The news about former Subway pitchman Jared Fogle pleading guilty to federal child pornography and teen sex charges may have affected the food chain’s brand right now, but there are signs that the company was experiencing difficulties long before the bombshell dropped last week.
According to a recent USA Today.com report, the company had lost ground to major competitors in the fast food market. Chains such as Chick-Fil-A and Chipotle have closed the gap and taken customers from Subway, and that has resulted in a 3.3 percent decrease in sales between 2013 and 2014. The drop in sales dropped Subway to the third largest chain in the U.S.; with Starbucks now claiming the number two spot and McDonald’s remaining number one.
There are a number of factors contributing to this decline. It appears that Subway’s image as a healthy food alternative is beginning to wane, and customer satisfaction has dropped more than five percent over the past three years. Also, with customers having more disposable income, they have more choices and may be able to spend more on what they want. Subway apparently tried to capitalize on this by ditching their famous $5 footlong sandwiches for $6 simple fit meals; but this strategy has apparently backfired.
The preceding is a cautionary tale for businesses that are having trouble adjusting to customers’ changing needs and desires. Indeed, negative publicity does not help, but not being able to keep up with a changing marketplace can hamstring a business’ success. In the meantime, it remains to be seen whether Jared’s troubles will translate into fewer sales going forward.