Subway's new CEO will need to mend fences with long-disgruntled franchisees
The sandwich chain may end up having to relocate or close some locations.

The sandwich chain Subway has a new boss.
It was announced yesterday that former Burger King exec Jonathan Fitzpatrick is taking the helm. He’ll be the first new leader since private equity firm Roark Capital bought Subway last year.
Fitzpatrick's first job will be to turn around slumping sales. He’ll also have to deal with more than a few disgruntled franchisees.
Subway is the biggest restaurant chain in the U.S., with more than 19,000 locations, and not one of them is operated by Subway itself.
In the 1980s and ‘90s, Subway was growing fast. Owning one became something like an American dream.
“It became the every-person’s business,” said Stephen Zagor at Columbia Business School. “It was very attainable. It didn’t cost a lot.”
Opening a Subway costs just about one fifth as much as opening a McDonald’s. Subway keeps things simple.
“It’s making sandwiches,” said Zagor. “We’re not sending someone to Mars.”
However, owning one of these stores became a little too popular.
“They kind of lost control of that expansion and they were accused of cannibalizing each other,” Zagor said.
Franchisees complained that new locations kept popping up nearby and sapping their business. Negative corporate news also didn’t seem to help.
“Everything from the footlong subway, which someone measured, and it wasn’t a foot long, to the gentleman that was found out to be a sexual predator that was the spokesperson for Subway,” said Joel Libava, a franchise consultant.
Plus, Subway’s emphasis on promos made life even harder for franchisees, who already operate on thin margins.
“To discount on top of that, sometimes, you know, net net, you walk away selling a sandwich, having made no money at all,” said Robert Byrne of the restaurant consultancy Technomic.
Subway’s new leadership has its work cut out for them.
“They’re gonna really have to listen to their franchisees, I mean, but you’re talking decades of distrust at this point,” said Genevieve Prieto, who runs the consultancy Franchise Reality Check.
A turnaround won’t be easy.
“The competition in the space is very different than it was when Subway was founded,” said Alex Susskind at Cornell’s College of Business.
With Jersey Mike’s, Jimmy John’s and Firehouse Subs, Susskind said there are a lot more places for customers to grab a quick sandwich.
In a statement, Subway said it's focused on sustainable growth and taking a data-driven approach to franchise profitability. It also said it may relocate or close some restaurants.


