While closely held Subway has been retrenching in the U.S. for years now as Americans forgo the Italian foot-longs that once felt like a healthier alternative to traditional fast-food, the shutdown rate quickened in 2018. The entirely franchised chain lost more than 1,100 total shops in the U.S., compared with about 800 in 2017. That marks the third straight year of a shrinking domestic store count, according to data that restaurant researcher Technomic said it obtained from the company.
When asked about the closings, Subway said it’s in the process of reviewing its store fleet, and some owners “will close, relocate or remodel their locations, and that will result in fewer, but more profitable, restaurants.”
The company will offer U.S. franchisees grants to cover about a quarter of the cost of remodeling restaurants. It’s investing $80 million to bring new menu items and improve customer service, Subway said in an emailed response to questions.
The sandwich shop has been fighting a losing battle to build sales as it faces competition from newer, more modern restaurants with expanded healthy options, like Chipotle Mexican Grill Inc. Once considered the more responsible fast-food choice, Subway has been grappling with the changing expectations of diners, especially younger ones, who’ve started to turn away from carbs and processed sandwich fillings in favor of ingredients that skew organic, GMO-free and transparently sourced. Competitors have also deepened discounts and expanded grab-and-go food options and delivery service, amping up the pressure.
Subway, founded more than 50 years ago in Connecticut, faced a blow in 2015 when longtime leader and co-founder Fred DeLuca passed away. While his sister took over for a while as chief executive officer, she resigned last year. Trevor Haynes has been leading as interim CEO since then, and the company has yet to announce a permanent replacement.
The chain has turned to wrap-style sandwiches, along with delivery, to help boost sales. Lately, it’s been advertising a new steak and guacamole wrap. Subway’s push into breakfast didn’t resonate with diners, and last year the company said franchisees could opt out of selling egg sandwiches and other morning fare.