The Challenges Facing Subway and Its Impact on Customers

Subway, one of the largest fast food chains in the world alongside McDonalds and Burger King, has struggled in recent years. Thousands of Subway restaurants have had to close their doors in the USA. This raises the question: how could it come to this?

Increased Competition

The fast-food industry has become increasingly competitive with the emergence of numerous new entrants and established brands. Many of these competitors have expanded their menu offerings, drawing numerous customers away from Subway. The rise of alternatives such as vegan and healthier options in other fast-food chains has confronted Subway with tough competition.

Changing Consumer Preferences

Consumers are shifting towards healthier eating habits. While Subway has positioned itself as a healthier option, it has faced criticism over the quality of its ingredients and the nutritional content of its offerings. This has led to some health-conscious consumers seeking alternatives such as vegan and other fast-food options that cater to their dietary needs. The brand has failed to fully appeal to this segment of the market, losing a significant number of customers.

Franchise Issues

Many Subway franchisees have struggled with profitability. High fees, combined with the pressure to renovate stores and compete with other sandwich shops, have made it extremely challenging for some locations to operate successfully. This has resulted in a substantial number of closures, further exacerbating the brand's issues.

Brand Identity and Marketing

Subway has encountered challenges in maintaining a strong brand identity. Marketing missteps, controversies, and legal issues, as well as changes in management, have had a negative impact on public perception. Additionally, the brand has struggled to resonate with younger consumers—a critical demographic for long-term growth. This generation’s changing preferences and loyalty to more modern and trendy brands have further damaged Subway's standing.

Economic Factors

Broad economic factors, including inflation and changing consumer spending habits, have affected discretionary spending on dining out. Many consumers have opted to cook at home or choose cheaper fast-food options, leading to decreased foot traffic at Subway locations.

Pandemic Impact

The COVID-19 pandemic further affected the restaurant industry. Many customers shifted their dining habits towards delivery and takeout, which has significantly impacted Subway's in-store sales. While Subway adapted to these changes, the long-term impact on foot traffic and dine-in sales remains challenging, particularly in locations that faced additional difficulties such as being in hard-to-reach areas.

For instance, many Subway restaurants are located in strip malls with limited parking, such as inside a BJs Warehouse inside a Wal-Mart. In situations where time constraints or inclement weather make it less convenient to visit a Subway, customers often simplify their choices and opt for more convenient drive-thru alternatives. This further contributes to the difficulties faced by Subway in maintaining customer loyalty and increasing sales.

These challenges have resulted in a significant number of Subway closures in the USA, as the brand struggles to adapt to the rapidly changing food industry landscape.