Subway is moving south.
The Milford, Conn.-based sandwich giant is moving some of its operations to Miami, the company acknowledged on Friday.
Miami also happens to be near the home of CEO John Chidsey, who took over operations at the chain in 2019.
“A Miami presence allows us to keep our finger on the pulse of more cultural conversations and the evolving tastes of the modern consumer,” the company said in a statement. “With its dynamic business climate, diverse population and multicultural influences, it is the ideal place to transition some of our consumer-facing roles.”
The company also said that Miami is home to the Independent Purchasing Cooperative, Subway’s franchisee-owned purchasing coop in the U.S. and Canada. “The proximity will enable even stronger integration between us and our supply chain,” Subway said.
The move is expected to lead to some layoffs. According to a memo obtained by Restaurant Business, the areas moving to Miami are in the chain’s marketing and culinary teams and its global transformation teams. The company plans to make the move in the spring of 2022.
Subway in its statement said most of its employees will remain in Milford. “While there are planned staffing changes, the majority of the workforce will remain at the Milford, Conn., headquarters,” the company said. “We are working with affected individuals to provide the appropriate transition tools.”
The New York Post first reported the move.
Subway’s second corporate office is only the latest major change for the chain over the past several months that has included hundreds of layoffs, a massive executive overhaul, further store closures and the buyouts of some of the company’s area developers.
Chidsey arrived at the chain with a clear intent on making changes. After laying off 300 workers in Milford, he told remaining employees at a meeting that the layoffs were done to give the company a sense of urgency about the need to fix its problems. He also said he wanted the company to act more “entrepreneurial.”
Subway has struggled with weak sales for years and more recently franchisees have been closing in droves—more than 4,000 locations have closed in the past three years alone, or close to 17% of the chain’s units.
Subway laid off more people after the outset of the pandemic, which has hurt company revenues. The company reported $476 million in royalty income in the first nine months of 2020, according to its most recent franchise disclosure document. That puts it on pace for a 24% decline for the full year.
It also suggests that franchisees’ same-store sales fell 16% during the course of the year—which almost certainly is the reason for the increased pace of closures. Subway franchisees operate all the chain’s locations, now fewer than 22,000, and their unit volumes going into the pandemic was an already-low $400,000—meaning many of them struggle to stay open.
Subway is not the first restaurant chain to either open a secondary headquarters or move them altogether. Some of these moves, such as McDonald’s move from suburban Oak Brook, Ill., to Chicago and Chipotle’s move from Colorado to California, were done in part to change corporate culture. Papa John’s, meanwhile, is opening a second headquarters in Atlanta to be in more of a restaurant hub.
Miami, meanwhile, is home to Chidsey’s former chain—Burger King, as well as its sister company Popeyes Louisiana Kitchen.
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