Subway franchisees rebel against value meal deal over concerns it will spark losses

Franchisees are rebelling against Subway’s new deal, fearing it will lead to losses.

The chain has launched a promotion on sandwiches priced from €3.50 to $6.99, which runs until September 8 and is intended to entice consumers on a budget.

But Bill Mathis, president of the North American Association of Subway Franchisees (NAASF), reportedly told the group’s members to ignore the promotion.

“If your franchise agreement allows it, DO NOT participate in the $6.99 promotion,” Mathis urged franchisees in a private blog post shared by The New York Post‘NAASF advises not to participate.’

The group is the largest in the U.S., representing approximately 2,500 franchisees who collectively operate approximately 10,000 Subway restaurants nationwide.

Most Subway restaurant franchisees in the U.S. have contracts signed before 2021 that allow them to opt out of promotions, The NY Post reports.

In the blog post, Mathis criticized Subway’s management under CEO John Chidsey and questioned how franchisees could break even on the promotion.

Franchisees typically charge between $11 and $17 for a 12-inch sub.

The $6.99 Subway deal is the latest in a series of value meal deals introduced this year by major chains like McDonald’s and Burger King.

“NAASF has a variety of talented members, including members who are highly skilled at analyzing break-evens,” Mathis wrote.

‘Some people believe that as much as 30% more traffic is needed to break even with this promotion.

“If this is true or even partially true, have you ever seen a promotion that has brought franchisees so many more customers, coming from current Subway management?”

One franchisee with about 25 stores participating in the promotion said 20 percent of customers at one of his busier locations ordered the $6.99 sandwich.

However, he said the number of visitors to that same store was unchanged from the previous week.

“McDonald’s is not putting a Big Mac on the $5 value menu. But we are putting all of our best-selling subs on it,” another franchisee told The NY Post.

“We could do a third or half of the menu and still not be hurt by this promotion.”

Bill Mathis, president of the North American Association of Subway Franchisees (NAASF), reportedly told the group’s members to ignore the $6.99 promotion

Franchisees typically charge between $11 and $17 for a footlong sub

Subway sales are said to have fallen by 5 to 10 percent in some regions

The $6.99 deal was revealed to franchisees last month during a conference call that one franchisee called an “emergency meeting,” according to The NY Post.

Fast food chains have suffered from inflation over the past year as Americans eat out much less.

But Subway has been hit particularly hard, with sales down 5 to 10 percent in some regions.

The chain has closed several locations in recent months and now has about 20,000 restaurants in the US, up from more than 27,000 in 2015.

An invitation the company sent to local store owners said it would outline plans to win back customers and increase its faltering market share.

“This conference is essential,” read the invitation, which was seen by The NY Post. “Join us… to discuss the state of the industry and get an update on our business.”

A spokesperson for the chain denied that the conference was an emergency, stressing instead that “we consistently and proactively communicate with our franchisees to share business updates and plans.”