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Subway’s big problem: Its customers dine alone

Customers don’t get excited about the chain, according to recent data, and that’s an issue, says RB’s The Bottom Line.

The Bottom Line

Subway’s customers apparently like going there alone, and that’s a big problem for the chain as it searches for strategies to reverse its sales decline.

According to Technomic Consumer Brand Metrics data, 52% of recent Subway customers visited the chain alone.

That’s a lot. By contrast, the average number of solo visits for sandwich concepts is 35%. According to Robert Byrne, senior manager of consumer insights with Technomic, only four concepts had a higher percentage of solo visits: Au Bon Pain, Dunkin’ Donuts, Starbucks and Einstein Bros. Bagels.

Those chains are largely focused on morning or commuter visits, Byrne says. Subway is a sandwich concept.

“It’s a big problem, from my perspective,” Byrne says. He says that the company’s ads focus on individual orders and add-ons, especially beverages, “and say nothing about Subway as a fun group destination.”

“The advent of the millennial family means you need to offer more than just low prices to be at all relevant,” Byrne says.

The higher percentage of solo diners has likely played a role in customers’ general ambivalence toward the chain, based on Technomic data. For instance, 39% of Subway customers either disagree or are ambivalent about the statement that “Subway is unique.” That’s higher than the 36% average for quick-service chains.

And the percentage of customers who ranked their experience as “Excellent” at Subway fell to 47%, from 51% a year ago. That 47% is substantially below the 56% average for sandwich chains.

Solo visits consistently result in lower satisfaction metrics, Byrne says.

The numbers are disconcerting at a time when the restaurant industry is largely oversupplied. Consumers have many choices in their lunch and dinner options. If one concept doesn’t do the job, diners will pick something else.

There are lots of sandwich choices these days. Subway has growing competitors in the form of Jimmy John’s, Jersey Mike’s and Firehouse Subs. Delivery is also taking a bite out of the chain’s business. So is Chick-fil-A.

Subway’s U.S. system sales declined 4.4% to $10.8 billion in 2017, according to Technomic's Top 500 Chain Restaurant Report. Unit count declined by more than 800 locations, and the company expects more closures this year, as operators struggle with low unit volumes.

Suzanne Greco resigned as the chain’s CEO earlier this year, and Trevor Haynes was named interim CEO, with Subway conducting a search for Greco’s replacement. Subway faces complex challenges in its bid to recruit that successor.

To be sure, Subway is working on a number of issues to fix its sales. It introduced wrap sandwiches earlier this year. It has started remodeling locations to make them more inviting.

But Subway has had some marketing challenges in recent years, especially since the 2015 arrest of longtime spokesman Jared Fogle, and its shift away from its popular $5 Footlong and inability to develop a strong replacement value offering.

Perhaps marketing improvement could lead to a change in the way customers use the chain.

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