Hundreds of Southern California Subway restaurants have launched a controversial $4.99 footlong deal despite protests from some franchisees.
The promotion launched Monday, Jan. 1 at participating restaurants across the nation including roughly 785 Subway restaurants in Los Angeles and Orange County. The deal, which first emerged during the Great Recession, was last seen on menus in 2012. The latest bargain shaves the cost of some sandwiches by as much as $1.80 — a drastic drop that struggling restaurants can ill-afford.
Bob Grewal, who owns the master development rights for more than 2,000 Subway restaurants across the country, said franchises who dislike the deal do not have to participate. He said roughly 90 percent of his franchise stores in Orange County and the greater Los Angeles area, are selling the discounted subs.
“That’s quite a bit,” he said.
Some operators, especially shops in locations where the rent is high, have chosen not to participate.
“There are franchisees upset about the deal. And, they have a right to be,” said Grewal, whose company is the largest Subway franchisor in the world. “We can’t by law force anybody to do the $4.99.”
He said the deal was brought back to increase foot traffic in restaurants at a time when fast food rivals are pushing value meals. McDonald’s, Taco Bell and Del Taco, for example, recently announced tweaks to their value menus for 2018.
“Everybody in QSR (Quick Service Restaurant) industry is launching price point promotions. We wanted to bring back a real value to customers,” he said.
Grewal said franchise representatives must approve all chain-wide promotions. Despite protests from some franchise groups, the $4.99 footlong deal was approved twice by Subway representatives, said Grewal, who also operates restaurants in Virginia, Washington D.C., and Maryland.
In previous years, Subway offered several subs for $5 between 2008 and 2012. In 2014, Grewal said Subway brought back the deal but raised the price to $6. This year, represents a compromise. The $4.99 price is only good for five subs: Black Forest Ham, Meatball Marina, Spicy Italian, Cold Cut Combo and Veggie Delite.
At his 243 Orange County Subways, those subs range in price from $5.99 to $6.79 for a 12-inch sandwich, Grewal said.
“A majority of the country will barely break even — even if they get a traffic bump,” Grewal said.
So why do it?
“This is not to make money. It’s to bring them (customers) back to Subway restaurants.”
Once the deal goes away, operators like Grewal are hoping customers will continue to come back.
Restaurants need the boost. In 2016, Subway sales reached $11.3 billion, down 1.7 percent from the year before, according to the latest data from Chicago-based market research firm Technomic.