In 2007, Subway launched perhaps the most well-known deal since McDonald’s dollar menu: the $5 footlong. The accompanying ad jingle made the offering an instant hit. However, on February 4, Subway raised the price of all $5 subs to $6.
It’s an inevitability that prices fluctuate across all restaurant segments, and it is certainly not uncommon for a value promotion to end (the dollar menu has long passed), but Subway’s one dollar increase hit a nerve. Consumers immediately took to social media to voice their confusion and frustration with the change.
38% of US sandwich eaters find value meals appealing at sandwich restaurants
In fact, Mintel’s Sandwiches, Subs and Wrap Concepts US 2015 report shows that Subway’s announcement may have alienated a very large consumer base: nearly three in five Americans visit sandwich quick service restaurants (QSR) and two in five sandwich eaters find value meals appealing at sandwich restaurants. Many on social media were also turned off by the slightly tone-deaf reveal by Subway which featured gifs, a tweet and an ad positioning the new sub price as a brand new deal.
The moral of this story has less to do with the actual price change and more to do with what happens when a brand places too much focus on one promotion. Consumers have associated $5 sandwiches with Subway for nine years. While this was certainly positive for the brand for nearly a decade, Subway did not diversify its offerings enough during that time – such as offering more premium sandwiches or a unique beverage program. Instead, it relied solely on the $5 promotion. While the change in price was almost certainly warranted (nine years is a long time to keep prices stagnant), changing something so integral to the brand would of course elicit response from the public.
Subway also could have done a better job with how it announced the change. With no warning and no explanation that the increase in price was due to food costs, Subway announced the change as if it was a brand new promotion, leaving consumers very confused. Subway did release a statement explaining the change, but only after initial backlash.
Subway has been facing a lot of competition in recent years from other QSR sandwich companies like Jimmy John’s and more premium fast casual brands such as Jason’s Deli, Hannah’s Bretzel and Mendocino Farms. Subway is a private company, so one cannot definitively say how the company is performing, but it is clear the brand is making significant changes (for example, Subway has decided to stop running ads focused on famous athletes). While the price change makes sense, it removes one factor that made Subway unique.
Caleb Bryant is a Foodservice Analyst at Mintel, specializing in the foodservice industry. Caleb authors reports focusing on changing consumer attitudes, industry news and flavor/ingredient trends within foodservice.
