Subway works to rebuild its business – Restaurant Business Online

OPINIONFinancingA management overhaul and major layoffs signal a sense of urgency, but renewed complaints from operators over a new discount show the chain has a ways to go, says RB’s The Bottom Line. By Jonathan Maze on Feb. 19, 2020 Photograph courtesy of SubwayShortly after 300 people were told they no longer work for Subway earlier…

Subway works to rebuild its business – Restaurant Business Online

OPINIONFinancingA management overhaul and major layoffs signal a sense of urgency, but renewed complaints from operators over a new discount show the chain has a ways to go, says RB’s The Bottom Line.
By Jonathan Maze on Feb. 19, 2020
Photograph courtesy of SubwayShortly after 300 people were told they no longer work for Subway earlier this month, new CEO John Chidsey held an employee meeting at the company’s Milford, Conn., headquarters to explain his rationale and the company’s overall strategy.According to a source, Chidsey told workers that the layoffs weren’t necessary for financial reasons, but were done to give the company a sense of urgency about what it needed to do: Reverse a brutal, seven-year slide that has hammered the company’s operators and shrunk the chain to its smallest size in more than a decade.While acknowledging the difficulty of such a mass layoff, Chidsey told employees it was a necessary step to change the company’s culture and get it to act more “entrepreneurial” and more like “old Subway,” according to a source.  Almost immediately thereafter, however, Chidsey received a lesson in the challenges associated with the brand he’s tasked with fixing. Subway is planning to offer a buy one, get one offer for its footlong subs starting next month. Customers who order a sub online or through the chain’s mobile app can get another one for free.Yet franchisees, who operate all of Subway’s nearly 24,000 U.S. restaurants, have pushed back against the offer. The deal provides an important clue about one of Chidsey’s priorities for Subway: digital sales. The company wants to increase the use of its digital channels, an area in which Subway has lagged in recent years even as it spent millions to develop its digital infrastructure. Yet operators, wounded by years of falling sales and traffic and closing an average of three U.S. stores a day for the past two years, are resistant to discounts and their potential effect on profitability. It echoes a similar pushback from operators in late 2017 over a renewed footlong offer that led to a near revolt from franchisees. Six months later, Chidsey’s predecessor, Suzanne Greco, resigned, and the company went through a long period und
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