Last spring, we pointed out that, for the first time in its 52-year history, Subway had contracted in 2016, shuttering 359 US locations which, as Bloomberg explained, was the “biggest retrenchment in the history of the restaurant chain.”
Since then, the outlook for Subway has only deteriorated. The chain, which holds the title of “most ubiquitous fast food chain in the US,” is facing the largest sales slump in its history, driven no doubt by the advent of healthy eating trends that have pushed consumers toward low-carb and less-salty foods.
Sales fell 4 percent last year after a 1.7 percent drop in 2016, according to industry researcher Technomic.
To try and revive growth, the chain is now offering steep discounts on meals.
The chain, Bloomberg explains, will now allow customers to use their rewards of up to $2 on any menu item, lifting restrictions that existed under its previous program. The new system, which will expand to 28,500 US and Canadian locations next month, will offer good customers free cookies and chips, as well as allow them to pay for their food with a mobile app.
Subway’s loyalty program has existed, in some form, for years. But Subway executives felt they needed to do more to win back customers. The chain is notorious for being one of the cheapest fast-food restaurants to open, with potential franchisees only need to show liquid assets of $30,000 and a net worth of $80,000.
“It made sense for us to revisit our loyalty program,” Chief Digital Officer Carissa Ganelli said in an interview. “We’re putting the customer first. We have to be everywhere they are and engage with them how they want to engage.”
The chain, of course, has also endured its fair share of public-relations blunders in recent years. The company was widely criticized last year after DNA tests revealed that the chicken in its chicken sandwiches was mostly soy filler. Also, the company’s former pitchman, Jared Fogle, is presently serving a 16-year prison sentence for possessing child pornography and for crossing state lines to pay for sex with a minor.
As Bloomberg points out, closely held Subway is relying on technology to reverse the decline, making it a latecomer to the technology world. Last year, the company introduced a new mobile-phone application and started adding touch-screen kiosks in its restaurants. The new rewards program will also represent a significant expansion, since rewards are currently only available at about one-third of North American locations. The company’s millions of existing rewards members will be automatically enrolled in the new program, which was intended to “reward our most valuable customers.”
Of course, given the combination of shifting eating trends and the broader malaise in Subway’s segment of the food service industry, even these changes might not be enough to reverse sales for the closely held private company.
via Zero Hedge http://ift.tt/2HI6JtH Tyler Durden