Subway franchisees are raising concerns about a recent promotion of the footlong sandwich for $6.99, which they say is hurting their profitability. The deal, which offers the footlong sandwich for $6.99, has sparked a revolt among franchise owners who say the low price is unsustainable given the rising costs of ingredients and labor, New York Post reported.
This North American Subway Franchise Association (NAASF), an organization representing about 2,500 Subway franchisees, alleges that Subway corporate management is pushing the promotion without due consideration of the financial burden it places on individual store owners.
The $6.99-a-foot promotion is the latest in a series of corporate initiatives that have drawn criticism from franchisees who feel their concerns are being ignored in favor of aggressive pricing strategies. Many franchisees already struggle with tight profit margins, and the $6.99-a-foot offer — on a sandwich that typically costs $11 to $17 — exacerbates those challenges.
“If your franchise agreement allows it, DO NOT PARTICIPATE IN THE $6.99 PROMOTION,” NAASF President Bill Mathis urged franchisees in a private blog post Sunday, in accordance with Fasting. “NAASF advises resignation.”
Franchisees are also demanding more autonomy in decision-making and for their financial well-being to be factored into corporate promotions. The end result of this conflict could have broader implications for the fast-food industry, because it highlights the delicate balance between corporate strategies and franchisee profitability. For Subway, addressing these issues is key to maintaining a strong franchise network and avoiding further discord inside its ranks.
Subway has called an emergency meeting with its North American franchisees on August 15 amid growing concerns about declining sales and profitability, Fasting previously reported. The company’s data from many regions showed significant same-store sales declines, with some areas seeing declines of as much as 10% compared with the previous 12 months, the newspaper reported. The challenges come as Subway faces additional financial pressures, including interest on debt from recent sales.
Subway’s situation is unique, but the brand hasn’t been resistant to the broader struggles in the fast-food industry. Many chains are competing fiercely to draw inflation-weary, cost-conscious consumers. Competitors like McDonald’s, Taco Bell and Wendy’s have also implemented aggressive pricing strategies with mixed results.
Read more: New York Post