Franchisees of more than a quarter of the stores in the Subway system are asking the company to make changes in its new “Sub Club” loyalty program, according to a petition viewed by Restaurant Business.
In particular, franchisees of the sandwich giant remain concerned that the program is too generous, giving a free Footlong sub after the purchase of three other 12-inch or six 6-inch subs.
The petition, signed by franchisees of more than 5,000 restaurants, was sent by the North American Association of Subway Franchisees, or NAASF. The group also asks that Subway reengage with the group, with whom corporate management hasn’t spoken in years. Subway has more than 19,000 restaurants in the U.S.
“Although we may at times have differing perspectives, we believe that a strong, constructive working relationship between Subway and NAASF is essential to stabilizing and strengthening our brand,” Bill Mathis, a Subway franchisee and chairman of the association, wrote in a letter to corporate leadership earlier this month.
In a statement, Subway said that the Sub Club has generated “double-digit” growth in new loyalty signups in the first six weeks and that “early results are encouraging.”
“Sub Club, a program designed to deliver value and drive traffic, is off to a very strong start,” the company said in a statement to Restaurant Business. “In its first six weeks, the program generated double-digit, year-over-year growth in new signups, loyalty sales and loyalty traffic.
“Early results are encouraging, and as we continue to learn from the rich data this program provides, we will further evolve the loyalty platform in partnership with members of the [Subway Franchisee Advisory Council] to ensure it delivers long-term growth for the brand and for franchisees.”
As for the association, Subway noted that the advisory council features 28 franchisees nominated by their fellow operators and elected in a national vote. Some of these operators are members of NAASF.
Subway has long argued that the association itself promotes division within the system and that some of the operators who work through the association have a history of disputes with the company or “compliance issues.”
“Franchisee success is our top priority, and our focus is on supporting profitable, sustainable growth across the system,” Subway said in its statement. “Our leadership team welcomes all perspectives and maintains an open-door approach to thoughtful feedback.”
Still, the petition represents a substantial portion of Subway operators and demonstrates continued division within the system over some of the chain’s marketing strategies, particularly the discounts it routinely runs through its loyalty program.
Subway late last year brought back its Sub Club, which had previously been the company’s stamp program more than 20 years ago.
It was the first major marketing effort under new CEO Jonathan Fitzpatrick along with Damien Harmon, president of Subway North America. Fitzpatrick was brought in by the chain’s new owner, Roark Capital.
The program ran into immediate opposition from franchisees who complained about the lack of restrictions on the subs people could get for their free Footlong. Some operators also complained that the company did not listen to their complaints about the program and its generosity before moving forward.
The new program is more generous than the company’s old stamp-collecting program, which would give customers a free six-inch sandwich after they bought four. It is also one of the most generous programs in the industry.
Subs collect stamps regardless of their price and customers can apply their free fourth sub to any sandwich, no matter how costly. So a customer could buy three subs at $7.99 apiece, then use the free fourth sub to get a premium sandwich at full price. “The discount on that can exceed the total spend,” one franchisee said.
Subway franchisees generate low unit volumes per store and hundreds of operators are walking away from locations every year. Operators have closed about 844 stores per year between 2015 and 2024, according to data from Restaurant Business sister company Technomic.
Corporate management has given operators some leeway on other issues, notably remodels. Harmon said in an interview last year that the company is pausing remodel requirements this year to give Subway time to assess its return on investment and tweak its strategy to create tiers that will make them more affordable for lower-volume locations.
On the decision to go with a free fourth footlong sub, Harmon said, “Collectively, the group said, ‘we need to make sure the brand is relevant. We need to give guests a strong reason to choose us repeatedly, and we want the program to stand out from the competition.'”
UPDATE: This story was updated to correct the sandwich customers were eligible for under the old Sub Club.
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