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    Subway is Backtracking from Breakfast

  • Franchisees are being given the option to opt out of selling egg sandwiches, reports say.

    Subway
    Subway's unit count is on the decline in recent years.

    Subway is offering its franchisees a chance to bail on breakfast. According to a Bloomberg report, the world’s largest fast-food chain is shifting gears on a breakfast initiative that began eight years ago with omelet sandwiches at 7 a.m.

    Subway started the push in 2010 when it was in growth mode and had 23,850 U.S. restaurants. But the brand’s expansion chart has shifted dramatically in recent years. Here’s how it breaks down in total U.S. unit count change:

    • 2009-2010: 816
    • 2010-11: 872
    • 2011-12: 956
    • 2012-13: 878
    • 2013-14: 778
    • 2014-15: 145
    • 2015-16: -359
    • 2016-17: -866
    QSR 50

    Reports suggest Subway could shutter another 500 locations this year, including some that might be relocated or combined.

    Bloomberg cited documents from Subway’s North American franchisee association, which showed that the brand has eased up on operators' breakfast requirements over the past year, and is giving them the option to opt out of selling egg sandwiches. Some stores are choosing to open later as well. It also noted a study from market-research firm Field Agent that showed 43 percent of Subway customers said they don’t eat at the chain for breakfast and 19 percent weren’t aware it was even an option. Sixty-seven percent also said it wouldn’t affect their Subway eating habits if the chain cut breakfast from its offerings. These diners were surveyed June 12 and 13.

    Additionally, the NPD group’s research shows a lag in fast-food breakfast traffic to 1 percent in 2018. That’s down from 2 percent in 2017; 4 percent in 2016; and 5 percent in 2015.

    James Walker, Subway’s vice present for North America, emailed Bloomberg a statement saying the chain was making changes to better serve its franchisees and that “each Subway location and customer base is unique, and our goal is to provide franchisees with the resources to deliver an exceptional guest experience while running a profitable business.”

    While breakfast traffic might be down, competition is up. Taco Bell hit the scene in 2014 and has added offerings, such as bacon-and-egg Crunchwraps, while McDonald’s introduced all-day breakfast in fall 2015 to stellar results. It expanded September 2016 to include McGriddle sandwiches and made both McMuffin and biscuit sandwiches available at all restaurants. Just recently, the brand started to pilot breakfast catering in Florida. Starbucks announced in January 2017 its Sous Vide Egg Bites, which were two years in the making.

    Subway is a brand in transition. In May, chief executive officer Suzanne Greco announced her plan to retire. Greco led the brand since her brother Fred DeLuca’s death in 2015. Trevor Haynes, its chief business development officer, stepped in as interim CEO while the company searched for a permanent executive.

    Subway’s Fresh Forward design continues to take shape as well.

    The new model—mandatory for all new locations and store remodels—features a vivid color palette, updated beverage stations, new ordering kiosks, and digital menu boards. Fresh Forward also highlights the fresh produce used in stores with a vegetable display case behind the sandwich line. The new design is already driving sales and traffic in stores across the country, Greco said.

    Subway is expanding delivery options with third-party providers—some overseas locations have even pioneered in-house delivery service. On February 22, Subway announced plans for a new loyalty program, called Subway MyWay Rewards, which promises a customized experience that allows users to collect and redeem rewards in flexible ways. An improved app is also expected to make online ordering easier for those customers who want to order on their phone rather than go down the sandwich line.

    Also, on February 15, Subway launched “Make It What You Want,” a multi-platform marketing campaign designed to highlight the customization of Subway’s offerings in a more contemporary fashion. It marked a shift in strategy as Subway consolidated its U.S. and Canadian media and creative business with one partner for the first time in more than 25 years.

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