On Again, Off Again, The Subway $5 Footlong Has Left The Station.

According to the NY Post, the effort to reintroduce the $5 footlong has been derailed. Created as a method to increase customer counts and higher top-line sales, the double offer of two footlongs for $10 was instantly met with franchisee resistance. Subway announced to its franchisee on Tuesday that it would be halting the promotion.

As I have written in prior articles, profits are critical to small business owners. Top-line sales are not the only indicator of success. Franchisors must realize the profitability of their franchised restaurants equals the overall health and growth of the parent company. Of course, in this case, if your Subway, the franchisor, and you’re collecting royalties on top-line revenue, you may feel differently. 

Customers were “All ABoard”

Customers seemed to love the promotion as many became aware via a massive TV campaign. According to the NY Post, the Subway memo stated: “While the summer promotion saw well above average consumer awareness, largely driven by our highest TV media weights since 2015, and the number of consumers taking advantage of the offer exceeded our expectations, we did not see enough incremental traffic to grow franchisee profits,”.

The reinvented offer will now only be available through the Subway app beginning July 2. The promotion which was reintroduced in mid-June feature a $10 -for-2-deal was loudly and immediately opposed by franchisees, some of which declined to honor the deal and refused to participate in the promotion completely.

The original $5 footlong offer started back in 2008 gave the chain a significant boost during the great recession. However, in today’s economy, with the rising cost of food and labor, the math does not work.

Nice Song – Wrong Audience

Viewed as set back for Subway’s CEO John Chidsey, who strongly promoted the initiatives as the 2020 COVID pandemic, negatively impacted sales. Even with the company hiring “One Call Away” singer Charlie Puth, to sing the deal’s praises in the TV ad, the Subway franchisees won out. 

In my opinion, franchisors should always put the collective profitable and unit economic of their franchisees ahead for royalty. Without profitable franchised unties, there are no royalties. Once gain lessons learned the world’s largest restaurant chain.