Subway left the door open, and Jersey Mike's burst in

As Subway's dominance has eroded over the past decade, Jersey Mike's has rapidly gained market share in the sub-sandwich restaurant category, setting the stage for an eventual takeover.
Image by Nico Heins

Subway’s challenges over the past decade have opened a gaping door for competitors in the sandwich market, and Jersey Mike’s has waltzed right in.

In just five years, Subway has watched its share of the market for sub sandwiches erode by 10 points.

Much of that—but not all—went to the fast-growing Jersey Mike’s, which has seen its share of that market double.

The shift in share could before long threaten to fully upend the sandwich market much in the same way that Chick-fil-A overturned the chicken business.

The sandwich category of the restaurant industry is broad, encompassing not just sub-sandwich brands like those but also concepts like Arby’s, Portillo’s, Panera Bread and Paris Baguette.

For these purposes, however, we narrow that down to brands that specialize in sub sandwiches similar to those at Subway or delis such as McAllister’s. It is a mix of both fast-casual chains and quick-service brands.

It’s a market that Subway has dominated for a long time. The brand is the most prolific restaurant chain in the U.S. and grew to include 27,000 locations domestically alone. The brand also contributed to the downfall of some key rivals, notably Quiznos, which shrunk from 4,700 restaurants in 2008 to just 142 locations at the end of 2023.

At its peak, Subway accounted for 70% of the market for sub sandwiches or more.

Yet a combination of oversupply, weak average unit volumes, rising costs and marketing and leadership challenges led to widespread closures. The company has closed 7,000 restaurants since 2015. But, to give you a sense of just how prolific Subway is, the chain still has 4,000 restaurants more than the next largest chain by units, Starbucks.

The unit closures have wiped out any sense of invulnerability that Subway once enjoyed.

Subway’s U.S. system sales grew by 2.1% last year, continuing its gradual recovery from the pandemic. But it remains below where it was in 2019 and far below its peak.

Meanwhile, a host of other chains have stepped into the void. The average sub-sandwich chain grew system sales by 8.3% last year, according to Technomic data.

Subway’s market share has shrunk from 56% in 2019, for instance, to 46% last year, according to Restaurant Business calculations of Technomic data.

Jersey Mike’s, meanwhile, has been on fire. The chain’s system sales have increased 151% since 2019, adding $2 billion in total sales through a combination of new locations and average unit volumes.

Its share of the sub sandwich market has increased from 7.3% in 2019 to 15.5% last year. System sales at the chain grew 25% in 2023.

Subway, with just under $10 billion in system sales, is three times the size of the $3.3 billion Jersey Mike’s. But 20 years ago, KFC had more than three times the system sales of Chick-fil-A.

Today, Chick-fil-A is four times the size of KFC U.S.

Subway’s U.S. sales are likely to be flat for the foreseeable future as franchisees close stores. Assuming Jersey Mike’s keeps growing as it has for the past several years, there’s no reason to think that it won’t overtake the once-dominant name in the market. And that day may not be all that far off.

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