Subway Strives to Keep Strategy Fresh

Subway has had more than its share of competition this year. However, the chain continues to see gains on top of the double-digit growth it experienced last year. Sales may be coming in $5 at a time, but that’s the way Subway wants it. The $5 footlong has given the chain a weapon to battle the recession — one that competitors continue to search for an answer to combat. CEO of the Subway Franchisee Advertising Fund Trust Jeff Moody sat down with Brandweek to discuss the competition, the economy and the chain’s plans for future growth.

Brandweek: Business is strong. What’s your secret?

Jeff Moody: Subway continues to do well despite the economy being down and the fast-food business being down as well. The secret is value, health and a great product. The $5 footlong product is doing very well for us. Since we launched it in March of 2008, it has become a multibillion-dollar brand in and of itself. Now the challenge is how do you keep it relevant. The answer is with new advertising, new things like the $5 buffalo footlong sandwich. There’s a constant stream of new ads [from MMB, Boston]. We tend to rotate in new programs every couple of months. Pretty much every month there will be something new coming from us on television. Buffalo chicken just started last week. We did the Tuscan chicken sandwich earlier in the year. We did a Scrabble promotion recently that lasted about seven weeks. We have health messages that continue on an ongoing basis. We use Jared in different ways. We just launched a new partnership with NBC. We’ve branded Sunday night as being Subway night in addition to being football night. There is p-o-p in the stores that promotes NBC and Subway. We’ll have ads during other major sporting events including the President’s Cup, figure skating and hockey.

Can you ever abandon the $5 footlong now?

There are a lot of things we can do. It depends on the economy and what happens with commodity costs and so forth. We can definitely do $6 and $7 versions keeping a baseline of $5 offerings. If things get too expensive, you ultimately have to come off. One of the things I look at is the dollar menu. It’s changed, but it’s still there. When it first came out over a decade ago, people said this will never last. They found a way to keep things fresh. We will look to keep things fresh at $5, but there won’t be the same items on the menu forever, obviously.

What about going lower like Quiznos’ $4 and $3 sandwiches?

Other people are struggling to find their answer to it. That’s why they’re trying things and it doesn’t work. They try something else and all of a sudden it becomes confusing to consumers. I’m not saying we wouldn’t do something like that. We’re not compelled to do it. We will do things under our terms that make sense to our brand.

What are your feelings about Domino’s after your legal spat?

Domino’s introduced sandwiches and named us in some advertising that wasn’t completely factual. They didn’t do particularly well. The pizza category itself has been struggling this year with as much as double-digit declines. It’s not one brand; it’s a category phenomenon. They’ve come back recently and they’ve got more sandwiches they are introducing. What they did before didn’t hurt us so I wouldn’t expect that what they’re doing now would hurt us, either. They have the challenge of trying to grow in their non-core daypart [lunch], while trying to focus on their core daypart [dinner]. We’re watching them. We’re not overly concerned that it will take directly from us, because it didn’t last time. Everybody in this down economy is trying t find ways to move into other dayparts and segments they are not competing in. It’s tough to do it if doesn’t stick with you core proposition.