Subway's Shrinking Footprint: The Struggling Sandwich Giant

May 4, 2025 - Business

Subway, once the largest fast food chain in the United States, continues to experience a decline in its domestic presence. The sandwich giant closed more than 600 locations in 2024, leaving it with 19,502 restaurants across the country. This marks the eighth consecutive year of decline for the chain, which peaked at around 27,000 locations in 2015.

A Declining Presence

Subway's decline in the US market is a result of various factors, including growing competition, shifting consumer preferences, and lower average sales compared to its rivals. The chain has struggled to maintain its market share, with its average unit volumes remaining low compared to other fast food chains. In 2024, Subway's average unit volume was $490,000, a mere 1% increase from the previous year, despite a 4% increase in menu prices.

Competition and Changing Consumer Preferences

The fast food landscape has become increasingly competitive, with new players entering the market and existing chains adapting to changing consumer preferences. Subway's traditional business model, which relied heavily on in store dining, has been disrupted by the rise of delivery and online ordering. The chain has attempted to adapt to these changes by introducing new menu items and improving its digital presence. However, its efforts have been hindered by its low average unit volumes, making it challenging for franchisees to maintain profitability.

International Expansion

Despite its decline in the US market, Subway has found success internationally. The chain has more than 10,000 units in its international pipeline from deals struck over the past three years and now operates nearly 37,000 restaurants worldwide. This global expansion has helped Subway maintain its position as one of the largest fast food chains in the world.

Rebranding Efforts

Subway has been working to revamp its brand image and improve the customer experience. The chain introduced a new store design, "Fresh Forward 2.0," which features vibrant décor elements, localized messages, and improved seating. Additionally, Subway has focused on value, introducing promotions such as the $6.99 footlong deal for the entire month of May. These efforts aim to attract budget conscious customers and drive sales.

Financial Performance

Subway's financial performance has been impacted by its declining domestic presence. The chain generated $9.5 billion in system sales in the US in 2024, a 3.8% decline from the previous year. This decline has contributed to Subway's drop in the rankings, falling from No. 8 to No. 9 on the Top 500 restaurant chains.

Future Prospects

As Subway continues to navigate the challenging fast food landscape, its future prospects remain uncertain. The chain's ability to adapt to changing consumer preferences and improve its average unit volumes will be crucial to its success. While its international expansion has provided a boost, the decline in its domestic presence poses a significant challenge. With the coffee giant Starbucks closing in on its unit count, Subway must act quickly to revitalize its brand and restore its position as a leader in the fast food industry.