One of the most successful marketing campaigns in restaurant industry history was Subway’s $5 Footlong.
That campaign carried the sandwich giant through the Great Recession, when consumers were cutting back dramatically on dining. The campaign was so successful that it helped speed the decline of rival Quiznos, whose franchisees could hardly afford such discounts. And it established the $5 price point as a key driver of value traffic to restaurants.
It was too successful, in fact. Subway and its franchisees have struggled to emerge from the shadow of its $5 Footlong promotion in the more than a decade since it last ran.
Consumers remember that $5 price point when they visit the chain’s restaurants and see some subs priced at $14. They remember it whenever the company tries offering a discount on that sub. And they remember it almost any time news comes out that Subway is struggling.
To wit: Last week news emerged that Subway was facing sales challenges. Invariably, people bring up the $5 Footlong promotion that ran for years.
In some respects, this has to be a marketer’s dream: Create an idea that works so well it helps your entire brand thrive during one of the worst economic downturns in history and spawns a memory that lasts for well over a decade.
But to Subway franchisees—and, increasingly, the brand as a whole—that promotion has been a nightmare for more than a decade.
The $5 Footlong dates back to 2003. Think about that for a minute. Stuart Frankel, the Subway franchisee who created the promotion, used the $5 price point 21 years ago to lure customers to his location on weekends.
It spread to more stores and was ultimately adopted chainwide. Subway used its marketing might to push the offer heavily, and the $5 Footlong jingle became ubiquitous. The offer itself became a $30 billion brand.
But the company ran with it entirely too long. It had to shift away from it in 2012 following a run-up in food costs that made the price point untenable.
Fast-food brands do need some value to get customers in the door. Subway in particular needs a lot of customer traffic, because it operates 20,000 locations. That many restaurants requires a lot of customers.
But it struggled to find the right type of value since then. And every so often the chain would come back to some form of $5 Footlong offer. In 2018, for instance, franchisees revolted when the chain tried a $4.99 Footlong offer.
The company tried something similar in 2020, “$5 Footlongs when you buy 2,” a 2-for-$10 offer that franchisees vehemently opposed.
Price-based promotions are risky because eventually costs make those prices obsolete. Consider the $1 menus many chains had during the heyday of the $5 Footlong. Nobody has $1 menus any longer, opting to promote menus that are under $3 or something along those lines. McDonald’s, for instance, has a 123 Dollar Menu, but few if anything is actually priced at $1 right now.
The cost of operating a restaurant is a lot more expensive than it was 21 years ago when Frankel created the offer. In today’s dollars, in fact, that $5 Footlong should be priced at $8.67. If we just went back to 2012, the last time Subway had the deal, it should be priced at $6.94.
That makes the $6.99 footlong offer the company plans more tenable.
Subway is a franchise. If it were a company-run operation, the brand could theoretically run a $5 Footlong promotion of some form and tolerate lower overall margin, including losses at many locations, in exchange for traffic. (Even then it’s only advisable in extremely limited amounts.)
But Subway is 100% franchised. Those franchisees generate low average unit volumes, $490,000 in 2023, according to Technomic. Most of these operators have one or two locations and rely on their profits for their income.
What’s more, many of these franchisees have watched their system close 7,000 locations over the past eight years, the result of a brand that has struggled to generate sales.
Part of the reason that brand is struggling to generate sales is the success of the $5 Footlong promotion. It has established Subway as the low-priced competitor. And customers haven’t forgotten that.
Like every fast-food brand, Subway needs some permanent value to get customers in the door. But it would help the brand if people weren’t still stuck on a promotion that has been out of date for 12 years.