While a lawsuit over its use of tuna has for now been dismissed, it is facing serious criticism for its continued support of a major franchisee who allegedly underpaid workers a total $38 million. It came under criticism from franchisees both for its handling of the COVID-19 crisis and for introducing an offer which would significantly cut into the profits of hard-pressed franchisees. Subway has often been the source of controversy. The sandwich industry is a site of both uncertainty and potential, due to continuing problems with its biggest player. It also protects supply chains during periods of crisis, as a sandwich outlet sells a broad mix of proteins such as ham, turkey, tuna, and cheese as the central flavor and nutrient in its meals, and so is less likely to struggle if supplies of one filling are disrupted. This has made it easy to cater to demand for healthier options and specialized diets, while still providing brand-building novelties and traditional favorites. Unlike a burger or a chicken meal, a sandwich can contain just about anything, and customers come looking for choice. One of the big advantages of sandwich franchises is the variety they offer. This has led to the creation of a new online catering platform, which will support large orders of Subway for parties and corporate events. While this market is usually talked about in terms of individual orders, Subway has made a move to strengthen its position in a different niche, through a deal with ezCater. It also depends upon the industry’s success in moving into online ordering, which rose from 10% to an estimated 14% of the restaurant market in 2020. □Find GOOD Franchises in Your Target Industries That Are STILL Available in Your Area (Free Tool) □How Much Franchise Can You Afford? Use Our Free Financial Calculator □Flip a Franchise, Grow Your Wealth (Free Live Webinar, Fri. Part of the appeal of Subway is selecting salad options in the store, and it will be harder for a company that has marketed itself on freshness to maintain that image when the customer doesn’t see the sandwich being made. Whether this leads to long-term growth will depend upon how far sandwich shops can market themselves as a prime prospect when customers are going to the effort of ordering for delivery. COVID-19 accelerated that trend, letting sandwich outlets survive local waves of the pandemic. It has recovered around half of its lost value in 2021, and is expected to reach $22.6 billion across the year, but this is still a serious setback from its previous position.īefore the pandemic, some sandwich shops were already moving slowly toward more takeout and delivery, as they sought to increase their presence in this market. The franchised sandwich industry lost nearly a fifth of its revenues in 2020, falling to just over $20 billion. However, even at the peak of the crisis, only 15% of US Subway franchises were shut down, mostly ones in malls and college campuses, where the whole shopping area might be shut down.Īs takeouts, they were in a stronger position to cope with the crisis than more traditional restaurants, and largely managed to stay afloat, but didn’t do as well as more delivery-oriented outlets. Subway has 10,000 franchisees, owning an average of around two restaurants each, and its competitors are often relatively small-scale organizations, having struggled to achieve Subway’s prominence.īecause they are usually sit-in and carry-out restaurants rather than drive-thrus or delivery businesses, sandwich shops were hit harder than some other takeout options by the initial wave of COVID-19. While many outlets for the big burger chains are run by investment firms, the sandwich franchising landscape has traditionally been dominated by individuals and families, thanks in large part to Subway’s lower initial fee. This kept the sandwich franchise industry growing at a healthy clip while other fast-food segments stagnated or even declined. The industry did a better job than many competitors at keeping up with consumer preferences for healthier options. In the US, the sandwich franchise industry saw 2.6% annualized growth in its market size in 2015-2020, reaching a value of $25 billion.
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