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Subway’s Salad Days Are Past
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Declining sales in 2015 at Subway sandwich chain stores and lower profits for franchise owners, following overexpansion. Sales at U.S. Subway chain stores declined by 3.3% to $11.9 billion, acccording to Technomic Inc. There are about 27,000 Subway stores in the U.S. compared to 14,300 McDonald's stores, and the saturation appears to be hurting sales and profits, say experts. The system setup by Doctor's Inc. which started Subway incentivizes expansion.
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Subway's was founded by Doctor's Inc. and has a unique system that gives territory to individuals who then get a share of fees for new franchises. The cost of opening a location is much smaller than McDonald's, the training much shorter and the locations small. This incentivizes expansion, unlike McDonalds and other food stores. The reason McDonalds and other chains own part of the franchise store is to maintain quality at stores. Perceptions of food quality is slipping according to this report in the WSJ.
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