samhexum Posted October 23, 2017 Share Posted October 23, 2017 For me, it's Burger King, Wendy's & Subway. I go through the occasional Arby's & McDonald's phase. For decades, the Subway sandwich chain was among the hottest restaurants in the world. Its healthier-than-burgers menu, wallet-friendly $5 footlongs and go-anywhere store concept helped it grow from a small regional player into the world’s largest restaurant chain — whose 46,000 locations around the globe dwarf even McDonald’s and its 37,000 stores. But in recent years, that growth engine has stalled. Several marketing snafus — from pitchman Jared Fogle pleading guilty to possessing child porn to a lawsuit claiming its foot-long heroes measured just 11 inches — have turned off customers while rivals, like Jersey Mike’s, steal away customers. Overall, sales at the privately held chain have fallen in each of the past two years, according to financial statements reviewed by The Post, and management is scrambling for an answer. Chief Executive Suzanne Greco is pushing plans to spruce up the interiors of Subway’s somewhat dated decor, invest in technology and roll out a customer loyalty program. But Subway ownership is on a totally different page. Dr. Peter Buck, who lent his late pal Fred DeLuca $1,000 in 1965 to start the chain and who retains a 50 percent equity stake, would rather see Subway buy or develop a sub-brand to better battle the Jersey Mike’s of the world, the reclusive co-founder told The Post. “How about opening four brand new sub-chains?” the rarely quoted Buck said in a telephone interview from his Connecticut home. The 86-year old co-founder is obviously not happy that same-store sales since 2013, according to Restaurant Research, have fallen a total of 13 percent. Buck knows something has to be done as Subway faces the most daunting challenge in its 50 years. Subway still controls 76 percent of the US sub sandwich market space, according to Restaurant Research — but that is down from 82 percent in 2013. “Other fast growing sub sandwich chains compete by offering more premium sandwiches with quality meats and abundant portions, proving that today’s consumers are willing to pay more for higher-end options,” Restaurant Research said in a report. But pushing through change will be tough. DeLuca died two years ago from leukemia and his 50 percent stake passed to his widow, Elizabeth, whose interest, according to Buck, is in maintaining the status quo and not spending money on expansion — be it in Subway or in a sub-brand. That leaves Greco, the younger sister of DeLuca, hand-picked by the late CEO to run the chain, caught in the middle — wanting to make changes but almost powerless to do so. Greco, a former Subway purchasing executive and sandwich developer, does not own stock in the company. Putting further pressure on Greco is that Buck, who has known the 59-year executive since she was in grade school, never saw her as being CEO-caliber, he told The Post. Greco, like Buck, is rather press shy and rarely grants interviews or appears at industry conferences. But earlier this month, after a Q&A at her alma mater, Sacred Heart University, in Fairfield, Conn,. she spoke excitedly about renovating the stores and bringing more technology to the sandwich-ordering process. “We have some beautiful new restaurants and are really excited about our new décor and technology,” Greco told the roughly 750 students who attended the Q&A. Dressed in a smart black dress accented with a string of pearls, Greco was also jazzed about the soon-to-launch customer loyalty program that, she hoped, could reignite sales growth from the chain’s 7.5 million orders. “I have known and loved Dr. Buck for most of my life, and we talk all the time,” Greco told The Post in a statement. “My focus is on the transformation of the Subway brand here in the US and around the world. This business was founded by my brother and Dr. Buck, and the model they created — a low-cost franchise offering fresh, nutritious, affordably priced sandwiches — is just as valid and exciting today as it was more than 50 years ago.” But a long-time Subway franchisee told The Post that technical problems have long delayed the roll-out of the loyalty program. “The loyalty program is a year behind, with many false starts,” the franchisee told The Post. “A reason is that it hasn’t been able to work yet because of software difficulties, including the corporate platform not talking to the store point of sale systems.” As such, there is a growing concern among franchisees that management is not up to the task of turning around the business. The company said it was very much on top of the issue. “Subway Digital was created in June 2016 to deliver digital products and experiences to our guests,” Carissa Gianelli, Subway’s chief digital officer, said in a statement. “Since then we have launched a variety of digital products including digital menu boards, kiosks, a Facebook messenger bot, and a new app. We continue to innovate and have much more planned in the coming months.” Link to comment Share on other sites More sharing options...
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