Dive Brief:
- Subway plans to remodel over 10,500 of its store locations by the end of 2020, according to a company press release. This accounts for roughly 40% of Subway's store locations. Nearly 1,400 Subway stores have already been remodeled.
- Following a $100 million grant program, more franchisees are able to afford remodeling costs, the company said. Each franchisee can receive up to $10,000, which is 25% of the remodel costs.
- These redesigns are part of a multi-year, global transformation aimed at modernizing restaurants, customer convenience and menu innovation.
Dive Insight:
Subway is working hard to revamp its image after sales declined 3.6% last year, according to Technomic's Top 500 Chain Restaurant Report, and closing more than 1,000 U.S. restaurants. Investing in store remodels and other initiatives that modernize Subway's stores, menus and digital offerings will likely help it regain some competitive traction in the QSR space, which has seen lightening-speed changes in recent years thanks to technological advancements and delivery.
On top of failing to keep up with current food trends, Subway is battling bad PR, including allegations that it cancels contracts over arbitrary franchisee agreement violations and that it rigs inspections in order to shutter stores. Its franchisees also have been dealing with increased competition, branding inconsistencies and overexpansion. Co-investing in remodels through the grant program is likely Subway's olive branch to its franchisees and a good faith effort to help get the entire brand back on track. Over 5,000 restaurants applied for the grants.
In addition to the grant offerings, Subway is focused on fixing up its menus and catering to consumers' digital appetites through its Fresh Forward initiative, which looks to add ordering kiosks, a mobile app, pre-order pickups and a bot integrated with Facebook Messenger that can take orders. To spearhead its tech-driven endeavors, Subway recently added former Land O'Lakes executive as its CIO along with a few other leadership changes.
As part of the initiative, it's added interesting new menu items like milkshakes made with Halo Top ice cream and cheesy garlic bread while investing $80 million in creating a more personalized guest experience with Flavor Stations that allow customers to add different toppings to their meals, according to the press release. This could be a big win considering that 79% of diners are interested in personalizing their meals according to insightful recommendations. Subway also recently expanded its partnership with Tastemade to launch its first Inspired by Tastemade menu item, the Green Goddess Tuna Melt.
Subway also expanded its delivery footprint in 2018 to 9,000 restaurants and now works with Grubhub, DoorDash, Uber Eats and Postmates, a strategy that will be a key ingredient in staving off competition.
