Subway, the storied fast-food franchise recognized worldwide for its subs and salads, is set to enforce a new policy requiring all U.S. franchisees to honor digital coupons and promotions. This decision, previously left to the individual store owners' discretion, follows closely on the heels of Subway's sale to Roark Capital, a private equity firm, for $10 billion last summer. The sale concluded Subway's 58-year reign as a family-owned business and propelled it into the arms of a firm that already owns several other prominent chains, including Dunkin' Donuts, Arby's, and Carvel.
FTC Investigates Roark's Acquisition
The Federal Trade Commission (FTC) has initiated an investigation into the legality of Roark Capital's acquisition of Subway. The firm's extensive portfolio of fast-food chains has raised antitrust concerns, leading to an in-depth examination of the purchase. The mandated discounts are set to commence on December 28, as per internal sources.
Contrasting Policies and Franchisee Revolt
Subway's new policy starkly contrasts with CEO John Chidsey's previous statements advocating for franchisee autonomy in pricing. The chain has been grappling with declining sales, store closures, and decreased foot traffic in recent years. Promotions such as the $5 footlong have been a bone of contention among franchisees, who argue that such deals are unprofitable.
This contention led to a significant franchisee revolt, including a complaint to the FTC, alleging forced participation in unprofitable promotions. However, Roark's managing partner, Neal Aronson, is now insisting on franchisees honoring these new deals.
Subway's Future Under Roark Capital
With over 20,000 U.S. locations, Subway's new policy is set to impact all its stores. As the fast-food giant navigates this transition, the world will be watching closely to see how franchisees adapt to the changes, and whether this new strategy can revive the declining sales, bolster customer traffic, and breathe new life into the brand.