Subway is turning to an old idea to get new customers: The Sub Club.
The fast-food sandwich giant is bringing back the “Sub Club” as part of a reconfigured loyalty program designed to drive much needed traffic into the chain’s restaurants.
Under the program, customers can buy any combination of three Footlong Subs or six 6-inch sandwiches and get a Footlong sub for free. Customers can also earn points that can be converted into “Subway Cash” to save money on a future orders.
The program also provides members with exclusive offers and promotions while keeping perks such as free birthday cookies.
“Loyalty is becoming the new battleground,” Damien Harmon, president of North America for the Miami-based Subway, said in an interview with Restaurant Business. “With the economy tightening, repeat visits matter more than ever for every consumer and every QSR brand. A meaningful loyalty ecosystem drives higher frequency and store profitability.”
Subway operated its “Sub Club” program for decades. Customers collected stamps for every six-inch sandwich they bought and received a free sub once they collected eight stamps.
That program ended in 2005 after counterfeiters printed and sold copies of those stamps, a practice that largely ended stamp-collecting loyalty programs during that era.
Subway in more recent years operated with a more modern and traditional MVP Rewards loyalty program that gave customers 10 points for every $1 spent.
Yet the company announced new management last year, including CEO Jonathan Fitzpatrick, and much of the company’s executive team has turned over in the past few months. In August, the company brought in Harmon, a former Best Buy executive, to head North America.
Harmon’s charge is to return Subway to growth, which is a tall order. The chain has closed about 8,000 locations in the U.S. alone since 2015. A typical unit makes less than $500,000 in sales per year, far less than the volumes generated by rival companies like Jersey Mike’s, Jimmy John’s or Firehouse Subs. At that volume, franchisees struggle to generate a profit or fund remodels and hundreds of locations close every year.
“Our brand thrives on traffic,” Harmon said. “We know that more traffic flowing into a location has major flow-through to franchisees’ profitability. But we have to do it profitably. You can’t erode the brand by discounting too much, which leads to the perception that your product is worth less.”
Harmon met with franchisees in his first week on the job to go over ideas for generating that traffic and one of the ideas was a reconfigured loyalty program. Restaurant chains have been upgrading and changing their loyalty programs in recent years to get better customer data and use one-to-one marketing to get them to come in. But most of those programs are largely points based, in some capacity.
Subway’s Sub Club brings back the more classic idea of buying several items before customers get their reward. “It has to be simple,” Harmon said. “People need to be able to keep track. With points, it’s hard. You always have to check the app. If people don’t understand how it works, they can’t associate value with the program.
“But people do know how many footlongs or 6-inch subs they buy. They know if it’s their fourth or sixth trip because they’re counting dollars and frequency. So we felt attaching rewards to the purchase, not the calculation, would be highly valuable.”
Subway tested different options, such as the number of subs required for a free sandwich. Harmon said the company worked with operators and considered the “economic backdrop,” as consumers demand value and shy away from fast-food chains.
“We debated between five and four” subs, Harmon said. The company ultimately settled on a relatively low number of subs and a larger reward than the old Sub Club provided.
“Collectively, the group said, ‘We need to make sure the brand is relevant. We need to give guests a strong reason to choose us repeatedly, and we want the program to stand out from competition,’” Harmon said.
He added that Subway’s program stands out because it doesn’t just give out free sides or drinks but gives customers the ability to get a free, 12-inch sandwich, so long as they come in enough.
“When you look at competitors, this is the richest, most rewarding program,” he said. “Consumers have counted on Subway for value, and we want to make sure we resonate again as a strong brand that leads the way.”
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