Subway’s last five years haven’t been so great. From the arrest of beloved mascot Jared Fogle to the use of weird chemicals in their bread, the sandwich chain faced numerous PR disasters as they tried to sell “healthy” sandwiches to the masses. They might be the fourth-largest restaurant chain in the world, but the company’s sales are down and stores are closing as people flock to other, better choices worldwide.
Yet Subway isn’t down for the count. They still have close to 45,000 stores to support, all which make enough money to keep their doors open and customers fed. In an effort to increase sales, make more people visit Subway, and get existing customers to visit more, the Connecticut-based chain is pulling off a few new tricks — and taking a page out of Panera Bread’s playbook.
Subway is loading up on tech to (hopefully) increase store sales.
The sandwich chain will soon introduce ordering kiosks and online ordering to their thousands of locations. Panera Bread did the same a few years ago, and saw an increase in sales thanks to the adoption of tech-focused, easy-to-use ordering methods. Subway hopes to piggyback on this idea and see the same sales increase across their franchised stores. The company is a tad behind the times on this ordering initiative, as McDonald’s ($MCD) is already rolling out ordering kiosks and Chipotle ($CMG) introduced online ordering years ago.
What does this mean for Subway employees?
If you visited a Subway recently, you likely noticed that they’re criminally understaffed. Adding kiosks and online ordering will likely solve most of these problems, as they could leave “Sandwich Artists” to their craft without having to spend much or any time at the register. At the same time, busy locations with a dedicated register employee will no longer need said worker when they install a kiosk. This would inevitably mean a decrease in low-paying, low-skill jobs, or fewer hours for existing Subway workers.
What does this mean for Subway store owners?
Subway is a franchise-only restaurant. The company doesn’t directly own stores, but supports them with marketing, food supplies, and anything needed to run a franchise location. In return, franchise owners pay 12.5% of their total sales to Doctor’s Associates (Subway’s owners) to enjoy everything their corporate mothership has to offer.
Asking franchise owners to buy expensive kiosks and add online ordering is a bit much. That is why Doctor’s Associates will contribute to some (but not all) of the costs associated with modernizing their locations. Buying new tech for each franchised location will hopefully lead to an increase in sales, further incentivizing store owners to shell out what they can for their shiny new toys. There’s also the decrease in overhead, as one less person would need to work during a shift to ring up orders.
What does this mean for Subway shareholders?
Nothing, because it isn’t a publicly traded stock. The company is privately owned by Doctor’s Associates, which handles all franchising agreements, marketing, and menu changes. You can’t buy the company’s stock, and the company has no incentive to offer stock in the future. If you want to make money from Subway, you need to open a franchise. Otherwise, you could always invest in publicly traded restaurants.