Dive Brief:
- Subway terminated 300 employees Wednesday at its headquarters located in Milford, Connecticut, according to Restaurant Business.
- Local police were reportedly called to escort employees from the premises.
- Subway’s unit count has shrunk 13% since peaking at 2015 and Technomic predicted last year that the chain will fall out of the top five chains on its Top 500 ranking, likely reporting less than $10 billion in sales.
Dive Insight:
The reason for Subway's employee reduction is apparently aimed at not only cutting overhead but making the business more efficient.
"A reduction in workforce is never an easy decision but streamlining and simplifying our business with a smaller and nimbler workforce will help us react quickly to the changing needs of the business,” Alan Marcus, senior director of public relations, said in a statement about the layoffs.
These job cuts add to a growing list of change and uncertainty for the sandwich chain. Subway CEO John Chidsey has been making several changes since taking the helm in November 2019 after the position stood empty for more than a year. Subway has closed over 2,300 stores since 2016, battled franchisees, been accused of shuttering stores for minor infractions to restructure its system and made significant changes in its executive leadership that appear to be ongoing.
Layoffs are not unusual in the restaurant space, as a competitive landscape, rapidly shifting consumer preferences, and tough margins often result in dire financial situations. Long John Silver's turned to corporate layoffs last year as part of a turnaround plan for the struggling brand. In 2018, Starbucks engaged in corporate restructuring which led to layoffs, as well. McDonald's turned to layoffs in 2015, and Burger King did the same in 2010 when Chidsey was CEO of the company.
Despite its continued challenges, Subway has engaged in a number of attempts to refresh its brand identity and change its leadership. It's planning to remodel roughly 40% of its stores by the end of 2020, launched a grant program to help address financial pressure for store remodels and started 2019 with price discounts despite pushback from operators.
