The math doesn’t support a $5 footlong and it probably never will

Illustration for article titled The math doesn’t support a $5 footlong and it probably never will
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Even if you’ve never eaten at a Subway, you are inevitably aware of its signature sandwich deal: the $5 footlong. A catchy years-long commercial jingle coupled with a simple finger-splayed dance all but guaranteed we’d be singing about this lunch special for decades to come, and even though the $5 has been retired for nearly two years now, the jingle remains rattling around inside our brains, waiting to be made relevant once more.

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It should be noted that Subway corporate didn’t voluntarily kill off its defining deal. Instead, it allowed individual franchisees to decide whether to continue pushing the promotion, and a huge number of those franchisees ditched it as soon as possible. For many outlets, the sandwich had been an unsustainable drag on profit margins for years, discounting the total price by about $1.80, which is a significant amount in a business with razor-thin margins to begin with. Each time Subway seeks to resurrect the $5 footlong, a collective of franchisees attempts to beat it back, an endless economic volley between Subway HQ and the individual store owners who must eat the costs of unprofitable promotions.

And now, it’s happening again. Restaurant Business reports that in response to the news that Subway was looking to bring back the $5 footlong on June 9 as a summertime special, the North American Association of Subway Franchisees (NAASF) sent a letter to its members that read in part, “The $5 Footlong was abandoned years ago after countless attempts to make it profitable for the restaurant... Not since the first iteration of this campaign did the increase in sales from traffic offset the cost of the trade-down.”

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The association doesn’t want the promotion to be available without a chips and drink pairing, which would offset at least some of its costs. “We have yet to receive a comprehensive or credible business case to support this deep discount offer,” the NAASF’s letter went on to say.

Subway is trying to incentivize franchise owners to push the promotion by offering each franchise $700 in monthly rebates. But let’s say a franchisee takes the maximum amount of rebates for an entire summer of $5 footlong promotion: that adds up to $2,100—an amount that’s pretty much totally neutralized by the cost of selling steeply discounted sandwiches all summer long. Plus, when customers come through the door for the cheap footlong, they’re effectively disincentivized from purchasing other, more profitable items that they might otherwise order. (Might we recommend the Cauliflower Curry Signature Wrap?)

So, will Subway stop at nothing to foist a cold cuts fire sale on the masses? As the director of NAASF told Restaurant Business, “This is a very fragile time for all restaurants... Our primary goal is to help ensure all Subway restaurants have an optimal chance to survive the pandemic and operate profitably.”

Step one: Subway might consider ceasing its endless attempts to get franchise owners to sell an unprofitable sandwich.

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Marnie Shure is editor in chief of The Takeout.

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DISCUSSION

It is odd to me that Subway franchises foot longs can sustain a $5 price. I pay the same money (7/8) at other sub shops for a 100% better sub (with more meat). Why can’t a giant corporation can’t have cheaper prices for a lower quality/quantity sub?