Subway's multi-year turnaround is off to quite the start.
The world's largest sandwich chain announced Tuesday that it beat 2021 sales projections by nearly $1.4 billion and reached its highest annual AUV since 2014. Three-fourths of the system, or more than 16,000 locations, experienced a 7.5 percent rise in same-store sales compared to 2019. Overall domestic comps sequentially improved throughout the year and were positive for Q2-Q4. In December, same-store sales increased 8.7 percent versus two years ago.
The performance exceeded Subway's prediction in the fall, when the chain said sales would surpass previous projections by $1 billion. The chain reported August was the best sales month since 2013. U.S. sales during the month rose more than 4 percent compared to 2019, with the top-performing quartile—comprising more than 5,000 restaurants—seeing a 33 percent increase. The top three quartiles averaged a nearly 14 percent uptick.
Subway attributes most of the momentum to July's launch of "Eat Fresh Refresh," the largest menu update in the chain's 56-year history. The rollout included more than 20 upgrades—11 new and improved ingredients, six new or returning sandwiches, and four revamped signature sandwiches. Turkey, ham, and steak were elevated and roast beef and rotisserie chicken returned to the menu. Additionally, Nancy Silverton, who won the 2014 James Beard Foundation’s Outstanding Chef Award, assisted with improving the bread.
The historic menu updates coincided with an upgraded mobile app featuring a new dashboard, fewer clicks, and insight into out-of-stock items. Subway also partnered with DoorDash to launch delivery through its website and app. Due to these changes—and other adjustments made throughout the pandemic—digital sales passed $1.3 billion in 2021, tripling 2019's level.
Additionally, the company has spent years working through a reimage and remodel program to provide customers a high-quality and modern experience inside restaurants. The redesign includes LED lighting, and new floor coverings, containers, tables, colors, merchandising, and packaging.
The journey is far from over, the company said. Subway is continuing to innovate around the menu, such as The Vault, a lineup of sandwiches created by noteworthy athletes like Russell Wilson, Marshawn Lynch, and Trevor Lawrence. The brand also plans to release a new catering program in the spring.
"Subway’s 2021 sales results indicate we have the right team and strategy to bring our multi-year transformation journey to life," CEO John Chidsey said in a statement. "As we continue to evolve and build a better Subway, our priority remains working closely with our network of dedicated franchisees to help them grow their business and deliver a better food and better guest experience.”
The success has fueled growth internationally. Last year, Subway signed major development deals in India, Indonesia, Kuwait, the Kingdom of Saudi Arabia, the United Arab Emirates, and Thailand that will result in more than 3,000 future restaurants.
In November, the brand announced an agreement with private equity firm Everstone Group to open more than 2,000 units across South Asia in the next 10 years. Subway called it one of the "largest master franchise agreements in quick-service restaurant history."
Subway has more than 37,000 restaurants in more than 100 countries. It is the second-largest restaurant in the world, behind McDonald's.