Subway Franchisees Are Getting It Wrong: Overpricing Is Driving Customers Away, and They Must Adapt to Win Them Back

 

An independent group of Subway franchisees is resisting the company’s $6.99 Footlong offer, but their stance is misguided and ultimately harmful to both their businesses and the brand’s future according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Their claim that offering a competitive price devalues the product is not only incorrect but ignores the broader issue: consumers increasingly perceive Subway as overpriced, leading them to abandon the brand for more affordable alternatives.

Overpricing Drives Customers Away—And History Proves It

Time and time again, brands that refused to address consumer pricing concerns have suffered the consequences. Here are five examples:

1.       Applebee’s attempted to push higher-priced menu items while downplaying value deals. The result? Sales plummeted, stores closed, and the brand scrambled to revive its value perception with late-game promotions like $1 margaritas.

2.       Boston Market insisted on maintaining premium pricing despite declining traffic. Consumers turned to lower-cost competitors, forcing Boston Market to shutter numerous locations.

3.       Quiznos priced itself out of competition with Subway by refusing to adjust its high menu prices, leading to a dramatic franchise collapse.

4.       Ruby Tuesday failed to compete on price while rivals like Chili’s and TGI Fridays introduced aggressive promotions. The result? Store closures and lost market relevance.

5.       Starbucks experienced a major sales slowdown when they raised prices too aggressively in the late 2000s, forcing them to reintroduce value-driven options to regain customer loyalty.

Why Subway Franchisees Must Get on Board

The franchisee group’s reluctance to support the $6.99 Footlong deal is shortsighted. Here’s why they should reconsider:

1.       Consumers Demand Value – In today’s economic climate, customers are hyper-aware of pricing. Fast food competitors, including McDonald’s, Wendy’s, and Taco Bell, are leaning into value deals to win back customers. If Subway refuses to compete, customers will simply go elsewhere.

2.       Overpricing Is Already Hurting Sales – Many former Subway loyalists have abandoned the brand due to rising prices. Offering strategic value-driven promotions is the only way to bring them back.

3.       The Data Backs It Up – Last year’s $6.99 Footlong promotion increased profitable sales. This isn’t a gamble; it’s a proven strategy that works when implemented correctly.

4.       Franchisees Benefit from the Incentive – Subway is subsidizing the deal with a $1-per-sandwich incentive. That means franchisees aren’t shouldering the full burden, making this a risk-free way to drive traffic and improve profitability.

5.       Adapting Now Prevents Further Store Closures – Subway has already closed 7,000 U.S. locations since 2015. A refusal to listen to what customers want will only accelerate this trend. To remain relevant, franchisees must embrace strategies that rebuild consumer trust and drive foot traffic.

The reality is clear: resisting a value-driven approach is a losing battle. Subway must focus on regaining old customers and attracting new ones with competitive pricing. The franchisee group’s resistance only serves to further isolate the brand from cost-conscious consumers. If Subway is to thrive in an increasingly price-sensitive market, all stakeholders must align with what customers actually want—affordable, high-quality food at a fair price.

Success Leaves Clues—Are You Ready to Find Yours?

One key insight that continues to drive success is this: "The consumer is dynamic, not static." This principle is the foundation of our work at Foodservice Solutions®, where Steven Johnson, the Grocerant Guru®, has been helping brands stay relevant in an ever-evolving market.

Want to strengthen your brand’s connection with today’s consumers? Let’s talk. Call 253-759-7869 for more information.

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