Subway hires Bain to combat US sales crisis
Subway Restaurants, the world’s most famous sandwich franchise, has hired Bain & Company to help resurrect its ailing fortunes in the US. It is the first time Subway has hired consultants, and the Big Three firm will be expected to infuse some creativity into a stale sales strategy.
It’s been a hard few years for Subway. Despite advancing internationally, the sandwich chain has seen lackluster sales at home, forcing it to close around 1,700 US stores since 2016. The 52-year-old franchise operation is facing fierce competition from younger upstarts capitalizing on healthy eating trends, and has been posting declining same-store sales for more than five years.
The family-owned business is still recovering from the death of founder Fred DeLuca, who ran the firm for 50 years until he passed away in 2015. His sister Suzanne Greco took over as Chief Executive but resigned in spring 2018. The interim CEO is now Australian businessman Trevor Haynes, who is currently on a ‘listening tour’ getting to know the firm’s stores and franchise owners.
Compounding the sales crisis and leadership overhaul is the public relations disaster that is Jared Fogle. The former face of Subway – pictured on billboards and broadcast into living rooms across the country – was jailed in 2015 for possessing child pornography and traveling to pay for sex with minors. Fogle, 40, became a household face, if not name, after spending 15 years as Subway’s poster boy for apparently losing 200 pounds courtesy of exercise and a diet of half-subs. He is currently serving a 15 year, 8 month sentence in federal prison.
Bain & Company hasn’t commented publicly on its recruitment by Subway. Nor has the sandwich chain, which never hired consultants during the hugely successful half-century tenure of Fred DeLuca. There have been reports that Bain might be asked by DeLuca’s heirs to prepare the firm for a sale after executing a restructuring plan. This has been rejected by a Subway spokeswoman who told press that the shareholders had every faith in the company’s future.
PR Expert Dan Hill of Hill Impact said that “Subway’s derailment is attributed to many factors” but that it will be interesting to see what Bain can do. The consulting firm recently launched its Pricing Navigator tool, which might come in handy as Subway reconsiders its latest public offering – the $4.99 sub – perceived as unimaginative in the industry and provoking the ire of franchise owners struggling to make a profit.
