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Subway is closing another 500 stores — here's why
Kate Taylor
Subway is planning to close 500 stores this year.
Last year, the sandwich chain's US store count fell by 909; it lost almost three times as many locations as it did in 2016.
Subway's struggles are tied to overexpansion, failure to keep up with trends, and internal battles, including a lack of confidence in the CEO.
Subway is closing 500 stores after years of declining sales.
The sandwich chain told Bloomberg on Wednesday that it planned to close about 500 of its US locations this year. Subway's US store count fell by 909 last year; it lost almost three times as many locations as it did the year before.
"Store count isn’t everything," CEO Suzanne Greco told Bloomberg. "It's about growing the business."
Franchisees and other internal Subway sources told Business Insider in recent months that up to one-third of the chain's more than 25,800 US locations may not be profitable and that franchisees were bracing for more closures.
Franchisees say Subway has tended to focus on increasing its store count over helping franchisees grow sales. Greco acknowledged in her interview with Bloomberg that the company had "focused in the past on restaurant count."
"I believe that Subway was more interested in the opening of stores," a former corporate employee told Business Insider. "That is where they made the most money — the franchise fee."
Fred DeLuca, Subway's former CEO and cofounder, "made his money from the franchise fee," the person said, adding: "The more stores he opened, the more dollars he made."
"I saw the handwriting on the wall with the focus being on opening as many units as possible, even if it angered franchisees," Scott Godwin, who owned three Subway locations in Virginia until the early 1990s, told Business Insider.
Subway is attempting to address concerns about international expansion and changes to its loyalty program and efforts to redesign stores.
The chain says it is also working to relocate up to 1,000 struggling locations this year — one of the few Subway initiatives that would boost sales, franchisees with knowledge of the situation told Business Insider.
Here's a deeper look into why Subway is shrinking:
Subway's innovation is too little, too late — though loyalty programs and wraps provide a boost
"The brand is tired," said one expert. "The employees even look tired."
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