Fast food chains are increasingly focusing on digital sales, but Subway has struggled in this area. Faced with ongoing financial difficulties, the chain appears to be turning to digital customers to boost sales. Subway has experienced some growth in recent years, a positive shift after years of declining sales. However, the company has also been closing stores at a significant rate, with 7,000 locations shutting down since 2015. Now, following the recent acquisition by Roark Capital, the future of the chain remains uncertain. According to sources at Restaurant Business, Subway’s sales for 2024 have been volatile. Costly investments, such as $6,000 meat slicers, have had limited success.
To counter these challenges, Subway seems to be focusing on digital promotions. Franchisees reported to Restaurant Business that Subway introduced a $6.99 footlong digital deal during a webinar on Thursday. The chain has denied reports that this was an “emergency” meeting, according to FOX Business. If the franchisees’ information is correct, the promotion will begin on August 26 and last for two weeks. While not as cheap as the once-famous $5 footlong, it’s a more affordable option compared to some subs that now cost over $14.
Pros And Cons of Subway’s Digital Shift
Subway is not alone in offering significant digital discounts to attract customers. The fast food industry has been hit hard by inflation, leading many consumers to view it as less affordable. Restaurants see digital deals as a way to directly engage loyal customers and encourage repeat visits. Online orders also come with lower overhead costs, and research indicates that digital customers tend to spend more.
However, Subway has been slow to embrace digital sales. In 2022, market research firm PYMNTS reported that Subway’s digital offerings lagged behind its competitors. The company’s app may be partly to blame. In a ranking of 15 fast food loyalty apps by Tasting Table, Subway’s app ranked 14th, criticized for frequent glitches and a poor interface.
Subway also faces resistance from some franchisees regarding digital sales. Traditionally, franchisees could opt out of coupon programs. In 2022, one franchise manager explained to WHO13 Des Moines, “If we keep giving stuff away, we can’t keep the business open. We’re not corporate; we’re individually owned.” However, late last year, Subway began requiring franchisees to participate in coupon promotions. A representative from Subway told Restaurant Business that even after the promotion ends, these deals help maintain sales momentum and encourage repeat visits. Whether franchisees will agree remains uncertain, posing a risk for a company already dealing with dissatisfaction among its operators.