Over the past few years, the fast-food restaurant has closed thousands of stores and is on its way to closing even more. It also saw a 25% fall in business from 2012 to 2017. So what happened? With more than 42,000 stores in over 100 countries, Subway has the most locations of any fast-food chain on the planet. At first glance, it smells like success—a thriving subgiant. However, Subway is anything but that. 

THE RISE

The chain began as Pete’s Super Submarines in Bridgeport Connecticut, in 1965. Three years later, co-founders Fred DeLuca and Peter Buck rebranded it to Subway giving it a more simple brand name. The brand redefined fast food with fresh ingredients that the customers could see. Compared to other fast-food chains at the time, it felt healthy and it worked. By 1981 there were 200 locations across the US, and soon after, Subway became international.

Not only were Subway franchises successful, but they were also—and still are—one of the cheapest chains to franchise. It costs between $116,000 and $263,000 to open a Subway while a McDonalds’ costs up to 2.2 million dollars. Since Subways were easy to open, the number of stores skyrocketed. According to The Gale Group, “Between 1990 and 1998, store locations rose from 5,000 to 13,200. At that same time, gross sales rose by 2.1 billion dollars.”

Subway’s advertisements were also very popular. In a time when diabetes took its toll on America, Subway piped out ads that showed how healthy they are.

THE FALL

Starting in 2014, Subway’s sales began to plummet. Tons of new sandwich chains like Jimmy Johns, Firehouse, and Potbelly were becoming new challenging competitors who offered healthier and fresher items. They also started stealing market share. Other fast-food competitors focused on healthy innovation, whereas Subway failed to adapt to the changing trends.

Besides new sandwich chains, Subway’s easy franchising model inevitably resulted in stores opening up around the corner from each other in lucrative markets. Not to mention that the face of Subway, Jared Fogle, was arrested in 2014 with possession of child pornography and having sexual activities with minors. These effects resulted in Subway closing over 1000 stores in the US in 2018.

THE FUTURE

In 2018, Subway launched its Fresh Forward program which started with remodeling its stores. Their revamped locations showed new menus, WiFi, furniture, and music. By the end of 2020, over 10000 locations will have a new restaurant design and “fresher food” with the help of an 80 million dollar investment. 

Subway’s great rise was a textbook success, but their company quickly collapsed on itself like a wave. While they are currently attempting a major renovation to almost all aspects of their company, bouncing back to the level of success that they once saw is an unlikely feat.