Subway is refocusing its $5 footlong deal to digital customers after franchisees, who are still trying to recover from coronavirus-related revenue losses, complained that it would hurt their bottom lines.
"We are refocusing this limited-time offer on digital ordering to make this promotion even more convenient," a Subway spokesperson told FOX Busines, adding that the two-for-$10 deal has been "positive" for the company.
Subway noted that now more than ever, customers are using the company's mobile app and website. As a response, the restaurant chain wants "to meet them where they are online."
The deal will be available for customers who place digital orders.
On Tuesday, however, the privately held company reportedly revealed to its franchisees that the deal, which kicked off in mid-June, wasn’t increasing profits for franchisees who have been up in arms over the promotion from the beginning, the New York Post reported, citing a corporate memo.
“While the summer promotion saw well above average consumer awareness, largely driven by our highest TV media weights since 2015, and the number of consumers taking advantage of the offer exceeded our expectations, we did not see enough incremental traffic to grow franchisee profits,” the memo read.
CEO John Chidsey had hoped that the revamped deal, featuring two footlong sandwiches for $10, would revive the brand from stifled sales that occurred due to the outbreak of the novel coronavirus, the Post reported in June. Instead, it provoked fears from store operators that it would pose a financial risk. Franchisees were concerned that they wouldn't be able to foot the cost of selling the sandwiches for a fraction of the cost for supplies and labor.
One operator told the Post last month that the initial $5 footlong promotion was launched in 2008 when labor rates were $7.50 an hour. However, rates have since jumped to $15 an hour. Another franchise owner discovered that they would be out nearly $1,000 every week even with Subway helping to offset some of the cost, the outlet reported.
Franchisees aren’t required to partake, however, and 75 percent of the chains revealed they didn't want to do it, the Post reported, citing the North American Association of Subway Franchisees, which represents Subway store operators.
A similar Subway promotion earlier this year also didn't settle well with franchise operators. In February, the chain offered a buy-one-get-one sandwich option for customers who ordered online or through the Subway's mobile app. The promotion was said to help boost its online and mobile business.
The North American Association of Subway Franchisees did not immediately respond to FOX Business' request for comment