The rise and decline of Subway, the world’s biggest food chain | Hacker News Reader

The rise and decline of Subway, the world’s biggest food chain

thestar.com

41 pointskareemm57 comments

It is illustrative to read through some of the franchisee message boards where Subway owners talk. From what I recall, the margins are incredibly low and profits hinge largely on "combo" chips and drinks deals.

Subway is getting hit high and low: high from fast casual, low from convenience stores which can add in sandwiches made on premises (small remodels, no rent or significant additional overhead, ability to leverage existing business infrastructure).

Minimum wage laws will sink a lot of these franchises soon. One immigrant-owned Subway in my area seems to be surviving only by stretching vacation visa laws with a rotating cast of visiting relatives working the line. It's no coincidence that it is in the same strip mall as a couple of nail salons.

> convenience stores which can add in sandwiches made on premises (small remodels, no rent or significant additional overhead, ability to leverage existing business infrastructure).

All the Subways around where I live are part of a gas station & convenience store.

From my conversations with some of my clients (who supply Subway franchisees with equipment), the $5 foot longs were virtually sold as loss leaders for the chips and soda. The franchisees were killed by people that bought only the sandwiches and ran.

Imo Subway is losing because it's the world's slowest fast food. I do enjoy Subway, but (at least here in germany) you can't get it delivered, and the process of pondering and ordering and watching them slowly put it together is excruciating and pointless exercise in standing around and wasting time, especially when you've watched it 4 times already with the people in front of you.

Totally agree. I always felt that Subways offer was too low and couldn't scale well. It takes too much manpower to make a single meal and their work is hard to parallelize. When they introduced the inefficient microwave type toaster to compete Quiznos it just made matters worst.

It's a poor value proposition compared to any local sandwich shop (Ike's in NorCal, Firehouse, Potbelly, &c), because their food is lowest-common-denominator with no local ingredients, they have those obsesity causing "healthy" low-fat/high-sugar options, and they're not faster. Are they actually cheaper?

It is made of real food and pretty inoffensive, so it's not bad or anything.

That’s a completely different perspective to the German one, by the way. There just aren’t any sandwich shops in Germany (this is obviously hyperbole so don’t you dare correct me on this one) and Subway actually is pretty much unique in that regard. (I don’t think bakeries count, cause their selection sandwiches, besides being much, much smaller, is usually not their main focus and also quite different from what you get in a Subway, though that might be a valid counterpoint depending on your perspective.)

Obviously there are other fast food options with similar parts, most notably probably Döner Kebab, which is very sandwich-like (grilled meat, often pita bread, salad, cabbage, tomatoes, onions, etc., white and red sauce of some description).

I would guess it’s Subway’s main competitor in Germany. Not a chain, since Germany apparently doesn’t do fast food chains. Some cities might have a couple restaurants with the same owner and that’s about it. Now that I think about it that’s actually really weird, but probably not. There are all these chain restaurants in the US and Germany for some weird reason doesn’t really have that at all. It’s either imported (McDonald’s, Burger King, KFC, Pizza Hut) or the odd exception (Maredo, Block House, Joey’s), I guess.

It would be interesting to see whether you could build a national Döner chain in Germany.

One of the things I miss most from the semester I spent in Berlin in college is the little hole-in-the-wall doner stores on seemingly every street. Here in the States, I can find Greek gyros in places, but I really enjoy the Turkish variant better.

I'm a Swiss German who mostly stays abroad nowadays and the three things I miss most is decent sausage[1], decent bread[2] and Doner Kebab.

[1] What is everyone doing with their spare meat parts?

[2] Is bread something that you noticed in Berlin? Or is it just personnal taste? I never had anything that didn't come out of a bakery in a German speaking country that was (a) satisfying and (b) not baguette. Hmm too many negations here. Let me try again - 'The only bread I like abroad is Baguette (sometimes)'. ;-)

On the whole, the food in Berlin was consistently better than what I have found elsewhere. I was there in 2009, and so the dollar was in the tank compared to the euro, but even so, prices were also pretty good.

I do really miss the small corner bakeries and all the different varieties of brotchens. Also the coldcuts - its very difficult to find ham, for instance, that is anywhere near as good as I found in Germany; 95% of what is in U.S. supermarkets is basic boiled Virginia or Polish ham.

Coldcuts is exactly what I mean, but not just ham, also the ones made like sausages we call 'Aufschnitt' - not sure whether it's German or French in origin.

'Aufschnitt' sounds German.

Most typical to what I mean is probably Lyoner (which in English Wikipedia is translated as Bologna/Baloney, however at least the picture doesn't look like Lyoner to me) and Leberkäse. First one originated in Lyon, France, second one in Bavaria. If you get the chance, try some pan fried Leberkäse once.

[1] http://de.wikipedia.org/wiki/Lyoner

[2] http://en.wikipedia.org/wiki/Leberk%C3%A4se

As someone who doesn't eat pork or drink beer, I almost starved in Germany. I survived on Doner and Chinese food the whole time I was there. But hey .. to each their own :D

I can see how that could be a problem, especially if you don't stay in bigger cities and if what you need is not just 'no porc' but kosher or halal.

>It would be interesting to see whether you could build a national Döner chain in Germany.

Uneducated guess: Not easy, because Döner is a quite homogeneous good in comparison to pizza or Burger (as long as you don't change the current offerings). At least that has been my experience. You can grab a Döner everywhere and it's usually good. The same can't be said about burgers (Kochlöffel ugh).

Aren't fast food places in northern Europe really expensive compared to the local kebab stands too?

> Not a chain, since Germany apparently doesn’t do fast food chains.

Most countries don't, I think it's pretty unique to America. In Asia there are many chains but there's also small family-run restaurants and local coffee shops everywhere. Was going to say something about supply chains in the Midwest, but it's probably just American highway culture and the zoning system making it too hard to run a local place…

Out here in California where there's a lot of immigrants and walkable city cores, there are very many independent Taiwanese cafes, all strangely popular enough to have eight of them in the same block.

3.70–3.80 for a Döner, that’s about on par with a Big Mac, though it will probably leave you feeling less hungry (a single Döner probably has less calories than a Big Mac and fries but more than a Big Mac).

Subway is a subpar sub shop at best, and it no longer really has the advantage of being pretty cheap (remember $5 footlongs? Not so much anymore).

This may be a Maine thing, as I haven't noticed it as much in other states, but I would much rather go to a mom & pop gas station/general store and order an Italian than go to Subway. It's superior in every way: faster, cheaper, better ingredients, more toppings. Of course it doesn't really scale...

I would certainly rather go to a Wawa than a Subway, though regrettably the closest Wawa to me is half an hour away. Luckily there is no shortage of independent sandwich shops near me, but sometimes I really just want the Wawa experience.

I actually think Wawa quality is about on par with Subway these days. First they started using pre-sliced meats, now they bake lower quality rolls in the store (they have a chewiness to them, much like Subway rolls). The only thing that's better is their ordering process and even that bottlenecks at the register. They should add payment processing directly to the touch screen terminals.

Another consequence of people caring more about how than what. They don't want good rolls; they want fresh rolls. "Made on site!"

Yes declarative sandwich-ordering is superior to the imperative variety. It certainly seems so when someone picky (or worse, someone on the phone with someone picky) is ahead of me in line.

I don't eat much fast food but Subway is a chain that has always struck me as one where it seems as if the food should be a lot better than it is. I guess because so many independents have Italian, etc. subs that are so much better than Subway's. I'm not sure I would necessarily ascribe that superior experience to gas stations but certainly to any number of independent pizza joints and the like--even those that don't have especially good pizza.

>> Imo Subway is losing because it's the world's slowest fast food.

One great thing about Jimmy John's is you order a sub by a number, and if you don't want some topping or want an add-on, you just say so. You're not picking and choosing items in line. If there are more than 5-6 people in line at Subway I just turn around and walk back out the door, where Jimmy John's can make and serve sandwiches pretty much as fast as people can pay.

Although a three percent dip one year it's hardly endemic failure, anecdotally the quality of food I can get at Subway has been in slow decline.

It's one of my favorite places to eat, but now when I go it's white lettuce, tomatoes that are pink at best, and I just hope to cover it with enough sauce to mask everything.

I don't pretend to understand the entire dynamic of them being on every corner now, food prices, no longer having five dollar foot longs, etc. but almost across the board the food seems to be turning sub-par.

It certainly is slower than Jimmy John's. Has anyone found a faster "sub" shop than Jimmy John's?

The truth is, Subway only do a few limited options and they do them rather poorly. It's still at the end of the day no matter what combinations you come up with (like meatballs) just a sandwich, one that seemingly takes forever to make and in my opinion is quite pricey for sub-par frozen ingredients full of preservatives.

Subway lacks innovation. For a chain that can operate inside of shipping containers suspended by crane on high-rise construction sites, they seem to lack the foresight to improve their lengthy process for making a sandwich. Every Subway store you go to seems to be understaffed which just adds to the wait time.

Here in Australia if you go to a McDonald's in a metropolitan area you're literally stepping into a restaurant. They take your order, they seat you and then bring out your food on a wooden board (chips come in a basket). Compare that to Subway, where you stand in line while you watch a student make your sandwich (sometimes in a hasty way) only for the end result to either be cold because they're understaffed or fall apart if you take it out of the wrapper.

I like Subway, but there are arguably much better sandwich shops out there. When I was in Seattle for work a few months ago, Jimmy Johns was my go to. They only do a few sandwiches, but they're really fast, cheap, customer service is great and their sandwiches taste really fresh (something you can't say about Subway).

>Here in Australia if you go to a McDonald's in a metropolitan area you're literally stepping into a restaurant. They take your order, they seat you and then bring out your food on a wooden board (chips come in a basket).

Pardon? In every single McDonalds I've been to here, you now place your order and get given a numbered ticket. You then loiter at the counter until your number comes up and you can collect it.

What part of Australia are you in? It's not all stores, but McDonald's have started turning their Australian stores into restaurants. Gone are the days of taking a number and waiting around for your grease stained paper bag. I am in Brisbane (Queensland) and a few of the McDonald's in my area have this "Create Your Taste" in which you can actually build your own burger and meals from a massive touch-screen if you like. The burger comes out on a wooden like chopping board and the chips in a basket, similar to how your food comes out somewhere like Grill'd. https://mcdonalds.com.au/create-your-taste - this article on Lifehacker shows you what the new McDonald's is like now: http://www.lifehacker.com.au/2014/10/taste-test-inside-mcdon... (Ignore the part about it only being available in a single store, there are a few of them around now.)

It's funny in the US McDonald's in particular is struggling as well as Subway and others in the face of upstarts like In-N-Out burger, but here in Australia McDonald's is innovating and becoming the benchmark for a new kind of McDonald's.

Brisbane, but I also speak for my experiences in Melbourne and Sydney in the last ~year, as well as smaller cities such as the Gold Coast, Mackay, Rockhampton, Albury and several others more recently than that (when I travel for work).

I cannot remember ever having a McD's employee bring me my meal when seated. For as long as I can remember (nearing a decade) it has been pick-up-over-counter, with the more recent addition of having a number on your receipt with a screen showing when your order is ready.

My local one has the Create Your Taste but I've not yet been to it. That only appeared in the last 1-2 months for me (Annerley). The fact that they're doing create your own was impressive enough to me but if they're now serving it to you at a table then that's pretty incredible. They've spent so much time nailing down their service times that I would have thought the staffing limitaions on running food out would be too high. I have to hand it to them for their efficiency.

edit: I've not yet been to one with the Create Your Taste thing, by the way. If the service at table is limited to those, then that explains it. But equally, I've only seen that at a couple of outlets too so I wouldn't exactly call it widespread here.

The only time I had my burger brought to my table was when I had wait for my burger to be made. This was in a Melbourne McD back in ~2009. I hope if McD increase the minimum wage if they are introducing table service as well.

Subway has a brand problem,most people no longer want the cheapest food around and those that do will go to food trucks or places more "authentic". Subway is now viewed as everything wrong with American food.

For one thing, it is insufficiently "artisanal" for today's consumers. If I was opening a sandwich shop, I would actually offer less options. I would offer a "curated" selection of sandwiches, changing daily/weekly, based on local ingredients. I'd charge 10-12 for a 6" inch sandwich.

You are not their target market. They cater to students and working people who eat it everyday, for subsistence. $10-12 for a small sandwich is too expensive, and even those of us who can afford it would rather save our money and, or pack our own homemade sandwiches and salads for <$5.

You are right of course. I'm no longer the target market. I Spend most of my time in the bubble of Manhattan or the rapidly gentrifying parts of Brooklyn, where subways seem to be disappearing, replaced with cute little brunch places.

If you ever decide to execute on Artisanal Sandwich Shop Inc, I highly encourage you to speak to someone with restaurant experience prior to doing so. It seems that everyone has the idea "I know, I'll just move up the price/quality curve from fast food." Chipotle succeeded at that... and they're not in very good company.

Briefly, the reality of fast food in America is that that they're sustained by poor people who use them for 10+ meals a week rather than by middle class people who use them for 1~2 meals per month. If you charge a multiple of the fast food pricepoint, you have to locate the store somewhere where you can get high traffic of well-heeled customers. That implies expensive real estate. A lot of stores get broken by it simply being impossible to sell enough $10 foozits to cover the rent necessary to sell a single $10 foozit.

Running a restaurant, QSR or otherwise, is by all accounts a brutal business to be in. I think the number usually quoted is 6% margins for the business owner -- i.e. if you sell $1 million in artisanal sandwiches in a year, you make $60k. You will be cutting a lot of bread yourself to earn that.

You are right, I have no idea of the economics and would probably fail quickly.

I wouldn't try to open it not where rich people live or work, but a marginal area that serves as a destination for after work drinks and the like where there is some sort of scene. Someplace like Red Hook in Brooklyn.

Maybe do cross promotion with other local artisans as well.

Really, I don't want to run a restaurant, I just want good sandwiches. I'll stick to supporting good sandwich shops.

Subway's bread is awful, which pretty much kills the sandwich.

In my neck of the woods, there's a couple local chains that do subs right and dozens of local mom and pop stands. Subs are one of the harder things to screw up, yet Subway somehow manages to do it and then charges $6 for a tiny sub with soggy bread and flaccid vegetables.

Ditto, subway bread is horrible. Jimmy John's is much better.

On the other hand, JJ's cold cuts are awful. Especially the lettuce. Subway gives me the option of having spinach at least.

But no one buys JJs for the food. It's because they deliver at the same price as carry-out. (Not including the tip.)

In my experience, I have never gotten a sandwich I would consider bad at Subway. But I have always felt that I could get a better sub if I went to any other sub shop. A sub that I would consider good. Subway defines mediocrity.

Jimmy Johns is still the only sub place I've been to that I've felt was just as bad as Subway. Its almost an accomplishment, the subs taste totally different but equally as mediocre and a place I avoid if I can.

It's interesting, I'd say that Subway were absolutely ahead of the game when it came to healthy eating - and made moves that chains like McDonalds haven't even matched yet.

Maybe that's the fate of all these chains - you innovate to get in front, then you go stale. I'm sure it'll happen to Chipotle eventually, too.

Innovation is part of it, but in the Subway example you see another phenomenon, which one could call "profit-taking" in analogy to the financial-media cliche. That is, a decade ago when Subway was in growth mode, they didn't want anything to prevent new franchisees from signing up. They kept their fees and ingredient prices low, and the low prices were passed on to the customer. The parent company probably didn't worry about profit during that time. Now they feel like they have enough franchises, and it's time to make some money. When prices are raised, the parent company makes more money, even though the franchisees probably make less, because they get a similar percentage on lower volume. Franchisees make up for that by getting really cheap, especially on labor. Because people are creatures of habit, there are still customers, even now that the same crappy sandwich that used to be $3.50 is now twice that.

Eventually Subway will be like Arby's (maybe KFC is like this now as well): such a bad deal for so long that no one goes there anymore. Perhaps like McD's, Taco Bell, etc. have in the past they'll be able to get investors interested in supporting a cycle of lower costs.

Subway was ahead of the game in putting together an advertising campaign to position themselves as healthy compared to McDonald's etc. I'm skeptical that their mainstream products were actually so much healthier.

I walk down an alleyway next to a Subway every day on my way to work and all I can smell is some sour/yeasty/herby concoction that doesn't inspire me to want to go in. I think I've been in a Subway shop about 3 times in my 49-year life.

Exactly! They never smell like a fresh bread/sandwich shop should. I think I've had two in my life.

I worked at a Subway while in high school, and I agree the smell is not very inviting. Even the dough, once thawed, has a strange odor to it, though the biggest cause of that funky odor you smell is the bread proofer located beneath the oven. It circulates warm moist air around the bread to help it rise. The thing is, it's not cleaned regularly (at least it wasn't at three different stores I worked in), and when left unchecked mold forms on the bottom.

I like Subway because it seems healthier than McD's, et al. and it's predictable (like McD's).

But lately there's a certain price point which they seem to have exceeded that's sending me back to drive thrus.

I really liked Subway back in my college days in the 90s. What I don't like for the past decade is that I found I'm somewhat sensitive to gluten and have cut any unnecessary sandwiches from my diet.

Ostensibly, Chipotle (and even Taco Bell) can offer me a meal that's relatively gluten free (and even low on carbs for the carb-conscious).

I wonder if the Atkins anti-yeast anti-carb and simultaneous gluten free awareness efforts are impacting the chain?

Is Panera Bread doing well, while Subway isn't? Why?

I know they did have some ok-tasting atkins-compliant wraps a while back, but not sure anymore.

What is your reaction to gluten? What happens?

Fairly allergic, skin breakouts and general nausea, some congestion. Allergy tabs help me cope if I have no choice.

Got a friend with nuts/eggs allergy and it's the same - we shared notes that cetirizine is quite effective for both of us.

One of the bad things about Subway is it is very slow. I have been in lineups at Subway of probably only 4 people and it can be at least 10mins before you get your food. Thats a life time in a "fast food restaurant". If it's busy during lunch...forget it. Also it isn't that cheap if you get a footlong + drink combo.

Also with more health conscious people these days and popular diets such as keto and paleo subway isn't that healthy. Your meal is basically 50% (or more) bread.

Subway used to be a go-to option for me when I was craving a sandwich. Now, I'd only go there if there was no other option.

Far superior options, IMO:

* Publix deli subs * Jimmy Johns * Firehouse * Wawa

Florida area?

What is going on with that web page? The browser gives some security warnings and only the headings load. Is this another shining example of modern web excrement where we are required to let things run rampant in the browser just to view an article?

it loads fine for me on chrome on Win7. the ssl warning is because it's an SHA-1 cert that expires after 1/1/2016.

Did anyone else get a few seconds of autoplay sound/advert?

Something fired up on my tablet (Boat Browser on a rooted Samsung running adaway), but before I could investigate it stopped again.

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