Author Topic: Going off track: Subway franchisees decry deep discounts as hospital-bound CEO struggles to right course  (Read 428 times)

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Offline Cincinnatus

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This summer wasn’t the best time for Subway sandwich shops — the world’s largest restaurant chain— to stumble.

Founder and owner Fred DeLuca — the driving force and vision behind the Milford, Conn., chain’s growth into a 40,000-unit chain — is in a Connecticut hospital getting treatment for leukemia and, he has told associates, is awaiting a bone marrow transplant.

Still, the 65-year-old billionaire businessman is directing the chain’s operations from a hospital bed.

The hands-on owner is still in daily contact with regional managers trying to find new ways to reverse the sales decline, a Subway development agent told The Post

Same-store sales at the closely held company dipped 2 percent last month and are down over the last several months — the first declines in recent memory, sources close to the company tell The Post.

Faced with the business setback, DeLuca is not letting his hospital stay stop him from continuing a recent discount marketing blitz aimed at igniting revenue growth, the sources said.

DeLuca in June launched a $4 lunch special — a six-inch sub, beverage and chips — and plans the re-introduction next month of its popular $5 footlong campaign.

But the plans are not going down well with many of its franchisees.

At that price, franchisees complain, they just barely cover their costs.

DeLuca, sources said, feels these multiple promotions are necessary to reverse the recent declines at the 48-year-old chain.

John Gordon, who runs the Pacific Management Consulting Group, said Subway’s 2 percent same-store sales decline came as McDonald’s and Wendy’s saw slight increases.

For the moment, Brooklyn-born DeLuca is ignoring the pushback from the franchisees.

“There are not any subway owners who like it,” a franchisee who owns thee stores told The Post. “Everybody is pissed off.”

Margins at a typical store, where revenues are about $400,000 a year, are now between 8 percent and 10 percent, the franchisee said.

the world’s largest restaurant chain Subway has more retail outlets than any other restaurant chain, including McDs.
We shall never be abandoned by Heaven while we act worthy of its aid ~~ Samuel Adams

Offline Rapunzel

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We have three in our town and "only" two McDonalds.    I had subway for dinner as a matter of fact.
“The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves.” G Washington July 2, 1776

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