Subway Calls 'Essential' Franchisee Meeting Amid Plummeting Sales The sandwich chain, recently acquired by a private equity firm, called a franchisee meeting to discuss ways to regain market share.
By Carl Stoffers Edited by Jessica Thomas
Key Takeaways
- Subway called franchisees to an August 15 meeting to address declining sales and outline strategies for regaining market share.
- Roark Capital completed its acquisition of Subway in May.
- Franchisees have raised concerns that aggressive discounting strategies have eroded profits without driving expected sales growth.
Subway convened an urgent meeting on August 15 with its North American franchisees amid growing concerns over declining sales and profitability, the New York Post reported. Company data from multiple regions indicates significant drops in same-store sales, with some areas seeing declines as steep as 10% compared to the previous year, the paper reported. These challenges come as Subway faces additional financial pressures, including interest payments on debt from its recent sale.
"This conference is essential," Subway said in the invite, according to the Post. "Join us…to discuss the state of the industry and an update on our business."
Roark Capital acquired the brand for $9 billion in May 2024, following a sales process that started in August 2023 and was delayed by a Federal Trade Commission (FTC) review. Subway will to outline new strategies aimed at increasing customer traffic and regaining lost market share in the meeting, the Post reported.
"There is no emergency virtual conference," a Subway spokesperson told the Post, disputing the nature of the meeting. "We consistently and proactively communicate with our franchisees to share business updates and plans."
Despite the company downplaying the urgency of the meeting, franchisees have voiced serious concerns, particularly around aggressive discounting that has eroded profits. According to the Post, a franchisee reported that recent promotional efforts, such as steep coupon offers, have not driven the expected increase in sales, with some stores barely breaking even.
The situation at Subway is unique, but the brand has not been immune to broader struggles within the fast-food industry. Many chains are engaged in fierce competition to attract inflation-weary, cost-conscious consumers. Competitors like McDonald's, Taco Bell and Wendy's have also introduced aggressive pricing strategies with mixed results.
