Subway Making a Turnaround
The potential buyers of Subway‘s business will now find the business tastier as the company reported an increase in the same-store sales volume. This comes after the company took measures to turn its business around – indicating the successful execution of these measures.
CNBC reports that although the sandwich chain is a privately-held company, it periodically posts data on its sales and revenue. This is in line with its decision to explore possibilities of selling the chain. This privately-owned business is aiming at a $10 billion value for its chain.
Subway Hired Bain In 2018
Back in 2018, the firm found itself in a dire position when its businesses were failing. So much was the downturn that Subway had to experience a 25% drop in customer-traffic compared to 2012-2017 levels. It was in this situation that the chain hired Bain & Company to improve how it operated.
The Turnaround In 2022-23
It seems that the turnaround strategies employed by the leadership at Subway have shown good results. According to the statement by the CEO of the company, John Chidsey, the chain has clocked record sales in the past couple of years.
The usage of his words – “getting its swagger back” – it seems like the firm is trying to look as attractive – both from a financial point of view and from a pop-culture point of view to get the attention of prospective buyers.
According to the CNBC report, the restaurant has seen growth in sales for eight months back to back, with online sales clocking a threefold increase. Same-store sales in North American locations increased by 7.8% last year.
Increase In Prices and Ad Spend
Apart from restructuring its operational processes, the American fast food restaurant franchise also increased the prices of its product. Since the company does not provide a robust revenue report, it is hard to say how much this price increase is responsible for the stellar turnaround of the business.
The chain, after the new CEO took over, decided to increase its ad spending. Not just traditional ads, Subway employed smart ad placements in Korean dramas to increase its visibility and recall value.
Challenges
As with other food chains, one of the biggest challenges in front of the company is to get an adequate number of workers. After the pandemic, fast food chains and restaurants are having a hard time attracting waiters and store sales executives.
This can directly affect the operations of the chain. Secondly, aside from attracting potential buyers, Subway has to change the perception of its retail customers. A quick visit to Reddit-chat threads about Subway shows that the customers find Subway rather uninteresting. This is why the CEO’s urge to bring the “swagger” back looks relevant.
As a chain with more than 50 years of history has seen many downturns. Subway can shake off its years of dwindling sales thanks to its experience.