Subway’s new boss is making moves toward a new national ad strategy that might finally help the beleaguered company put Jared Fogle behind it, The Post has learned.
John Chidsey, who took over America’s biggest restaurant chain in November, stunned store operators on Friday by saying he will be seizing control advertising, which used to split about 40-60 between territories and headquarters. Subway’s Milford, Conn., HQ will now control 95 percent of the budget, which is funded by store contributions.
Chidsey announced the shake-up in a 10-minute video that also blasted the company’s current marketing strategy as ineffective, sources said. The restaurant chain known for the $5 footlong is considering using the money to buy big, splashy Super Bowl ads, said people who have seen the ad.
Subway, whose tagline is “Eat Fresh,” has not come out with a national ad strategy that’s resonated since Fogle, its longtime spokesman, was busted for kiddie porn and seeking to have sex with underage girls in 2015. Fogle, famous for having lost weight eating Subway sandwiches, was sentenced to 15 years in prison.
“We must share our story in a bigger and bolder way nationally to better engage with our guests, strengthen our network of local franchise-owned businesses, and promote the Subway brand,” a chain spokeswoman said.
Store operators say they applaud the power grab in hopes it might revive the sagging brand. “We need one point of responsibility, we’ve never had that,” one franchisee said.
But the move has Subway’s influential territory managers, also known as regional development agents, worried about their futures.
Such agents — who have been a part of Subway’s fabric since its inception in the 1950s — currently get a one-third cut of royalties for managing specific territories, a job that often includes oversight over regional ads, conducting store inspections and opening area eateries. With responsibility for ad spending going back to headquarters, Chidsey could easily replace these managers with cheaper, third-party inspection firms, sources said.
“They were not happy,” a source said of territory managers’ reaction to the change. “It means they [headquarters] are trying to consolidate everything through central so they have better control,” this person added.
In Friday’s video, Chidsey griped that the number of customers is down 30 percent over the last five years, one source who saw the video told The Post. And the brand’s overall exposure has fallen to 5 percent from 11 percent in previous years.
Chidsey and North America operations boss Trevor Haynes blamed price increases, which has franchisees bracing for more discounting. “They talked about bringing back volume,” the source said.
As The Post reported in December, franchisees are already livid over Chidsey’s move to cut the price of a six-inch “Oven Roasted Chicken” sandwich and a six-inch “Veggie Delite” sandwich with cheese to $2.99 from over $4, claiming such promotions only serve to eat into their already sagging profits.
Chidsey was tapped as chief executive as Subway struggles to slow an avalanche of store closures that reached a peak of 1,108 nationally in 2018. In 2019, net store closures were only two shy of the peak at 1,106, according to food services company Technomic.
Subway — which in addition to the Fogle issue has been grappling with a wider array of healthy fast-food rivals — ended 2019 with roughly 23,692 US restaurants, down from a peak of 27,103 in 2015, according to Restaurant Business, citing Technomic data.
Subway has been trying to stop the bleeding by requiring franchisees who decline to renew their five-year leases to answer to a committee at its headquarters — a move that has riled franchisees, as The Post reported in November.
Despite that and unease over Chidsey’s price cutting, some franchisees say they are glad the ex-Burger King chief is shaking things up, including taking an ax to his C-suite, where at least six top execs have announced their departure in recent weeks.
“I’m not sure if this is good or bad, but I am glad he is blowing things up,” one franchisee said.