Shuttering a huge number of Stores
Subway is now shuttering a huge number of stores, and new reports reveal that the mass closures have just brought the chain to its smallest size in almost two decades. The company has been struggling financially for years, and right now executives are trying to sell the decaying franchise to the highest bidder. The retail apocalypse, recent controversies, and higher competition are just some of the issues that are devastating the largest sandwich shop chain in the world, and in today’s video, we decided to expose what is truly behind Subway’s downfall.
The chain’s financial problems are well documented. The company overexpanded, often forcing franchisees to build stores near existing locations. The sheer number of restaurants meant that each individual store generated less revenue per unit. And that started to erode Subway’s operations from within.
After years of facing increasing operational costs, falling sales, and declining profitability, many franchisees had no other choice but to start eliminating the stores that were reporting disappointing financial results. According to data released by Reuters, over the past 12 months alone almost 600 Subway restaurants closed doors in the US. But these closures are added on top of the thousands of stores the franchise shuttered in recent years.
Citing over-expansion, outdated operations and decor, stale menus, and $5-footlong deals that hurt profits, the chain closed over 1,000 in 2021 and 1,609 in 2020, according to an April 25 disclosure document obtained by Reuters that Subway provides to franchisees interested in purchasing locations. Since 2016, more than 6,500 Subway restaurants, or one in every four locations, have disappeared from the US market, as reported by Restaurant Business.
In 2023, Subway’s store Count hit the lowest total since 2005, and franchisees continue to report growing problems inside the company, with some of them exposing that the fast food giant charges operators markups of up to 700 percent on products.
The worsening problems between corporate executives and franchisees, mass closings, financial difficulties, and a dozen lawsuits have greatly accelerated the demise of the fast food titan. Now Subway is trying to sell its business to the highest bidder.
In May, dozens of multi-unit operators – the more sophisticated, financially sound franchisees that Subway desires – examined the possibility of entering the chain’s system by buying swaths of restaurants but walked away after seeing how little money they made, according to two of their advisers.
Although Subway has not revealed the average annual sales volume for its U.S. restaurants, industry experts and insiders estimate the figure is less than $500,000, which would make it one of the lowest in the entire industry. Rival sandwich shops Jersey Mike’s and Firehouse Subs generate more than $1.1 million and $900,000 respectively, according to QSR Magazine.
For now, no one has shown interest in saving the struggling chain. It will be hard to find a buyer that would want to get involved with the company’s mess. It is looking like Subway’s empire is crashing down right before us, and what we’ve seen so far is surely just the beginning of its collapse.
Credit to : Epic Economist