Franchisees are rebelling against Subway’s new value agreement for fear it will lead to losses.
The chain has launched a $6.99 deal on 12-inch sandwiches until Sept. 8 in an attempt to attract cash-strapped consumers.
But Bill Mathis, president of the North American Association of Subway Franchisees (NAASF), reportedly told members of the group to ignore the promotion.
‘If your franchise agreement allows it, DO NOT PARTICIPATE in the $6.99 promotion,’ Mathis urged franchisees in a private blog post viewed by The New York Post‘NAASF recommends opting out.’
The group is the largest in the United States and represents some 2,500 franchisees operating approximately 10,000 Subway restaurants nationwide.
The chain has launched a $6.99 sale on 12-inch sandwiches through Sept. 8 in a bid to attract cash-strapped consumers.
Franchisees of most Subway restaurants in the US have contracts signed before 2021 that allow them to opt out of promotions, The NY Post reported.
In the blog post, Mathis criticized Subway’s management under CEO John Chidsey and questioned how franchisees could break even with the promotion.
Franchisees typically charge between $11 and $17 for a 12-inch sandwich.
Subway’s $6.99 deal is the latest in a series of cheap 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 in break-even analysis,” Mathis wrote.
‘Some people believe that the increase in traffic needed to break even on this promotion is up to 30%.
“If this is accurate or even halfway accurate, have you seen any promotions that have generated that kind of increased traffic among Subway’s current leadership group franchisees?”
One franchisee with about 25 stores that is honoring the promotion said 20 percent of customers at one of its busiest locations ordered the $6.99 sandwich.
However, he said traffic at that same store was unchanged from the previous week.
“McDonald’s doesn’t include a Big Mac on its $5 menu, but it does include all of our best-selling sandwiches,” another franchisee told The NY Post.
“We could do a third or half of the menu and not miss out on this promotion.”
Bill Mathis, president of the North American Association of Subway Franchisees (NAASF), has reportedly told members of the group to ignore the $6.99 promotion.
Franchisees typically charge between $11 and $17 for a 12-inch sandwich.
Subway sales are reportedly down 5 to 10 percent in some regions.
The $6.99 offer was revealed to franchisees last month during a conference call that one of them called an “emergency meeting,” according to The NY Post.
Fast-food chains have suffered over the past year as Americans, tired of inflation, have eaten out much less.
But Subway has been hit particularly hard, with sales down 5 to 10 percent in some regions.
The chain has closed locations in recent months and now has about 20,000 restaurants across the United States, down from more than 27,000 in 2015.
An invitation from the company sent to local shop owners said the corporation would explain plans to win back customers and increase its faltering market share.
“This conference is essential,” the invitation, which was obtained by The NY Post, said. “Join us… to discuss the state of the industry and get an update on our business.”
A spokesperson for the chain denied the conference was an emergency and instead insisted that “we are constantly and proactively communicating with our franchisees to share updates and business plans.”
