Subway 2024

May 7, 2024 | Insights, Restaurant Research

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Executive Summary

Subway is the largest sub sandwich chain by far with an ad budget larger by multiples than the other sub chains. An extensive menu primarily features sub sandwiches but also includes wraps, salads and bowls. The chain’s “fresh” menu equity is represented by: veggies cut in-house; deli meat sliced in-store; multiple sauce options; and bread baked in-house. A 2023 addition of meat slicers aligns with the brand’s goal of improving its overall menu quality and the chain’s pivot towards premium is reflected by a material check increase since 2019. Notably, while guests have historically moved along Subway’s iconic make line to customize their orders, the chain’s current goal is to push customers to order from standard menu options to improve operational efficiency (leveraging the chain’s 2022 Subway Series launch which provided customers with the ability to order by sandwich name or number for the first time). Brand presence benefits from an abundance of TV ads featuring some of the most famous sports stars and its fast-growing digital sales are supported by its 36MM Subway MVP Rewards program. Notably, the system generated 12 consecutive quarters of positive comps through 4Q23 and sales strength reflects recent efforts to cull & relocate its weakest stores. Further, its check benefits from add-on sales generated by its new Footlong Sidekicks platform (Churro, Pretzel & Cookie footlongs). In any case, the chain remains challenged by many competing options for consumers, including c-store and grocery chains offering quality sandwiches at low price points. Further, while Subway’s menu pricing more closely resembles fast casual as opposed to QSR, its average check still significantly underperforms the sub-sandwich segment average. Subway also has a long history of struggling to find a competitive value equation that works with its price conscious customers (especially important given the current economic environment), and which is profitable for franchisees. In conclusion, while Subway has turned the corner in terms of improving its relevancy and market positioning, the chain has a lot of work to do to improve its unit level economics in a crowded sub sandwich field.

Subway Market Share Graph

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