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Subway franchisees are voicing concerns over the sandwich chain's recent $6.99 footlong promotion, which they argue harms their profitability. The deal, which offers a footlong sub for $6.99, has sparked a revolt among franchise owners who claim that the low price point is unsustainable given the rising costs of ingredients and labor, the New York Post reported.
The North American Association of Subway Franchisees (NAASF), an organization that represents about 2,500 Subway franchisees, argues that Subway's corporate leadership is pushing the promotion without adequately considering the financial strain it places on individual store owners.
The $6.99 footlong promotion is the latest in a series of corporate initiatives that have drawn criticism from franchisees, who feel that their input is being ignored in favor of aggressive pricing strategies. Many franchisees are already grappling with narrow profit margins, and the $6.99 footlong deal — on a sandwich that usually sells for $11 to $17 — exacerbates these challenges.
"If your franchise agreement allows, DO NOT PARTICIPATE in the $6.99 promotion," Bill Mathis, NAASF chairman, urged franchisees in a private blog post on Sunday, according to the Post. "NAASF is advising to opt out."
Franchisees are also calling for greater autonomy in decision-making and for corporate promotions to consider their financial well-being. The outcome of this conflict could have broader implications for the fast-food industry, as it underscores the delicate balance between corporate strategies and franchisee profitability. For Subway, addressing these concerns is crucial to maintaining a strong franchise network and avoiding further discord within its ranks.
Subway convened an urgent meeting on August 15 with its North American franchisees amid growing concerns over declining sales and profitability, the Post previously reported. Company data from multiple regions indicates significant drops in same-store sales, with some areas seeing declines as steep as 10% compared to the previous year, the paper reported. These challenges come as Subway faces additional financial pressures, including interest payments on debt from its recent sale.
The situation at Subway is unique, but the brand has not been immune to broader struggles within the fast-food industry. Many chains are engaged in fierce competition to attract inflation-weary, cost-conscious consumers. Competitors like McDonald's, Taco Bell and Wendy's have also introduced aggressive pricing strategies with mixed results.
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Read More: New York Post
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