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Participation in once-famous deal will be left up to individual franchises

Tim Nelson
September 11, 2018

If you factor out the yoga mat bread and the spokesperson who turned out to be a convicted child molester, the concept of the $5 footlong is perhaps the first thing that springs to mind when one thinks of Subway. Though few (if any) would claim that the sub chain churns out the best sandwiches in the world, they offer one of the best deals around for those after a filling lunch on a shoestring budget.

Because certain things are too good to be true, it’s sure sounding like that magical $5 footlong deal could soon be a thing of the past. In a recent interview, Subway CEO Trevor Haynes said the margins on the famous meal deal don’t just make sense for every franchise across the country anymore.

“How do we help our franchises with more of a regional value message, so they're able to (have) a value proposition that fits with their economic model," Haynes told USA Today. "If you look at California, there's a very different cost of business than in Arkansas.”

The decision to pull the plug on the nationwide promotion came after its proposed reintroduction late in 2017 was cause for consternation among Subway’s franchisees. Hundreds of them directly petitioned Subway with a strongly-worded letter warning that the return of the $5 footlong simply wasn’t economically viable.

The elimination of the $5 footlong deal is a sign of changing times. Introduced in 2008 and inspired by a Miami franchise owner who successfully combated flagging weekend sales by slashing prices, the offer became a runaway success in the midst of the Great Recession. Even as the economy cratered, Subway managed to pull in $3.8 billion of revenue from $5 footlongs alone between March of 2008 and August of 2009. That was good for an overall 17% sales increase at a time when the vast majority of restaurant chains were having trouble getting customers in the door.

But between inflation, rising ingredient costs, and increased competition from the proliferation of health-conscious and fast-casual options, the $5 deal left Subways in more expensive markets with razor-thin (even nonexistent) profit margins. The company’s emphasis on options like ham, roast beef, and chicken means they pay more than burger joints buying ground beef in bulk.

“Those are generally more costly on a per-pound basis than the ground beef that the burger guys use, so Subway has a hard time discounting,” John Gordon of Pacific Management Consulting Group told USA Today. “There's a tremendous amount of franchisee disruption and negativity regarding this discounting.”

Now, it will be up to individual Subway locations to decide whether or not they want to keep the $5 footlong dream alive. And while it may be a relief that we won’t have to hear the promo deal’s infamous jingle on the airwaves again anytime soon, our wallets will surely suffer.  

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