Subway May Be Slicing Into Profits

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Speaker 1
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Speaker 2
Wondering I'm David Brown, and this is business wars daily on this February 2. Happy Friday, everybody. For the past several months here on this program, we've been keeping tabs on what's been going down in Sandwich town. After an up and down past few years, Subway is trying to reinvent itself. Last August, the chain announced it was selling itself to fast food investor Rourke Capital for $9.6 billion. Rourke Capital also happens to be the owner of one Jimmy John's, and by November, the FTC had some questions about this acquisition. No resolution has been announced as of yet. Still, the proposed sale marked a positive shift for the brand, which, like we said up top, has had some highs and lows lately. Subway had to shutter more than 500 stores in 2022, after closing more than 1000 in 2000 and 22,021.

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Speaker 2
The chain's done just about everything possible to get folks in the door think revamped menus and marketing collaborations with sports superstars. But one thing Subway has tried to do to boost sales may not be all that it's sliced out to be. A commercial that debuted last year explained the change.

02:11
Speaker 3
Subway refreshed their ingredients, their menu, and now they're slicing their meats fresh. That's why their new Subway series subs are profurb by this chance.

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Speaker 2
Previously, meat would be sliced at central warehouses and then shipped to retail locations. But as Steph Curry said, that's all changing. Meat slicers have arrived on the doorstep of Subway's 20,000 locations. The goal? Lower costs over time and, well, trying to make customers feel like they're getting the absolute freshest ingredients. Unfortunately for Subway, the move so far has not been the best thing since sliced bread meat. According to reporting from outlet restaurant business online, the slicers have not yet been proven to drive sales or profitability. According to some franchise owners that spoke to the outlet. Those promised cost savings have yet to arrive, and the slicers have added to operating costs, according to some franchisees. Some operators report it takes more time to slice the meat and clean the machines, costing them more for labor.

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Speaker 2
Subway, for its part, recognizes that the slicer experiment's still new and that customers overall much prefer meat sliced in house. But some franchisees say there's no data to support that evaluation. One thing appears clear, though. Folks are deeply divided on Subway's latest party trick, particularly some folks who are die hard fans of one of the brand's rivals, a certain New Jersey based subchain. Jersey, Mike's one opinion writer noted on NJ.com, slices its meat on a per sandwich basis. Subway, meanwhile, appears to slice a bunch of meat in the morning and use it throughout the day. The writer went on to say that changing one thing about how its sandwiches are made isn't going to do much if the sandwich itself is, quote, tepid and unappetizing. Ouch.

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Speaker 2
How these subwars play out, well, we'll have to wait and see, but it appears that no matter how you slice it, Subway still has some challenges ahead of it. From wondery this is business wars daily. I'm your host, David Brown. Written and produced by Jessica Yarlaski. Our executive producers are Tina Rubio and Marshall Luton. Hey, Prime members, you can listen to business wars daily ad free on Amazon Music. Download the Amazon Music app today, or you can listen ad free with Wondery plus in Apple Podcasts. Before you go, tell us about yourself by completing a short survey@wondry.com.

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Speaker 4
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Speaker 4
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