The American fast-food giant Subway has called an emergency meeting in the face of a sales crisis. The multinational franchise group has initiated this meeting with its 19,000 restaurants across North America. As the New York Post reported, Subway branches have suffered negative changes in their profits and sales.

What happened?

In April 2024, Subway sold its franchisee to Roark Capital, which operates and owns Cheese Factory, Dunkin’, Baskin Robbins, Arby’s and others. Subway, a new addition to Roark Capital, had been sold to the company for $9 billion. Due to recent setbacks, Subway has informed all franchisees that they need to restructure their plans and develop strategies to revive customer traffic and regain lost market share.

In its recent invitation to its franchisees, Subway wrote, “The conference is a must-attend event.” The invitation also said, “Join us… to discuss the state of the industry and hear updates on our business.”

A Subway franchisee with nearly 20 stores has commented on the current situation, according to The Post. A spokesperson mentioned that his store sales have dropped by 5 to 10% in these few weeks, which is reportedly more than they will see in 2023. He blamed this on Subway’s recent price promotions and discounts, which have led to a significant drop in customer traffic.

“They’re doing crazy coupons,” he pointed out. “Our gross sales aren’t even where they were in 2012, and profits were five times what they are now.” Subway was also criticized for “charging $6.99 for each sandwich when it’s only $11 on the menu” and “offering three sandwiches for $17.99.”

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What was reported about the sale?

Although Subway reportedly does not disclose its nationwide sales figures, the outlet reported that about 1,000 Subway stores in the Eastern U.S. saw a weekly sales decline of 8.7 percent between June 25 and July 16.

Restaurant consultant John Gordon also claimed the meeting was “very unusual.” He also reported that sales at Subway stores across the West and East coasts were down 10%. In Los Angeles and San Diego, store sales were down 8%, and in the Southern California suburbs, sales were down between 2% and 5%.

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What seems to be the problem?

Last year, Subway reported that its sales in North America had increased by 5.9%. This year, however, sales have fallen significantly. The culprit for this situation was said to be price reductions on best-selling products. There seems to be no way to make up for the lost profits.

Subway reportedly hoped to increase customer traffic by offering a 12-inch Hot Dipper for $3 in June, expecting to increase in-store sales, but sources claimed they did not sell enough of the product.

Last year, Subway stores offered sidekicks like 12-inch cookies, pretzels and churros, which boosted sales despite a 1.7% drop in customer traffic. This year, however, the trick doesn’t seem to have produced the same results, and customers are no longer keen on the scheme.

Now Subway is strapped for cash. The company, which sold itself to Roark, now only earns money through the 8% royalties paid by its franchisees. The Post reports that they can no longer afford a drop in profits as they face interest payments on their debt following their recent sale to Roark Capital. It is indeed tough times for the popular fast-food chain, and the “emergency” meeting seems to be the only way out of their horrific failure.