Subway, the renowned global sandwich chain, is encountering difficulties in attracting new franchisees to purchase its US shops. Despite its efforts to revamp its ownership model, the combination of low restaurant profits and outdated stores has made it a challenging proposition.
Declining US Presence:
Subway’s US system has experienced a steady decline, marked by the closure of over 1,000 stores in 2021 alone. This reduction brings the total number of locations to 23,749, a significant drop from its peak of 24,629 stores in 2012.
Contributing Factors:
Several factors have contributed to Subway’s decline. Intense competition from other fast-food chains, shifting consumer preferences, and a series of food safety scandals have all played a role.
Attracting Big Franchisees:
To reverse the trend, Subway has sought to attract prominent franchisees capable of investing in the chain and fostering growth. However, the company has faced limited success in this endeavor.
Profitability Concerns:
One of the reasons for the lack of interest is the relatively low profitability of Subway’s US stores. In 2021, the average store generated $410,000 in sales but only $100,000 in profit, resulting in a modest profit margin of just 24%.
Outdated Store Design:
Subway’s outdated store design has also deterred potential franchisees. The company’s design standards have not been refreshed for years, leading to tired and dated appearances of many of its locations.
Efforts to Address Challenges:
Recognizing the issues at hand, Subway has implemented changes to improve the situation. It has updated its design standards, introduced new marketing initiatives, and offered enhanced training programs to its franchisees.
Uncertain Outlook:
While Subway’s efforts are commendable, it remains uncertain whether these changes will be sufficient to attract significant new franchisees. The company’s ability to reverse the trend will be critical in determining its future, as continued struggles may lead to further store closures.
In conclusion, Subway faces the uphill task of attracting new franchisees for its US shops. Challenges such as low profitability and outdated store designs have hindered its efforts. However, with recent updates to design standards and additional support for franchisees, Subway is striving to rejuvenate its brand. The future remains uncertain, and only time will tell if these measures can reinvigorate Subway’s growth. Thanks for reading!
