Subway is among the most ubiquitous restaurants that the world has ever seen. Statistically, most of the people reading this article are only minutes away from one of them right now. Just think about that, If you had a sudden craving for their classic Italian BMT or buffalo chicken (that’s my personal favorite), I’ll bet that most of you could be standing inside of a Subway having them custom make it for you by the time this article is over.

I say that because ever since 2002, there have been more Subways in the United States than any other fast-food restaurant, holding a distant lead ahead of these massive fast-food brands like Starbucks and McDonald’s. And maybe the craziest thing is that 20,000 locations is actually down quite a bit from where they used to be because Subway has not been doing well. In 2016, they closed more restaurants than they opened for the first time in their history, and ever since, their store count has decreased by an average of almost 1,000 every year.

That is obviously a bad sign. They have been losing customers, struggling with their reputation, and in response, making major changes to try and reverse everything that has been happening.

There’s been a lot happening with Subway, so in this article, I want to talk about how they grew so large, where things went wrong, and some of the efforts that they made to turn things around.

I’m just going to jump right into it and say that the main reason that Subway was able to grow so large is because of the simplicity behind it. I’m talking about the restaurant itself, because there’s simply not much to it. Unlike most other fast-food restaurants, you are not going to find broilers or fryers or grease traps. Less equipment means lower costs and less space needed for that equipment, and that is a huge advantage.

It goes all the way back to the very beginning when the first one opened in 1965 by a 17-year-old looking to raise money for his college tuition, Fred DeLuca. He wanted to become a doctor, which is an expensive process, and his summer job at a local hardware store was not bringing in the money that he needed to make it happen. He had a family friend named Peter Buck who worked as a nuclear engineer. Together, they came up with an idea of opening a simple sandwich shop to raise the money. All it took was a $1,000 investment from Peter Buck to get things started, and they partnered together to open Pete’s Super Submarines in Bridgeport, Connecticut.

They incorporated their company as Doctor Associates, named after the fact that DeLuca wanted to become a medical doctor and Buck already possessed a doctorate in physics, so it was kind of an appropriate name. But when they started running radio commercials, their customers started getting confused because the name Pete’s Submarines was being misheard as Pizza Marines. That is when they changed the name to Subway to avoid confusion. DeLuca did earn enough money to go to college, by the way, where he ended up earning a degree in psychology instead. But clearly, the business went well beyond that.

After nine years, they had expanded to 16 locations, which was still falling short of their goal of reaching 32 of them by the end of the first decade. So, to speed things up, they started a franchising program, where other people were basically permitted to open their own Subway restaurants by paying the company for the rights to do it. And again, the simplicity of the business worked to their advantage. Historically, it has been a comparatively lower investment to open a Subway franchise, smaller spaces, less equipment, so it has attracted a lot of people wanting to do it.

And since all you really need from a location is water and electricity, they’ve been able to squeeze into so many unconventional areas, like movie theaters, or gas stations, or hospitals. That’s the short answer of how they were able to become the most franchised restaurant of all time. But they have also found success through emphasizing freshness, value, and health, three things that are probably smart for almost any restaurant to promote. But Subway has done a really good job at it.

For freshness, they offer all of those freshly cut vegetables right in front of you that you can select from to put onto your sandwich. Also, in 1983, they started baking their dough at the restaurants, which is pretty uncommon in the fast-food industry, especially back then. Plus, as a bonus, the smell of the bread has drawn in a lot of customers. Just the word “fresh,” they love using that word. It’s in their famous slogan, “Eat Fresh.” And I’m just saying, if you find yourself at a Subway, look around at the menu, the wrappers, the napkins, and everything else, and count how many times you can find that word printed somewhere.

For value, they have always tried to offer competitive prices, going back to the first day of operations when they sold over 300 sandwiches, averaging between 49 cents and 69 cents each. But the most famous example would be their $5 footlong promotion. I remember when they started offering that, they had this catchy jingle on the commercials. I would walk around singing that song to myself constantly because I could not get it out of my head. And I apologize if that is the case for you right now. But, man, that was a huge campaign, and the timing of it was perfect because they started doing it in early 2008, only months before the big stock market crash and everything associated with that, so it was a perfect time to start promoting the value of their food.

And finally, for health, all of those vegetables and for the idea that has been promoted by countless athletes over the years, notably Michael Strahan, Michael Phelps, Blake Griffin, and Happy Gilmore. This fresh, delicious, tasty, meaty, turkey-filled cold-cut combo. But easily the most successful way they have promoted the health of their sandwiches was with Jared Fogle. He was a college student that lost 245 lbs by eating Subway twice a day. The college newspaper wrote an article about it, so learned about the story, and he quickly became a spokesperson for them. I mean, this guy became an unlikely sensation. People were calling him the “Subway Guy.”

He was featured in over 300 commercials over a 15-year span, many of which showed him holding up his pair of 60-inch pants that he used to wear before he lost the weight. He was at the center of a South Park episode, and their chief marketing officer has said that he attributes as much as half of their growth over that time to that campaign. So, yeah, freshness, value, and health, that’s what Subway wants you to associate with them, and in my opinion, they have done a really good job in doing that over the years. But as I showed earlier, things have taken a turn for the worst, so this article is about to get much more depressing as I outline what I believe to be five of the biggest reasons behind that trouble.

5 Biggest Reasons Behind The Decline of Subway

Too Many Locations of Subway

First off, I think that they were opening too many locations. It turns out that 27,000 of them across the United States may have been a little much. As we all learned from Jurassic Park, just because you can do something doesn’t necessarily mean that you should do it. There are Subway restaurants out there competing with other Subway restaurants, countless examples where one location is taking sales away from a different location because they’re all just so close to each other. I think it’s interesting that the original Subway, that first building named after Pete, wasn’t even doing very well.

Fred DeLuca has said that he opened the second one to create the image of success. You know, if you’re growing and opening new restaurants, people get familiar with the name and figure it must be good because people are going there. Do you get what I’m saying? And I think he has kept that mentality toward the brand as he continued to expand it to ridiculous levels in the following decades. When someone says that Subway is the biggest fast-food restaurant in the country, I think that could be a little deceptive. They do have more locations, but that doesn’t mean that more people are eating there.

When you measure by system-wide sales, which I think is the more appropriate measure, McDonald’s and Starbucks and five others are in fact bigger than Subway. And that is because Subway sales per location are abnormally low. For example, Chick-fil-A only has 17th as many locations, but twice as many sales. Now, Chick-fil-A is the leader of the industry and maybe not the most fair comparison, but even compared to other similar sandwich chains, Subway is noticeably lower. All of this suggests that Subway has been more interested in having a lot of locations rather than having good, efficient, profitable locations.

Passing of Fred DeLuca

My next reason behind their decline is the passing of Fred DeLuca. Now, this might sound contradictory to my previous reason in some way, but I want to be clear that even though his approach toward running Subway may not have been the safest or even the smartest in some aspects, he is still the main person behind Subway, easily one of the biggest success stories of all time. As a teenager, he took $1,000 and over the next 50 years, it became a billion-dollar company. He was known to be heavily involved with the company, sometimes even going into a restaurant wearing a disguise so he can sample the food and check up on things at the store level.

In 2013, he was diagnosed with leukemia, and by 2015, control of the day-to-day operations was passed to his sister. Shortly before he passed away, it was a distracting time over at Subway, to say the least, where the management wasn’t exactly on top of their game. And following that situation, the person who knew the company and arguably cared about it more than anyone else was no longer there to guide it. I think it is worth pointing out that the correlation is there. Subway sales started falling in 2015, right after he died.

Disastrous campaigns

It’s unfortunate, but both of their biggest ad campaigns, Jared Fogle and the $5 footlong, turned into complete disasters. For Jared, it’s upsetting to even talk much about this one, but I’m guessing you already know that he is far from the inspirational role model that many people once saw him as. I’m just going to say that in 2015, notice that year yet again, he was sentenced to 15 years in prison for crimes involving minors.

Now, it’s not quite as severe with the $5 footlongs. I mean, I would sure hope not, but that one also turned sour. After about four or five years, they almost had to start phasing it out because it was becoming impractical to maintain that price point. Then, after things started falling in 2018, I think that they were getting desperate because they tried to force it back in a slightly different way as the $4.99 footlong.

It didn’t last long because they still couldn’t afford to do it, and the franchisees got upset with the company over it. So, it hurt the relationships there, and they were left without any of their proven campaigns to fall back on.

Various Scandals

And I want to be clear that from my viewpoint, anyway, there’s hardly any validity to any of these. But for whatever reason, every few years, there are these wild accusations being reported about the food over at Subway. For example, in 2013, a photo posted by a teenager in Australia had everyone talking about how Subway’s footlongs are only 11 inches. In 2017, the new thing was that their chicken was only made of 50% chicken. In 2021, the new-new thing was that their tuna isn’t actually tuna. Again, these are seemingly erroneous or exaggerated stories that I would say unfairly have been hurting Subway’s reputation. People hear about a story like that and start going to Jimmy John’s or one of the other. So, you can see how this can hurt them.

Stale Brand

In 2019, as an attempt to breathe new life into it and reverse the trends, they hired a new CEO, John Chidsey, who had previously led a turnaround plan over at Burger King. When he arrived at Subway, he was the one who used the word “stale” to describe their menu. It had been mostly unchanged for many years, partially because of the illness of Fred DeLuca and all the craziness surrounding that.

So, in July of 2021, they started their, I think cleverly named, “Eat Fresh Refresh” that they call the largest menu update in Subway history. It includes new sandwiches, new ingredients, sort of a shift more towards standardized sandwiches rather than building them yourself. And it has been noted by some of the most famous athletes like Steph Curry and Tom Brady. They invested $80 million to buy meat slicers for the restaurants. It used to be pre-sliced before it got to the restaurants, and now they do it there. They call that one of the most complex changes the brand has ever made.

They’ve been making efforts to attract better talent at the corporate level by offering equity compensation plans and bonuses for the first time. In 2023, they were sold to a private equity firm called Roar Capital, who also owns Jimmy John’s among many other fast-food restaurants. It ended their longtime run as being a family-owned business, and they say it is yet another part of their transformation journey, as they put it. So, big changes have been happening over at Subway.

If you haven’t been there for a while, you might be shocked at how different things are, and it seems likely that they may continue to progress. And there have been some positive indicators, like the fact that their sales per location have been improving. So, I don’t know, maybe Subway is on their way to becoming a much more stable and efficient operation.

Let me know in the comments what do you think about Subway? How do they compare to the competing sandwich shops? And what has been your perception of them over the years? Did you stop eating there at some point, or have you returned? Maybe you never liked them, maybe you’re more of a Schlotzsky’s fan.

And do you agree with my list of the reasons behind their trouble? As always, it’s not a complete list, but I do stand behind it as a good summary of the trouble that they’ve been having. Let me know if you think anything should be added or subtracted from it. And finally, what is your order when you go to Subway?