Everything We Know About the Subway ‘Emergency’ Meeting With Franchisees

Subway reportedly called an emergency meeting with its franchisees as the sandwich giant tries to stave off plummeting sales and profits. Though executives deny the meeting was an emergency, more than 19,000 franchisees were invited to attend the call in an attempt to learn how to improve foot traffic and market share. Let’s take a look at what we know so far about the meeting.

Subway ‘Emergency’ Meeting: What We Know So Far

According to The New York Post, which was the first to break the story, the fast-food behemoth, which sold itself to Roark Capital, the owner of Dunkin, Arby’s, and Baskin Robbins, for $9 billion in April, informed franchisees that at the meeting on Thursday, Aug. 15, it would disclose strategies to increase traffic and regain market share.

“This conference is essential,” Subway said in the invite. “Join us … to discuss the state of the industry and an update on our business.”

A summary of the promotional offers being tried in restaurants was covered at the conference, which one franchisee referred to as an “emergency” meeting given that the invitations were just sent out last week.

One nearly 20-store franchisee of Subway told The New York Post that his same-store sales have decreased by 5% to 10% in the last few weeks compared to the previous year. He attributes the decline in consumer traffic to the chain’s recent price promotions.

“They are doing crazy coupons,” he said to the outlet. “Our gross sales are not even at 2012 levels, and profit then was five times what it is today.”

The franchisee went on to say that even with the discounts, his stores seldom make a profit. NBA legend Charles Barkley has been asking consumers to “Buy any foot-long in the app and get one free” in a recent nationwide advertising campaign.

“Charging $6.99 for any sub while they are $11 on the menu,” he said to the outlet. “Offering three sandwiches for $17.99.”

Corporate Denials

For their part, the higher-ups at Subway denied the “emergency” nature of the meeting.

“The terms ‘emergency’ and ‘essential’ were never mentioned in any official company communications to franchisees,” a source from the fast-food giant said to FOX Business, in a statement. “The call was scheduled more than three weeks in advance. Additionally, value offers are strategically designed to help increase sales and traffic by attracting consumers. The claim that promotions lead to a decline in traffic contradicts the viewpoint of industry experts.”

Additionally, not every franchisee slammed the various promotions offered by the sandwich giant. Kevin Allen, a Subway franchisee in Texas, told FOX Business that the promotions were a boon to his business.

“As soon as coupons are live, we see a difference in our restaurants,” he said to the outlet. “Right now, with the increase in food and grocery prices, coupons are more valuable than ever, and they have proven in our market to boost sales and traffic.”

The corporate offices also claim that they see the various promotions as a net good. “It is challenging times for the entire restaurant industry,” a Subway spokesperson told FOX Business. “Our approach to value is thoughtful and strategic based on data to help balance consumer needs while protecting franchisee profits.”

The fast-food industry has seen a change as Starbucks has surpassed Subway to become the second-largest restaurant chain globally. Technomic data shows that last year, Starbucks surpassed Subway with an astounding 38,587 stores worldwide, while Subway came in second with 36,516 locations.

The U.S. market for Subway remains strong despite the chain’s recent decline in the global rankings. As per Quartz, in 2022, Subway had an astounding 20,000 restaurants, while Starbucks and McDonald’s lagged behind with roughly 15,000 and 13,000 locations across the country, respectively.