Why Subway Failed and How You Can Avoid Their Mistake


Entrepreneurs are always looking to expand their business by either building another shop in a different location or opening the business for franchising. Between the two, franchising is an easier option since you won’t have to manage the other stores.

As long as you have comprehensive operating and marketing manuals for your franchisees, you can let them manage their own stores. And if you want your digital marketing to be in sync, you can even recommend to them the same people who provide you with SEO services in Denver.

But, before you pursue this path, you should know what the pitfalls are so that you could avoid them. In short, avoid what Subway did.

Subway’s rise

The sandwich restaurant was once a colossal enterprise that went toe-to-toe with some of the biggest fast food franchises in the U.S. It used to compete heavily with McDonalds, Burger King, Wendy’s, and all the other burger joints across the country.

For a time, it even posed to topple all of those companies when majority of Americans became more conscious with their daily diet. One of Subway’s successful marketing strategies was to showcase one of their patrons who lost considerable weight after limiting his diet to only Subway sandwiches.

Jared Fogle, a one-time obese student, decided in the late 1990s to change his lifestyle of eating junk food and focus on eating only healthy sandwiches. Subway’s menu is significantly healthier compared to other fast food restaurants because they serve several varieties of fresh vegetables. Also, customers have the option to choose their ingredients.

So, what Jared did was to eat regularly at Subway, choosing low-calorie ingredients. The result was he lost more than 200 pounds. His dorm mate then wrote about it in their university’s paper.

The media caught wind of Jared’s dieting success story, and so did the advertising agency of Subway. Subway hired him as their official spokesperson. After showing the public his evident weight loss, the sandwich restaurant’s revenue went up.

Subway’s demise

Subway’s marketing strategy became a huge success that more and more people started emulating Jared and ate at their restaurants in the hopes that they would become healthier, too. This led Subway to boost their franchising plans, thinking that there would be more customers coming in, thus the need to add more stores.

The only problem was Subway was too eager to franchise their restaurant without stopping to analyze how it would affect their sales. What they did was they let thousands of franchisees put up Subway restaurants anywhere they wanted.

The result was too many Subway stores popping up to a point that those establishments were competing against each other for customers. It was like in one street, there were about three Subways, leading to a saturation of the company brand.

So, customers soon got tired of seeing too many Subway restaurants that they started looking for other places to eat. And so, one by one, the franchisees had to close their shops because they could no longer make a profit.

What now?

If you’re planning to franchise your business, make sure that you have a concrete plan. Don’t be too eager to accommodate several franchisees. Before you let someone buy your franchise, do a little research and see if the location your franchisee chose for your store has high traffic and minimal competition.