This Controversial Fast-Food Chain Won't Be Opening New Locations In the U.S., CEO Says
"I don't really see a lot of growth in the U.S." isn't something you'll often hear from heads of major American restaurant chains, but that's exactly how John Chidsey, the CEO of sandwich chain Subway, recently described the brand's domestic plans.
Of course, there's more to the message—Chidsey was referring to the fact that Subway, which has traditionally been known to open restaurants at a frenzied pace, is shifting gears and taking a different approach to growth in its domestic market.
"I still think there's some non-traditional opportunities in the U.S.," he said. "But we want to get away from being so unit-focused in the U.S and focus more on the quality of what we have."
That "quality" is something the chain attempted to capture with a major menu overhaul, which rolled out last year and is expected to continue in 2022. Not only were new subs added, but Subway deemed it necessary to improve on its basics—bread, bacon, ham, turkey, and toppings—as well.
"We have Refresh 2.0," said Chidsey. "We've got a lot more new products that will be rolled out in 2022. We've got some more enhancements to our digital app, which are coming out in '22. We've got a whole new catering program."
Besides bolstering the menu, Subway has also been shedding underperforming restaurants en masse as part of its turnaround strategy. In 2020, it allegedly closed more restaurants than any other chain ever in the history of the business (although the exact number of closures, which some say was over 2,000, is disputed by the chain.) Then last year, it lost hundreds more locations, which brought the 40,000-plus store count down even further. According to most recent data, both Starbucks and McDonald's could soon have a bigger global footprint than Subway, which is currently the biggest chain by unit count in the world.
While Chisdey says he doesn't anticipate the chain shuttering many more locations in the United States, some believe thousands more restaurants could close. According to Restaurant Business, the chain still has some 5,000 domestic stores that are performing well below 2019 levels, which means closures are likely to continue for the foreseeable future.
Franchisees with insider knowledge echoed a similar prediction last year, saying many of the chain's operators are looking to get out of the Subway business and are unloading their restaurants for "dirt cheap."
"It wouldn't surprise me if another 25% of stores are gone in the next three years since the franchisees whose lease is coming up for renewal are not favorably eyeing this business," said one West Coast franchisee who owns multiple locations.
And while it won't be expanding at home, Subway is planning on opening thousands of locations worldwide. Last year, the company signed development deals in Bangladesh, India, Sri Lanka, Indonesia, and United Arab Emirates. Chidsey says another 8 to 12 international deals are expected to be signed in the next two to four quarters.