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Thread: How a $5 sandwich sparked a war between Subway and its franchisees

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    Post How a $5 sandwich sparked a war between Subway and its franchisees

    How a $5 sandwich sparked a war between Subway and its franchisees.

    The rise and demise of Subway’s $5 footlong promotion. Subway’s famous promotion made the sandwich franchise billions — but the deal wasn’t as sweet for individual shop owners.


    574CD205-6BC8-48E3-9BC2-7F46BD390911.gif


    In 2008, Subway introduced a tantalizing deal: For just $5, one could purchase any “footlong” (12-inch) sandwich. The promotion was a smash hit with cash-strapped customers during the recession — and its (“five-, five-, five-dollar footlong…”) became the company’s calling card. Within a year, foot traffic skyrocketed across the franchise’s thousands of locations. Revenue from $5 footlongs alone topped $3.8B.[/FONT]
    [FONT=Roboto]It was, according to many industry analysts, one of the most successful promotions in the history of American cuisine.

    But the deal wasn’t so hot for Subway’s franchisees. Eager to grow at all costs, Subway refused to let the promotion die. As inflation drove up the cost of doing business, the $5 footlong became financially unsustainable for many of the independent entrepreneurs who owned the company’s eateries.

    This is the story of a promotion gone very right, and then very wrong. But it’s also a parable about the oft-conflicting goals of small business owners and large corporations.


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    https://thehustle.co/how-a-5-sandwic...s-franchisees/
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    Quote Originally Posted by DGUtley View Post
    How a $5 sandwich sparked a war between Subway and its franchisees.

    The rise and demise of Subway’s $5 footlong promotion. Subway’s famous promotion made the sandwich franchise billions — but the deal wasn’t as sweet for individual shop owners.


    Attachment 35282


    In 2008, Subway introduced a tantalizing deal: For just $5, one could purchase any “footlong” (12-inch) sandwich. The promotion was a smash hit with cash-strapped customers during the recession — and its (“five-, five-, five-dollar footlong…”) became the company’s calling card. Within a year, foot traffic skyrocketed across the franchise’s thousands of locations. Revenue from $5 footlongs alone topped $3.8B.[/FONT]
    [FONT=Roboto]It was, according to many industry analysts, one of the most successful promotions in the history of American cuisine.

    But the deal wasn’t so hot for Subway’s franchisees. Eager to grow at all costs, Subway refused to let the promotion die. As inflation drove up the cost of doing business, the $5 footlong became financially unsustainable for many of the independent entrepreneurs who owned the company’s eateries.

    This is the story of a promotion gone very right, and then very wrong. But it’s also a parable about the oft-conflicting goals of small business owners and large corporations.


    Attachment 35283

    Attachment 35284

    Attachment 35285

    Attachment 35286



    https://thehustle.co/how-a-5-sandwic...s-franchisees/
    Subway was also focused on growth at the same time, so it was allowing new franchises to open within a couple of miles of other franchises - in some cases in urban centers, within half a mile or less. Nonetheless, it was irresponsible to force these promotions on their franchisees regardless of their revenue. They made it the franchisee's choice after 2018, but not until many franchises went bankrupt.
    In quoting my post, you affirm and agree that you have not been goaded, provoked, emotionally manipulated or otherwise coerced into responding.



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    @Collateral Damage.


    I think CD might know a bit about this.
    History does not long Entrust the care of Freedom, to the Weak or Timid!!!!! Dwight D. Eisenhower ~

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    The article pretty much covered the high points, though there were several more pitfalls that Subway Corporate took a couple of years to address that at times, the franchisee would come out at a loss because the advertising materials failed to specify that 'extras' (at normal prices, most extras like condiments, veggies and such were 'free') and unscrupulous consumers demanded huge quantities of 'extras' that would push the COGs into the negative column.

    While some individual Franchisee's tried to offset after the initial painful learning period, Corporate was deluged with complaints, and came back on the Franchisee for limiting extras or charging for above and beyond the basic extras. Once the Franchisees held forth with Subway Corporate on the subject in ernest, they started adding a disclaimer to their promotional material, and then also added to opt-out. There were even reductions in Royalties and Advertising charges for participating in the $5 footlongs.

    The Jared Fogle debacle hit Franchisees hard also, even though Subway Corporate severed ties before the information became public. Somehow, the individual stores were responsible for the actions of a spokes person?

    As to market saturation, a lot will depend on the actual market, and will depend on the 'ease of access' factor - opposite sides of busy streets allow customers access without having to navigate heavily traveled thoroughfares to continue on in their primary direction. Quite often, one Franchisee will own multiple locations, some across the street from each other.

    If a location cannot maintain it's sales level, which is investigated prior to approval of the location, then it may close or relocate.
    "I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations." -- James Madison

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    Quote Originally Posted by Collateral Damage View Post
    The article pretty much covered the high points, though there were several more pitfalls that Subway Corporate took a couple of years to address that at times, the franchisee would come out at a loss because the advertising materials failed to specify that 'extras' (at normal prices, most extras like condiments, veggies and such were 'free') and unscrupulous consumers demanded huge quantities of 'extras' that would push the COGs into the negative column.

    While some individual Franchisee's tried to offset after the initial painful learning period, Corporate was deluged with complaints, and came back on the Franchisee for limiting extras or charging for above and beyond the basic extras. Once the Franchisees held forth with Subway Corporate on the subject in ernest, they started adding a disclaimer to their promotional material, and then also added to opt-out. There were even reductions in Royalties and Advertising charges for participating in the $5 footlongs.

    The Jared Fogle debacle hit Franchisees hard also, even though Subway Corporate severed ties before the information became public. Somehow, the individual stores were responsible for the actions of a spokes person?

    As to market saturation, a lot will depend on the actual market, and will depend on the 'ease of access' factor - opposite sides of busy streets allow customers access without having to navigate heavily traveled thoroughfares to continue on in their primary direction. Quite often, one Franchisee will own multiple locations, some across the street from each other.

    If a location cannot maintain it's sales level, which is investigated prior to approval of the location, then it may close or relocate.
    Spending much of my life on the road makes me a Subway expert as a customer.

    The specific stores are often victims of themselves. Closed and dirty restrooms. Toppings that are cut without regard for bad spots or stems and leave you pulling things out of your mouth. I would not get tomatoes on my sandwich because bad ones ruined so many sandwiches with hard green centers.

    You just do not go back to those locations. Maybe the ease and low cost of the franchise reflected in the quality of the individual that could buy in.

    I have to think there is more to the failed franchises than the profitability of the special although we all have to sell lower profitable items to pull in customers even in heavy industry.

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    Quote Originally Posted by carolina73 View Post
    Spending much of my life on the road makes me a Subway expert as a customer.

    The specific stores are often victims of themselves. Closed and dirty restrooms. Toppings that are cut without regard for bad spots or stems and leave you pulling things out of your mouth. I would not get tomatoes on my sandwich because bad ones ruined so many sandwiches with hard green centers.

    You just do not go back to those locations. Maybe the ease and low cost of the franchise reflected in the quality of the individual that could buy in.

    I have to think there is more to the failed franchises than the profitability of the special although we all have to sell lower profitable items to pull in customers even in heavy industry.
    Of course there is more to a failed Franchise, though since they are inspected monthly for compliance, which includes quality of product, cleanliness, it is the individual Franchisee who is held accountable for a location. If a location is out of compliance 2 months running, they can lose the Franchise. Then Corporate will option either a takeover, or a straight closure.

    If you've encountered a location that doesn't meet your standards, you can either contact the location directly, or Subway HQ at 1-800-888-4848. Most locations will either replace or remake your sandwich if you aren't happy.
    "I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations." -- James Madison

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