HBI Staff | Hyderabad 
According to The New York Post, amid a significant sales slump, American fast-food giant Subway has convened an emergency meeting with its 19,000 eateries across North America. Subway has experienced a troubling decline in profits and sales, prompting urgent action.
In April 2024, Subway was sold to Roark Capital for $9 billion, adding the chain to a portfolio that includes The Cheesecake Factory, Dunkin’, Baskin Robbins, and Arby’s. However, recent setbacks have led Subway to instruct its franchisees to devise new strategies to revive customer traffic and reclaim lost market share.
In a communication to its franchisees, Subway emphasized the importance of the upcoming meeting, urging participants to attend and discuss the state of the industry and the company’s current challenges.
A Subway franchisee with nearly 20 stores reported that his same-store sales have dropped by 5% to 10% in recent weeks, a more severe decline than seen in 2023. The franchisee attributed this downturn to aggressive discounting strategies, which, while intended to boost traffic, have instead eroded profits.
The Post also reported that sales in about 1,000 Subways in the Eastern U.S. dropped by 8.7% between June 25 and July 16. Restaurant consultant John Gordon noted that same-store sales have decreased by 10% across Subway locations on both the West and East Coasts, with similar declines seen in Southern California.
Last year, Subway reported a 5.9% increase in sales in North America, but the current year has seen a sharp reversal. Discounting, particularly of best-selling products, has been blamed for the steep decline in profits.
Facing financial pressure from its recent acquisition by Roark Capital, Subway, which now relies heavily on the 8% royalty fees from its franchises, is struggling to manage interest payments on its debt. The upcoming emergency meeting is seen as a critical step in addressing these challenges and avoiding further financial deterioration.
Source : The New York Post
