Subway will close more than 500 sandwich shops in the US in 2022 due to over-expansion and outdated menus as it explores potential $10 billion in sales.
The chain is closing an additional 571 locations — at 2.7 percent — in 2022 after even stronger closures in previous years in the United States, its largest global market, according to the latest disclosure document it provides to franchisees interested in buying locations.
Subway has closed thousands of locations across the U.S. in recent years due to an overabundance of stores, outdated operations and decor, dated menus and $5 footlong deals that have eroded franchisee profits, according to a disclosure document reviewed by Reuters.
The chain will close 1,000 stores in 2021 and more than 1,600 in 2020.
At the end of 2022, Subway had 20,576 stores in the United States. That is a sharp decrease compared to 2016, when there were 26,772. It has about 37,000 locations worldwide.
The company sought to rekindle its favor with fans by introducing a revamped menu featuring splashy ad campaigns featuring A-list celebrities, including Serena Williams and Steph Curry. The role came under CEO John Chidsey and could take several years to succeed, restaurant consultant John Gordon said.
Subway has closed thousands of locations across the US in recent years due to over-expansion, outdated operations and decor, outdated menus, and $5 footlong deals that have eroded franchisee profits.
In 2022, the company closed 571 stories. In 2021 it closed 1,000 stores and in 2020 it closed more than 1,600
Continued closures could also harm public perception, said franchisee advisor Robert Edwards.
“That’s baggage they have a hard time getting rid of,” Edwards said.
“We’ve spent the past two years optimizing our footprint by using a strategic, data-driven approach to ensure restaurants are in the right location, image and format,” Subway said in a statement.
“This includes opening new locations, keeping quality a top priority, relocating restaurants to maximize guest traffic, and closing locations when necessary.”
The company also said the delay in store closures is related to Subway limiting its market to hotspot areas.
“The slowdown in closings is a result of the progress we have made to return to smart growth, which will increase franchisee profitability and protect our position in the market,” said Subway.
Subway announced early this year that it was exploring a billion-dollar sale. A source told Reuters last week that bids range from $8.5 billion to $10 billion
“Our goal is to increase the number of new openings in North America by approximately 35 percent by 2023 compared to 2022.”
Subway announced early this year that it was exploring a billion-dollar sale. A source told Reuters last week that bids range from $8.5 billion to $10 billion.
Subway will soon allow bidders to cooperate before submitting final bids, and Bain, TPG and Advent have already been in talks on this, the sources added.
While Subway previously dismissed speculation that it was preparing for a sale last year, the franchise has taken a major turn after years of controversy over its ingredients, including the tuna and bread, and its pedophile former spokesperson, Jared Fogle.
The company tried to rekindle its favor with fans by introducing a revamped menu with splashy ad campaigns featuring A-list celebrities like Megan Rapinoe (pictured). The role came under CEO John Chidsey and could take several years to succeed
Serena Williams (left), Tom Brady and Steph Curry (right with Brady) also appeared in the new revitalized ads
In 2015, Subway faced a public image nightmare when the face of the company, Jared Fogel, was convicted of child pornography.
It also faced criticism over the freshness of its ingredients, with Ireland’s Supreme Court ruling that the bread contained too much sugar to be called bread.
The company also faced a class action lawsuit alleging that it misrepresented its tuna sandwiches, with lab analysis repeatedly showing that the meals contained no tuna DNA.
The tests prove that the ‘tuna’ is actually a ‘mixture of different concoctions that do not constitute tuna, but are mixed together. [Subway] to mimic the appearance of tuna,” the lawsuit against the company said.
A judge rejected Subway’s request to dismiss the lawsuit in July, after which the case was reviewed by the U.S. District Court for the Northern District of California before going to trial.