The rise and fall of Subway.

Overexpansion

A decade ago, when Subway was destroying competitors with its $5 Footlong offer and a reputation for health thanks to its Jared commercials, the company expanded aggressively. The chain’s founder, Fred DeLuca, at one point said that Subway could have 100,000 global locations.

At the end of 2006, the chain had 20,721 locations. By the end of 2011 it operated 25,285 units, a unit growth of 22%. Keep in mind that period included the worst recession in 75 years and one in which the restaurant business lost sales.

Loss of its Marketing

Subway’s immense growth could be attributed to a pair of marketing campaigns: Jared and the $5 Footlong. It lost both of those.

It’s difficult to overstate the problems created for the company by the 2015 arrest of Jared Fogle to child sex charges. Fogle had helped give Subway the perception that it was healthy, and that perception carried the chain for years and even lifted other sandwich chains’ own health perceptions.

And, you know, it’s just never good when your longtime spokesman gets arrested.

Yet Subway’s traffic and sales were declining even before then, and some of that could be attributed to a loss of value perception after the chain went away from that $5 Footlong.

Perhaps the company kept that Footlong offer too long. But much like McDonald’s struggled after shifting away from its Dollar Menu around the same time, Subway struggled to overcome the loss of its value perception after that offer ended.

Now, given the small size of many of its franchise operators, their low ($420,000) unit volumes and rising labor costs, franchisees are revolting against a $4.99 offer.

Subway has struggled to develop marketing campaigns to follow these. That’s been a real problem, especially given the increase in unit count.

So What Actually happend

Unethical behaviour of its face (jared fogle) which was  arrested for to child sex charges damaged firm’s reputation and make it less appealing to stakeholders and people.

Can it recover? (2020)

 There’s clearly hope for Subway, whose primary shareholders have committed to investing $25 million in the brand.The company has a complex problem—too many locations, value challenges, small unit volumes and angry operators. But a few quarters of sales increases can fix many of these issues. Sales are, after all, the silver bullet that fixes everything.

 source
www.businessinsider.com