Two decades ago, the sandwich giant Subway added toasters to its restaurants in a bid to fight off rival Quiznos, which was growing fast and gaining market share.
This year, Subway is planning to do something similar. The company told Restaurant Business this week that it plans to add automatic slicers in all 22,000 of its restaurants over the coming year. It will add them by region starting this year, with the goal of having them in each location by next summer.
Subway plans to pay for the slicers, made by the German company Bizerba. It would not say how much the effort will cost. Yet it represents the latest in a series of massive menu improvements and its biggest equipment addition since those toasters.
“In five decades worth of sandwich making, we’ve explored many things, tested many things, tried many things,” Trevor Haynes, president of Subway North America, said in an interview. “This is the natural next step of the evolution of the U.S. business and operations.”
Subway CEO John Chidsey announced the move to franchisees at the company’s franchise convention in Las Vegas last week.
Subway will slice meat in the mornings and in the afternoons, rather than slice the meat to order like fast-growing rival Jersey Mike’s. Restaurants may also slice meat again as needed later in the day. Unused meat can be used again the next day.
The slicers are automatic, so employees simply press a button and the machine does the rest of the work. “It’s not like the old handheld deli slicer,” Haynes said. “It’s all automated.”
The slicers will be out front so customers can see the process. Initially, restaurants will slice turkey, ham, salami and pepperoni “to see what we learn.”
Right now, Subway’s meats are sliced at a central facility and shipped to the restaurants. Haynes said the change will lower food costs because it won’t have to pay for the meat to be sliced, and there are more supplies of unsliced meats available.
“It allows us to work with other vendors,” Haynes said. “That could help reduce costs for franchisees.”
Subway, like many restaurants, saw its costs for meat soar in the first half of the year—far more than expected.
Because the slicers are automatic, Haynes said, they won’t require additional labor inside the restaurants. The company has been testing the slicers in various markets. Employees slice the meats in the morning while they’re preparing food for the day. “We haven’t seen any increase in labor,” Haynes said.
“Inflation has eroded some [food cost] savings,” he added. “But we should see some sort of savings in food costs for franchisees without increasing labor.”
The new procedure does add some work inside restaurants at a time when labor remains in relatively short supply and there are more demands on the employees. But Haynes said tests have not indicated any issues. “We had some reservations about how difficult this would be for restaurants,” he said. “But it’s been very smooth and very positive.”
He also said that it should improve the company’s reputation for freshness, as customers over time notice the freshly sliced meat.
Subway has been working to improve its reputation for quality over the past two years, hoping that bolstering its reputation can bring customers back in the door. U.S. system sales declined from a peak of $12.3 billion in 2013 to $10.2 billion in 2019, according to Restaurant Business sister company Technomic. In 2020 they fell off a cliff to $8.3 billion. They recovered somewhat last year, growing to $9.3 billion.
The problem for the chain has been low unit volumes, which were $434,000 last year, according to Technomic, and store closures. The chain has just over 21,000 restaurants, down from a peak of 27,000.
Meanwhile, rivals Jersey Mike’s, Firehouse Subs and Jimmy John’s have been gaining share. Jersey Mike’s in particular has seen sales grow 70% over the past two years. Firehouse was just sold to Burger King’s aggressive owner, Restaurant Brands International.
To fend off its rivals, Subway has made numerous changes to its menu in a bid to improve its reputation for quality and get customers back in the door. It announced an “Eat Fresh Refresh” last year, using star athletes like NFL quarterback Tom Brady and NBA superstar Steph Curry to market several improvements to ingredients, including its bread.
This year, it introduced 12 new subs, called the “Subway Series,” with hopes that it could reduce its reliance on customized subs.
Those efforts appear to be working. The company generated its strongest average unit volumes in years in 2021 and, according to the consumer traffic data firm Placer.ai, traffic to the chain’s restaurants has been up for most of the year.
“It’s surpassed our expectations,” Haynes said. “It’s been very, very well received.” He noted that there are some other popular sandwiches, such as the BMT, Chicken Teriyaki and the Tuna, that it is considering adding to the series of sandwiches. “It was absolutely the right thing to do,” he said.
Subway plans a gradual rollout of its slicers by region this year, in part because of manufacturing limitations. “Nobody has 22,000 slicers,” Haynes said. “They’re just not available.”
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