Dive Brief:

• Subway has expanded its nontraditional development to include interactive, unattended smart fridges at Grab & Go retail locations, the company announced on Monday. 
• The smart fridge, which uses artificial intelligence and natural language processing to allow guests to ask about products inside before purchasing, is stocked daily by a franchisee’s nearby restaurant. The equipment uses weight-sensor shelves to ensure guests are charged accurately via contactless, cashless transactions.
• In September, the first Subway smart fridge opened at the University of California, San Diego, and the chain is seeing strong interest from franchisees wishing to expand their portfolios.

Dive Insight:

Non-traditional locations are becoming a growing emphasis for the sandwich chain. Subway expects to expand Subway Grab & Go and its smart fridges into places like airports, colleges and hospitals in the future, Karla Martinez, Subway’s director of innovation for non-traditional development, said in a statement. 

During the first three quarters of 2022, about 5,900 non-traditional Subway locations in the U.S. and Canada — or about a quarter of the chain’s North American footprint — saw same-store sales rise an average of 13% compared to 2021 year-over-year. Locations that saw the largest sales drops at the height of pandemic restrictions, including airports, colleges and hospitals, saw an average 22% increase in same-store sales. 

The company is shifting its emphasis from single-unit franchisees to multi-unit operators. Subway is also using data-driven approaches to better understand market-specific needs to ensure that restaurants are in the right locations and formats.  

“As Subway focuses on strategic and profitable growth, there is a significant opportunity to expand our footprint in non-traditional locations and for franchisees to generate incremental revenue for their business,” Taylor Bennett, Subway’s VP of non-traditional development, said in a statement. 

In 2020, the company began testing Subway Grab & Go so franchisees could increase off-premise occasions for diners. Franchisees prepare sandwiches daily and distribute them to select Grab & Go locations, including at casinos, convenience stores and gas stations, hospitals and airports. The program has since expanded to over 400 locations in North America, with plans for more growth this year. The smart fridges are an extension of this program. 

Subway, which has undergone two menu revisions in the last two years, has seen rising sales during the last 18 months. The Subway Series, which the chain called its biggest menu update in its history, drove a same-store sales increase of 7.4% in the eight weeks following its July 2022 rollout compared to the eight-week launch of its Eat Fresh Refresh menu the year before, Subway said in an email to Restaurant Dive. During the third quarter of 2022, same-store sales were up 8.4%.