The Decline of Subway...What Happened?

[Music] Subway is among the most ubiquitous restaurants that the world has ever seen statistically most of the people watching this are only minutes away from one of them right now just think about that if you had a sudden craving for their classic Italian BMT or buffalo chicken that's my personal favorite I'll bet that most of you could be standing inside of a Subway having them custom make it for you by the time this video is over I say that because ever since 2002 there have been more Subways in the United States than any other fast

food restaurant holding a distant lead ahead of these massive fast food brands like Starbucks and McDonald's and maybe the craziest thing is that 20,000 locations is actually down quite a bit from where they used to be because Subway has not been doing well in 2016 they closed more restaurants than they opened for the first time in their history and ever since their store count has decreased by an average of almost 1,000 every year that is is obviously a bad sign they have been losing customers struggling with their reputation and in response making major changes to

try and reverse everything that has been happening there's been a lot happening with Subway so in this video I want to talk about how they grew so large where things went wrong and some of the efforts that they made to turn things around I'm just going to jump right into it and say that the main reason that Subway was able to grow so large is because of the Simplicity behind it I'm talking about the restaurant itself because there's simply not much to it unlike most other fast food restaurants you are not going to find broilers

or friers or grease traps less equipment means lower costs and less space needed for that equipment and that is a huge Advantage it goes all the way back to the very beginning when the first one opened in 1965 by a 17-year-old looking to raise money for his college tuition Fred Duca wanted to become a doctor which is an expensive process and his summer job at a local hardware store was not bringing in the money that he needed to make it happen he had a family friend named Peter Buck who worked as a nuclear engineer together

they came up with an idea of opening a simple sandwich shop to raise the money all it took was a $1,000 investment from Peter Buck to get things started and they partnered together to open Pete's super submarines in Bridgeport Connecticut they Incorporated their company as Doctor Associates named after the fact that DeLuca wanted to become a medical doctor and buck already possessed a doctorate in physics so it was kind of an appropriate name but when they started running radio commercials their customer started getting confused because the name Pete's submarines was being misheard as Pizza marines

that is when they changed the name to Subway to avoid confusion Duca did earn enough money to go to college by the way where he ended up earning a degree in Psychology instead but clearly the business went well beyond that after 9 years they had expanded to 16 locations which was still falling short of their goal of reaching 32 of them by the end of the first decade so to speed things up they started a franchising program where other people were basically permitted to open in their own Subway restaurants but paying the company for the

rights to do it and again the Simplicity of the business worked to their advantage historically it has been a comparatively lower investment to open a Subway franchise smaller spaces less equipment so it has attracted a lot of people wanting to do it and since all you really need from a location is water and electricity they've been able to squeeze into so many unconventional areas like movie theaters or gas stations or hospitals that's the short answer of how they were able to become the most franchised restaurant of all time but they have also found Success Through

emphasizing freshness value and health three things that are probably smart for almost any restaurant to promote but Subway has done a really good job at it for freshness they offer all of those freshly cut vegetables right in front of you that you can select from to put onto your sandwich also in 1983 they started baking their dough at the restaurants which is pretty uncommon in the fast food industry especially back then plus as a bonus the smell of the bread has drawn in a lot of customers just the word fresh they love using that word

it's in their famous slogan eat fresh and I'm just saying if you find yourself at a subway look around at the menu the wrappers the napkins and everything else and count how many times you can find that word printed somewhere for Value they have always tried to offer competitive prices going back to the first day of operations when they sold over 300 sandwiches averaging between 49 cents and 69 cents each but the most famous example would be their $5 foot long promotion I remember when they started offering that they had this catchy jingle on the

commercials I would walk around singing that song to myself constantly because I could not get it out of my head and I apologize if that is the case for you right now but man that was a huge campaign and the timing of it was perfect because they started doing it in early 2008 only months before the big stock market crash and everything associated with that so it was a perfect time to start promoting the value of their food and finally for Health all of those vegetables and foret idea that has been promoted by countless athletes

over the years notably Michael stran Michael Phelps Blake Griffin and Happy Gilmore this fresh delicious tasty meaty turkey filled cold cut combo but easily the most successful way they have promoted the health of their sandwiches was with Jared Fogle he was a college student that lost 245 lbs by eating Subway twice a day the College Newspaper wrote an article about it so learned about the story and he quickly became a spokesperson for them I mean this guy became an unlikely sensation people were calling him the subway guy he was featured in over 300 commercials over

a 15-year span many of which showed him holding up his pair of 60in pants that he used to wear before he lost the weights he was at the center of a South Park episode and their Chief marketing officer has said that he attributes as much as half of their growth over that time to that campaign so yeah freshness value and health that's what Subway wants you to associate with them and in my opinion they have done a really good job in doing that over the years but as I showed earlier things have taken a turn

for the worst so this video is about to get much more depressing as I outlined what I believe to be five of the biggest reasons behind that trouble first off I think that they were opening too many locations it turns out that 27,000 of them across the United States may have been a little much as we all learned from Jurassic Park just because you can do something doesn't necessarily mean that you should do it there are Subway restaurants out there competing with other Subway restaurants countless examples where one location is taking sales away from a

different location because they're all just so close to each other I think it's interesting that the original Subway that first building named after Pete wasn't even doing very well Fred Duca has said that he opened the second one to create the image of success you know if you're growing and opening new restaurants people get familiar with the name and figure it must be good because people are going there do you get what I'm saying and I think he has kept that that mentality toward the brand as he continued to expand it to ridiculous levels in

the following decades when someone says that Subway is the biggest fast food restaurant in the country I think that could be a little deceptive they do have more locations but that doesn't mean that more people are eating there when you measure by system wide sales which I think is the more appropriate measure McDonald's and Starbucks and five others are in fact bigger than Subway and that is because Subway sales per location are abnormally low for example Chick-fil-A only has 17th as many locations but twice as many sales now Chick-fil-A is the leader of the industry

and maybe not the most fair comparison but even compared to other similar sandwich chains Subway is noticeably lower all of this suggest that Subway has been more interested in having a lot of locations rather than having good efficient profitable locations my next reason behind their decline is the passing of Fred Duca now this might sound contradictory to to my previous reason in some way but I want to be clear that even though his approach toward running Subway may not have been the safest or even the smartest in some aspects he is still the main person

behind Subway easily one of the biggest success stories of all time as a teenager he took $1,000 and over the next 50 years it became a billionaire with it he was known to be heavily involved with the company sometimes even going into a restaurant wearing a disguise so he can sample the food and check up on things at the store level in 2013 he was diagnosed with leukemia and by 2015 control of the day-to-day operations was passed to his sister shortly before he passed away it was a distracting time over at Subway to say the

least where the management wasn't exactly on top of their game and following that situation the person who knew the company and arguably cared about it more than anyone else was no longer there to guide it I think it is worth pointing out that the correlation is there Subway sales started falling in 2015 right after he died next up on the list is disastrous campaigns it's unfortunate but both of their biggest ad campaigns Jared foggle and the $5 foot long turned into complete disasters for Jared It's upsetting to even talk much about this one but I'm

guessing you already know that he is far from the inspirational role model that many people once saw him as I'm just going to say that in 2015 notice that year yet again he was sentenced to 15 years in prison for crimes involving miners now it's not quite as severe with the $5 Foot Longs I mean I would sure hope not but that one also turned sour after about four or 5 years they almost had to start phasing it out because it was becoming impractical to maintain that price point then after things started falling in 2018

I think that they were getting desperate because they tried to force it back in a slightly different way as the 4.99 ft long it didn't last long because they still couldn't afford to do it and the franchisees got upset with the company over it so it hurt the relationships there and they were left without any of their proven campaigns to fall back on another reason behind the decline is a series of various scandals and I want to be clear that from my viewpoint anyway there's hardly any validity to any of these but for whatever reason

every few years there are these wild accusations being reported about the food over at Subway for example in 2013 a photo posted by a teenager in Australia had everyone talking about how Subway's Foot Longs are only 11 in in 2017 the new thing was that their chicken was only made of 50% Chicken in 2021 the new new thing was that their tuna isn't actually tuna again these are seemingly erroneous or exaggerated stories that I would say unfairly have been hurting Subway's reputation people hear about a story like that and start going to Jimmy John's or

one of the other so you can see how this can hurt them finally I'm just going to say that the brand has become stale in 2019 as an attempt to Breathe new life into it and reverse the Trends they hired a new CEO John chidy who had previously leted at a turnaround plan over at Burger King when he arrived at Subway he was the one who used the word stale to describe their menu it had been mostly unchanged for many years partially because of the illness of Frank Duca and all the craziness surrounding that so

in July of 2021 they started their I think cleverly named eat fresh refresh that they call the largest menu update in Subway history it includes new sandwiches new ingredients sort of a shift more towards standardized sandwiches rather than building them yourself and it has been oted by some of the most famous athletes like Steph Curry and Tom Brady they invested $80 million to buy meat slicers for the restaurants used to be pre-sliced before it got to the restaurants and now they do it there they call that one one of the most complex changes the brand

has ever made they've been making efforts to attract better Talent at the corporate level by offering Equity compensation plans and bonuses for the first time in 2023 they were sold to a private Equity Firm called roor Capital who also owns Jimmy John's among many other fast food restaurants it ended their longtime run as being a family-owned business and they say it is yet another part of their transformation Journey as they put it so big changes have been happening over at Subway if you haven't been there for a while you might be shocked at how different

things are and it seems likely that they may continue to progress and there have been some positive indicators like the fact that their sales per location have been improving so I don't know maybe Subway is on their way to becoming a much more stable and efficient operation let me know in the comments what do you think think about Subway how do they compare to the competing sandwich shops and what has been your perception of them over the years did you stop eating there at some point or have you return maybe you never like them maybe

you're more of a shooter mcavan fan and do you agree with my list of the reasons behind their trouble as always it's not a complete list but I do stand behind it as a good summary of the trouble that they've been having let me know if you think anything should be added or subtracted from it and finally what is your order when you go to Subway I almost always go with that buffalo chicken so have I been overlooking something what should I get next time I go there and any other thoughts you have about Subway

leave them in the comments I'd like to hear what you have to say thank you for [Music] watching