Subway is one of the leading fast-food outlets in Australia. They have provided Australian citizens with fast foods such as sandwiches for the longest time possible. Subway could also be considered a multinational franchise since it is found in other countries. Despite the increasing success and profit in the recent past, the company is facing escalating problems. A good number of stores have closed down, and Australia has not been left out. (Maze, 2021). Many of their franchises have consistently made losses, and they have opted out. Subway’s management has not been prudent with this scenario, and the problem is getting worse. Subway could be on the verge of a significant failure indefinitely.
This paper revolves around the problems that have faced Subway in the recent past. The paper researches the possible reasons why there has been an increased closure of Subway stores in Australia. Research objectives that the company has undertaken have also been discussed and analyzed. Online marketing and sales and the introduction of loyalty cards are some of the research objectives discussed. Data types as a result of these research objectives have also been stated and discussed. The paper discusses how these new objectives have helped Subway maintain its customers but have still led to the shutting of most stores around Australia.
Company’s Background and Objectives
Subway is an American fast-food franchise that has been in business since 1965. Subway has specialized in the sale of submarine beverages, sandwiches, and salads. Fred DeLuca is the company’s founder, and he founded the company when he was just 17 years of age after financial help from Peter Buck. Since then, the company has been in business and has become one of the fastest-growing franchises globally. The company had a slogan formerly ‘eat fresh,’ which was intended to mean that they used fresh ingredients to prepare their products. By the year 2019, Subway had stores in more than 40,000 locations in a hundred countries (Rudd, 2019). It is the leading single-brand eatery chain and the prevalent cafeteria operator in the world.
Subway’s primary objective always has been to provide its customers with the best sandwiches. Subway has always ensured to have their signature taste and look of their submarine sandwiches and the salads as a multinational franchise. Customer satisfaction is Subway’s top priority, and they have done an excellent job about this over the years. They have invested in the advertisement, which has made Subway become one of the best fast food joints, only trailing after McDonald’s (Waters, 2019). Subway has always had the slogan ‘eat fresh’ to encourage their customers to buy their fast food. Customer care services have been competent, and they have even piloted the subcard project, which is a customer loyalty card for their loyal customers.
Problems Facing Subway in Australia
Subway as a franchise enjoyed spontaneous growth, and at some point, they had the highest number of stores in the world. Subway enjoyed huge profits such as in 2016 as recorded in The Sun-Herald, subway in Australia had an eighty-eight million euros profit. The number of Subway stores in Australia alone was 1,444 by 2015 (Waters, 2019). These successes show that the company was growing tremendously and enjoying huge profits. However, this growth was not to last any longer as per the year 2019, the number of stores had reduced to 1,311, and more stores were closing (Sinclair, 2019). The company had also registered a drop in their annual profits, and the profit was at 77 million Euros (Waters, 2019). Subway’s decline and sudden closure of its stores have been attributed to several factors facing the company. Many Subway franchisees are currently selling their stores in Australia because they can no longer maintain a profitable business. As customers leave Subway for other fast food stores, the franchises under Subway feel the pinch.
One of the company’s major problems was that of the death of its founder, Fred DeLuca, which occurred in 2015. Not long after his death, Subway’s Ambassador was convicted for pornography and child sex offense (Waters, 2019). These two occurrences had a massive blow on Subway’s marketing and general public image. This effect was significant since there had been accusations that the meat at Subway was stale and not fresh, and other claims were on the unhealthy nature of their fast foods (Partridge et al., 2020). Many of the customers complained of the high carbs level in the products, and because of this harmful nature of the fast foods, many customers decided to get their fast foods from other stores.
Customers choosing not to eat at the Subway stores has resulted in these franchisees making losses. These franchisees claimed that it was hard to maintain workers and to pay them adequate salaries. Due to this issue, many stores have closed down, and many more are soon closing down. These are, however, some of the external factors affecting the franchisees; the main problems are internal. Subway Company has come up with a lot of new company policies that are frustrating the franchisees. Franchisees are finding it hard to work with these new policies that the company has enforced. Most of the franchisees have termed this recent action by the company as bullying. Subway has indicated that there need to be renovations done in the stores to boost sales and bring more customers.
Consequently, many franchisees have complained that this refurbishment cost is quite expensive and cannot manage to carry it out. The main reason was that the refurbishing companies are specified by Subway, and their price is much higher than that of other companies (Hsu and Abrams, 2019). Franchisees have also complained about the new loyalty cards given to the customers. They have claimed that this marketing strategy is hurting their businesses. Many of the franchisees have opted to sell their stores at half-prices to try and recover their money. The loyalty cards and other strict enforcements from the Subway Company management have resulted in many franchisees feeling oppressed. The loyalty card program is only beneficial to the customers and the company, but it puts a lot of pressure on the franchisees to bear the consequences of this move.
As part of the mitigation measures to curb the company’s current problems, Subway management staff has several strategies to improve the profits and keep customers coming. When a company faces a crisis, the operation and marketing management teams should develop solutions to the problem. Over the years, advertising has gone through rapid evolution, and so has service delivery. With the onset of the internet and social media, marketing and advertising have not been the same. Companies have gone online, and most of the advertising and sales are nowadays made online. Online presence enables a company to widen its target market scope. Physical limitation can be a great hindrance to any business, and thus online advertising and selling have opened doors to more comprehensive geographic targets.
Subway has an online presence that serves a significant number of its customers. Online booking of fast foods and payment of these products can be made. It has been established that countless customers prefer to book their foods online due to delivery services. Despite the increasing closure of the Subway stores, some loyal customers who enjoy the loyalty card services prefer online purchasing. Having an online presence is an excellent move since customers can view the Stores menus, the prices, and the delivery options (Bates, Reeve, and Trevena, 2019). Companies such as Uber have fully taken charge of online marketing and partnered with many companies, Subway included. Uber offers delivery of these fast foods, and this partnership is well-identified through Uber eats (Bishop, 2019). Many fast-food companies have applauded the online transition and adopted it. It has revolutionized the way the business operates and has brought in more profit to the businesses.
As mentioned earlier, the loyalty gift cards famously referred to subcards by many people around Australia have helped Subway maintain some of their customers. Gift cards come with certain offers that customers enjoy and therefore keep them buying more. It is nice to offer waivers to customers once in a while and especially those customers who have been loyal to the company. Customer loyalty should not go unrewarded since these customers keep the company running and offer friends and family referrals. However, in Australia, these new strategies of providing gift cards have become an enormous problem. The loyalty program gives customers a $2 discount on every $50 they spend, and this does not resonate with the franchisees. They claim that this discount is not discounted from the company’s funds but their profits. This move has angered many franchisees despite being a strategic move by the company to boost sales.
Loyalty cards come with discounts, and other offers that customers may enjoy. According to the interviews with the franchisees, it is evident that many customers came shopping after the introduction of the cards (Raduzzi and Massey, 2019). The rapid increase in the number of customers can be established because the franchise owners are uncomfortable with the discounts catered for by their profits. Customers came running in the stores to shop and activate their gift cards with their $2 discounts. Loyalty cardholders, therefore, have a higher tendency to shop as compared to those without the cards.
Data Types to Address the Research Objectives
Online presence is an essential element in the success of any company. Many companies and institutions have gone ahead to have online platforms to engage their clients or students. In the fast-food industry, online presence has also been adopted, and many fast food industries have their websites (Fondevila-Gascon, Rom-Rodriguez, Mir and Gonzalez, 2017). These websites offer a lot of information about the companies from their contacts, news and new products, menus, and online selling services. To achieve maximum sales in the fast-food industry, it is necessary to have these online platforms through which loyal customers can register and get to buy their favorite foods. Subway as a company has not been left out on this new wave of marketing strategy. They have a website through which customers can go through the menu and buy their favorite fast foods.
Specific data types need to be studied to determine whether this research objective is working and is effective. The number of emails that have registered to the website can be counted for the online presence or purchases. The email listing will provide information on how many loyal customers have signed up for the website. The number of bookings, acquisitions, and successful deliveries made through the website can also be tabulated and recorded. Online purchase records will also provide adequate data on the number of online platform customers.
Loyalty gift cards have also been found to improve the number of customers purchasing products from the stores. These cards come with discounts and other fantastic offers that the customers get to enjoy. For a customer to get these cards, they need to sign up for them and register fully. This list can quickly determine the number of people who sign up for the cards. Therefore, getting the data on the number of people who sign up or use the loyalty gift cards is easy.
Online sales and the issue of the loyalty gift cards can all be advertised through the website or the company’s social media handles. Subway can then determine or have raw data of these aspects by checking out and managing the customers’ social media engagements. Monitoring the number of followers, checking the number of retweets, and watching the comments can generate reliable data for online customers. Developing these data sets is crucial in marketing and expansion plans. The data can also be important when determining whether the service delivery is okay and if the products are up to standard. Monitoring these data sets can also help in research and development to ensure new marketing strategies and improved product quality.
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