Subway, the largest sandwich chain across the United States is reportedly closing numerous locations domestically due to upcoming and already established gourmet fast-food chains. It’s reported that they are closing up to 500 stores in 2018 after 800 restaurants closing back in 2017. Their main focus is to research and discover the underperforming subway stores in certain locations, close those locations in order to fully focus on the stores that are performing very well. The focus will drive more traffic to these stores. Subway will continue to pride itself on market share and looking to maintain and retain its current loyal fanbase. Their focus is their current consumers rather than new consumers. The issue is the quick service sandwich shops like Jersey Mikes and Jimmy Johns that are taking over the market with their fast sandwich making skills and fast delivery. The pressure is increasingly tremendous due to the rise of up and coming sandwich shops. Together, those shops combined brought in over $4 billion. Sandwich chains in the United States account for over $30 billion of annual consumer purchases; Subway accounts for nearly 35% of those sales, with nearly 26,000 U.S. locations. Subway is reducing its restaurant numbers in order to create and revamp their stores to be nicer, more appealing, and more innovative to compete with local competitors. Subway wants to have a smaller store count but have better quality.
Younger consumers crave better quality and will pay at a premium price if it means quality meats, toppings and breads. These people choose to pay more for quality food and faster service. Why go to an actual store when you can have it delivered at rapid fast speed? There’s an issue with Subway’s growth over the years. Subway is a franchisor of restaurants, with no stores owned or operated by the company. Aggressive franchise development created an oversupply of restaurants that cannibalized sales when proximity was too close. Innovation has been Subways weakness over the years but they have strategized to create the Subway app and more item implementations.
Subway is finding addition through subtraction. Subway is focusing on more of a store restructuring in order to maintain consumers. Subways is focusing more on global growth opportunity and why it is a smart decision as it continues to manage strong supply chain and operational strengths. Subway officially became the largest global fast food chain in 2010 with 33,749 worldwide restaurants. Its proven that it is over a thousand more than McDonald’s. At this rate, it will continue to expand globally surpass Mc Donald’s as the number one fast food chain across the world. There is a process of localization and standardization when Subway is across the globe. Subway changes its menu based on where they are located in the world. Domestically, they are taking a huge hit but globally remain ahead of everyone else. In order to maintain domestic success, subway needs to recreate they brand image and draw in new consumers and still cater to their older generation.