What makes Subway’s closure rate in recent years so vivid is how fast the brand was growing. Before an 866-store decline from 2016–2017, Subway added 4,456 restaurants the previous six years combined. And it was steady to a point few companies could rival, if any: 816, 872, 956, 878, 778, and 145. While impressive, it's not surprising to anybody who’s driven through just about any town in America. Subway had 27,103 domestic units at the end of 2015—more than Burger King, Wendy’s, Taco Bell, and Pizza Hut combined; 12,844 more than McDonald’s; 14,582 ahead of Starbucks. (CHECK OUT THE 32 BIGGEST FAST-FOOD CHAINS IN AMERICA)
It’s been a different narrative since, though, as Subway’s total U.S. store figure has declined by 359, 866, and 1,110 in the past three years to drop the restaurant below 25,000 stateside restaurants (24,798 at 2018 year-end). Subway hasn’t had this few locations since 2011.
There are a bevy of factors at play here, everything from a shifting consumer to more competition to Subway’s need to match real estate and trade areas with brand evolution, either via relocations or closures. A good example of this is July’s announcement the company would provide north of $100 million to franchisees to speed up its “Fresh Forward” remodel efforts. The company partnered with vendors to offer $10,000 grants to operators, about a quarter of the remodel costs, to accelerate Fresh Forward and less costly Fresh Start designs across the system.
The company said then it expected to have 10,500 U.S. locations completed by the end of 2020. To that point, roughly 1,400 global units were updated and 900 were in some form of development. Subway also spent $80 million last year to promote culinary upgrades and a more personalized guest experience via “Fresh Now,” a platform free to franchisees that quickly moved to 14 countries.
The family affair of running a Subway franchising empire
Subway: We’re building a brand stronger than ever
Former Pizza Hut exec joins Subway as marketing chief
But all of this innovation, including more menu promotions than usual, unfolded against that footlong elephant in the room: Was Subway’s retraction going to continue?
This week, The New York Post reported the sandwich giant instituted a new policy requiring “mom-and-pop franchisees” who decline to renew their five-year leases to speak with a committee at Subway’s Milford, Connecticut, headquarters. Subway’s system is fully franchised.
A “former territory manager” told the publication, “the brakes are on to stop the closures. The company is coming to its senses and realizing that every store is valuable.”
Per The Post, the process starts with a one-page questionnaire and is intended to help overextended franchisees find someone else to run their restaurants. The goal being to slow the closure rate.
Sources added in the story that Subway’s 2019 rate of shut downs “appears to be on pace with last year in parts of the country.”
One question the publication raised was whether or not franchisees were eager to fill out the form. One West Coast franchisee said, “I think the form means they are putting a stake in the ground and that they don’t want to see any more stores close.”
A Subway spokeswoman added: “Subway places a tremendous value on its network of small-business owners. And as such, aims to ensure viable Subway locations remain open. We help franchise owners find buyers for their restaurants whenever possible.”