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Subway hunts for new CEO to fight multiple battles

Sandwich chain Subway said that CEO Suzanne Greco is leaving the corner office coming summer. Greco is leaving the firm after spending over four decades with the firm. The company said Trevor Haynes, who is looking after business development, will take over Greco’s position as a temporary arrangement.

The Board has started its hunt for a new CEO. Since inception, this will be the first time Subway will be headed by a professional who is not part of the founding family.

Subway, a family-owned entity, is the world’s largest restaurant and franchise running about 44,000 eateries globally. Of this, nearly 65% stores are in North America.

The quick-service chain has been witnessing sluggish sales since 2009. Things turned worse as consumers move towards healthy options, as well as increasing competition, pushing Subway sales into negative territory. Last year the company saw 4.4% dip in sales.

Fred DeLuca and Peter Buck who started Subway have been early adopters of franchising. They used the franchising route effectively to spread their wings across the globe. The sandwich chain has been facing the heat from franchisees as sales dwindled along with lower footfalls, pushing many of them into red.

To counter competition and slump in sales, it started offering lower priced menu options. This didn’t make the cut with franchisees as they hardly make any money due to lower margins. As a result, the company closed 359 US stores in 2016, marking the first time since launch it saw more store closures than it opened. The trend continued last year where the firm put down the shutters for over 900 stores in the US.

Subway CEO Resigns

When the company tried to promote $4.99 footlong throughout US, franchisees protested against the promotion. They wanted Subway to drop the idea as it would decrease their profits further, which are already very low. This resulted in Karlin Linhardt, who was heading the marketing, leaving the firm in December.

The sandwich chain had meetings with regional franchisees to explain the rationale behind the promotion. Few months back, Subway modified its loyalty program where the customers can earn $2 discounts in lieu of free footlong sandwiches.

To make the brand more appealing to its customers, it started to focus on store redesign, dubbed Fresh Forward. The new approach is expected to improve the overall customer experience in the store, including more young people. The sandwich chain has completed redesign of 40 stores till last November. Based on the feedback from franchisees the store redesign might be expanded to more locations. The quick-service chain has earmarked $25 million for marketing to reboot the brand.

The person who is going to take charge of Subway has too much to munch: tackling irked franchisees, plunging sales, improve profits, menu revamp and increasing competition. Will new CEO make Subway see the light at the end of tunnel? Stay tuned!

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