brand in 2019 as part of the latest management overhaul. The brand last year made a massive change to its menu, upgrading its bread and other ingredients, in what it called the “Eat Fresh Refresh.” Getting back to the basic messaging of the brand.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information.  

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