A version of Subway’s $5 footlong is returning, but franchisees say the promotion could devour their businesses after coronavirus-related revenue losses.
The sandwich chain on Tuesday will start promoting a revamped version of its coveted promotion, selling 12-inch sandwiches for just $5 by allowing eaters to purchase any two subs -- including its $8.95 Big Philly Cheesesteak -- for $10, the New York Post reported.
But 75 percent of owners don’t want to participate in the special, according to the North American Association of Subway Franchisees, an organization that represents Subway franchise owners.
The company’s CEO John Chidsey reportedly thinks that putting out the promotion will revive the brand from sluggish sales fueled by nationwide store closures because of the outbreak of the novel coronavirus, but store operators say they can’t afford to take on the cost of selling sandwiches for a fraction of the cost for food and labor.
A store operator from New York told the Post that the initial $5 footlong promotion, which started in 2008, was put in place when labor rates were $7.50 an hour, as opposed to the current $15 an hour.
Subway estimates that franchisees will make just $245 after costs if the $10 for two sandwiches promotion sells 100 times a week, a spreadsheet given to franchisees and obtained by the Post shows. However, a franchise owner did the math and found that he would have lost $121 in a day had he sold the subs at $5 each, or $847 in a week, with Subway helping to offset $200, according to the Post.
A similar Subway promotion in February also didn't settle well with franchise operators. The chain offered a buy-one-get-one sandwich option for customers who ordered online or through the chain's mobile app in a move to boost mobile business.
Subway and the North American Association of Subway Franchisees did not immediately return FOX Business' request for comment.