The $5 footlong is back — and most of Subway’s mom-and-pop store operators are not happy about it.
Starting on Tuesday, America’s largest restaurant chain will begin promoting a version of the sandwich special that put it on the map in 2008 when it started selling 12-inch subs for just $5 each. In the newest version, hungry Subway consumers can buy any two subs, including the Big Philly Cheesesteak that now sells for $8.95, for just $10.
But here’s the sticking point: Franchisees aren’t required to go along with the promotion and 75 percent of those polled say they don’t want anything to do with it, according to the North American Association of Subway Franchisees, a group that represents Subway store operators.
“This promotion was started when labor rates were $7.50 an hour as compared to $15 an hour today,” one New York-area franchisee said.
That fact hasn’t deterred Subway, run by ex-Burger King boss John Chidsey, from going all out to promote the $10-for-2 offer — including by tapping “One Call Away” singer Charlie Puth to participate in its new ad campaign, sources said. In letters to franchisees, Subway reps have also said the promotion will mark its biggest campaign since the heyday of spokesman Jared Fogle, who was arrested for kiddie porn in 2015.
The push comes as Chidsey, hired late last year, scrambles to right Subway’s ship following five years of sagging sales made worse by the coronavirus pandemic. Chidsey believes that offering sandwiches at a steal will help revive the brand with customers emerging from home lockdowns, sources said.
“After three months of massive sales declines, we need to do all we can to get 100 percent of our sales back so we can stand on our feet,” Raghu Marwaha, a Subway territory manager for the Southern California and Texas markets, said in a recent video, a copy of which was obtained by The Post.
“This is our reaction to the present crisis. It’s not part of the original plan,” Marwaha said of the promotion. “I urge you to give it the chance it deserves.”
In an effort to convince franchisees to get on board, Subway has convinced Coca-Cola, which sells its soft drinks at the chain, to throw in about $200 a week to store operators who participate, franchisees said.
But even with that bonus, franchisees say the promotion could obliterate what they pocket per sandwich after counting for food, labor and royalty payments to Subway.
In a spreadsheet provided to franchisees, a copy of which was obtained by The Post, Subway predicts that franchisees will pocket $245 after costs if they sell the $10-for-2 deal 100 times a week on top of their current sales — and that includes the extra money from the Coca-Cola deal.
But franchisees say the math is flawed. Store operator and franchisee advocate Keith Miller, for example, took a recent tally of his sales to determine how the promotion would contribute to his bottom line. Over the course of one recent day, he engaged in 21 transactions involving the sale to two subs instead of one. Had he sold those subs at just $5 each, he would have lost a combined $121 that day, he said. Over the course of a week, that’s a loss of $847, of which Subway will only help offset $200.
“The more successful the promotion becomes the worse it is for franchisees,” Miller added.
Subway, by contrast, stands to gain because it charges a monthly before-cost royalty payment that requires store operators to fork over more than 8 percent of sales.
The company declined to comment.
Credit: Source link