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Subway plans to give digital customers deep discounts on the company’s Footlong subs starting later this month as part of a plan to counter steep sales declines.
The company alerted operators at a scheduled webinar Thursday that it plans to offer digital customers $6.99 Footlong subs for two weeks starting on Aug. 26, several franchisees told Restaurant Business.
The deal is for any type of sandwich. Subway’s Footlong sandwiches can top $14 or more, depending on the market.
Subway may also offer more buy-one, get-one-free offers in hopes of reversing traffic declines that have hurt sales this year as fast-food customers cut back on dining out.
Sales at the chain have struggled this year, according to several sources. The company scheduled a webinar for Thursday to reveal its plans for the offers. Subway tested its $6.99 Footlong deal in select stores before deciding to take it national for a limited run.
The offer is a straight discount on a single item, rather than a bundled offer such as $5 value meals at McDonald’s or Burger King. But it is only available for users of the company’s mobile app.
Many restaurant chains use mobile app offers to target more loyal consumers, because it gives them a chance to market more directly to such customers.
Restaurant sales have weakened this year amid concern about restaurant prices. Restaurant chains raised prices aggressively coming out of the pandemic to combat soaring costs for food and labor.
But that has hurt the industry’s value perception. Consumers today are less likely to consider fast food affordable, according to Restaurant Business sister company Technomic. Low-income consumers in particular have adjusted their spending accordingly, sending traffic plummeting at many concepts.
Those traffic declines have started showing up in many restaurant chains’ same-store sales numbers, such as McDonald’s and Burger King. That has prompted a value war. Both of those chains have extended their own value offers and other chains, including Subway rival Jimmy John’s, have released their own offers in a bid to regain traffic.
Subway in many respects has more to lose than many chains, given its low average unit volumes and closures of thousands of restaurants in recent years. The typical Subway location generated $490,000 in revenues in 2023, according to Technomic. That’s one of the lowest average unit volumes among the 500 largest restaurant chains.
The company has kept many of its discounts on the app, including regular deals giving customers a free 12-inch sub with the purchase of another one. Some franchisees say those deals are too aggressive, and that some customers will order their subs from their app just outside the restaurants. Franchisees would routinely turn off the digital offers, saying they couldn’t make a profit, prompting the company to require operators to accept the deals late last year.
Subway, however, argues that it needs some value offers to counter the perception that its sandwiches have grown too costly after years of price increases. The sandwich giant needs a certain amount of traffic to support its 20,000 U.S. restaurants.
The sales challenges this year have been frustrating for both Subway and its operators, coming after the chain appeared to have generated some positive momentum, reversing years of sales declines.
Unit volumes had fallen between 2012 and 2020. The company changed marketing and upgraded many of its ingredients in 2021, adding the Subway Series premium line in 2022. Unit volumes are 19% higher than they were five years ago.
This year the company added a line of footlong “sidekicks,” including footlong versions of its cookie, Auntie Anne’s pretzels and a Cinnabon churro. In June the company added $3 Dippers, meat and melted cheese wrapped in flatbread alongside a dipping sauce.
But the efforts have not been enough to stave off the summertime sales decline, prompting Subway to seek new value offers. The company looked at multiple options for value before ultimately settling on the $6.99 Footlong deal, arguing that it was the right type of deal that could generate traffic without hurting operator profits.
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