Subway franchisees rebel against value meal deal over concerns it will spark losses

Franchisees are revolting against Subway's new value deal over fears it will spark losses. 

The chain has launched a $6.99 footlong sandwich deal, which is set to run until September 8, in a bid to lure in cash-strapped consumers. 

But Bill Mathis, chair of the North American Association of Subway Franchisees (NAASF), has reportedly told the group's members to ignore the promotion. 

'If your franchise agreement allows, DO NOT PARTICIPATE in the $6.99 promotion,' Mathis urged franchisees in a private blog post seen by The New York Post. 'NAASF is advising to opt out.'

The group is the largest in the US, representing around 2,500 franchisees who operate approximately 10,000 Subway restaurants nationwide. 

The chain has launched a $6.99 footlong sandwich deal, which is set to run until September 8, in a bid to lure in cash-strapped consumers

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Franchisees for most of the Subway restaurants in the US have contracts that were signed prior to 2021 and allow them to opt out of promotions, The NY Post reported.

In the blog post Mathis took aim at Subway's management under CEO John Chidsey, and questioned how franchisees would be able to break even with the promotion. 

Typically, franchisees charge between $11 and $17 for a footlong sub. 

The $6.99 Subway deal is the latest in a series of value meal deals introduced by major chains such as McDonald's and Burger King this year. 

'NAASF has a variety of talented members including those who are quite proficient with analysis of break evens,' Mathis wrote. 

'In some people's opinions, the traffic lift needed to break even on this promotion is as high as 30%. 

'If this is accurate or even half accurate, have you seen any promotion that has brought to franchisees that kind of traffic lift from the current Subway leadership group?'

One franchisee with around 25 stores who is honoring the promotion said that 20 percent of customers in one of his busier locations ordered the $6.99 sub. 

However he said that traffic in that same store was unchanged from a week prior.

'McDonald's doesn't put a Big Mac on its $5 value menu. But we put on all our best-selling subs,' another franchisee told The NY Post. 

'We could do one-third or one-half of the menu and not be killed by this promotion.'

Bill Mathis, chair of the North American Association of Subway Franchisees (NAASF), has reportedly told the group's members to ignore the $6.99 promotion

Typically, franchisees charge between $11 and $17 for a footlong sub

Subway sales are reportedly down sales down between 5 to 10 percent in some regions

The $6.99 deal was revealed to franchisees last month during a conference call which one franchisee dubbed an 'emergency meeting,' according to The NY Post.

Fast food chains have suffered in the past year as inflation-weary Americans have eaten out a lot less. 

But Subway has been particularly badly hit, with sales down between 5 to 10 percent in some regions. 

The chain has closed locations in recent months, and now has around 20,000 restaurants across the US, rather than more than 27,000 in 2015.

An invite from the company sent to local store owners said the corporation would explain plans to win back customers and boost its faltering market share.

'This conference is essential,' the invite, viewed by The NY Post, read. 'Join us… to discuss the state of the industry and an update on our business.'

A spokesperson for the chain denied that the conference was an emergency, instead insisting 'we consistently and proactively communicate with our franchisees to share business updates and plans.'