Subway planning major overhaul as sales slump

Josh Kosman
August 30, 2015
New York Post
Subway is planning its first major facelift in seven years as the five-decade-old sandwich giant tries to reverse sagging sales, The Post has learned.
The slumping chain — hurt by changing consumer tastes, marketing missteps and the scandal surrounding its former pitchman — will reveal a major rebranding in mid-2016, according to sources.
As it struggles to keep up with nimbler rivals, the Milford, Conn.-based mega-deli is eyeing a host of changes, including redesigning its stores and employee uniforms, rolling out digital signs and introducing new menu items.
A Subway spokeswoman said the company is taking a “multifaceted” approach to improving operations, including staff training and new products, but declined to provide details.
America’s most ubiquitous fast-food chain, which celebrated its 50-year anniversary Friday, was ahead of the curve when it started pitching subs and salads as a healthier alternative to burgers and fries. Spokesman Jared Fogle helped fuel sales for 15 years after shedding 200 pounds on “The Subway Diet.”
Its prices were also hard to beat, especially the $5 foot-long that debuted during the Great Recession in 2008.
But all was not well even before the company ditched Fogle, who agreed earlier this month to plead guilty to possessing child pornography and paying minors for sex.
Faster-moving rivals, including Chipotle and Firehouse Subs, have been eating Subway’s lunch by offering seemingly fresher, healthier and more customized fare.
Subway suffered a backlash last year when a chemical found in yoga mats was also found in its bread.
The company is also under pressure to switch to antibiotic-free meat. Subway has said it will cut antibiotics from its chicken next year. It is also working on ham and turkey, but it takes time to source that much meat, which is why the move won’t happen until 2016.
“We have been working toward the elimination of antibiotics, as are many other companies, which makes securing supply challenging for a chain our size,” a spokeswoman said.
Meanwhile, the closely held company, which doesn’t disclose its finances, has been mired in a slump. Sales for 2015 are flat following several down years, sources said.
“We’ve been up 1 to 2 percent in the last couple of weeks,” said a development agent, noting the Fogle scandal wasn’t having an impact. Still, “we are behind where we were two years ago.”
Part of the problem is stale marketing, the agent said.
“When marketing got stagnant, it became price, price, price,” said the agent, who spoke anonymously.
Subway’s longtime marketing chief, Tony Pace, has said he will step down Sept. 30. Karie Ford, the vice president of media services who led digital marketing efforts, is also planning to exit, said a source. Subway just tapped BBDO as its new ad agency.
Chief Executive Suzanne Greco showed off new, seemingly healthier products at the company’s annual development conference earlier this month, including thicker-sliced carved turkey, ham with lower water content and vegan patties, sources said.
The question is: Will Subway have to raise prices?
“If you tell people it is higher quality, and it is not a higher price, will they believe it?” the agent asked.