Subway forced to close hundreds of stores across Australia

Sandwich giant Subway has closed hundreds of stores across Australia as the pandemic and changing eating habits take its toll on the fast-food chain.

Subway has closed 202 stores since 2015 and the fast food chain now has 1,242 stores across Australia, down from 1,353 in 2019 and 1,444 in 2015.

That means 13.9 per cent of Subway’s stores – more than one in 10 – have closed their doors over the past seven years. 

Accredited dietician Anna Debenham said the sandwich chain had been hit by changing eating habits, with Australians now favouring cleaner fast food.

‘Coming out of lockdown, people are now focused on health and nutrition. People are more aware of what’s going into their bodies,’ she told Daily Mail Australia.

‘If you look at the fast food options you have now, you’ve got salad bars, healthy Mexican restaurants or places doing skin rolls,’ she said.

‘People want to incorporate plant-based foods into their diets.

‘Then you’ve got your fresh food delivery services like HelloFresh and Marley Spoon. 

‘I’ve definitely noticed a change in our eating habits.’ 

Now Subway is battling to bring back customers with a major modernisation plan for its Australian stores.    

The new stores feature digital menu boards, a brighter atmosphere, displays of vegetables, free Wi-Fi and remote pick-up areas. 

At this stage, only 35 per cent of restaurants in Australia have undergone the refit, but Subway’s banking on the changes to help grow its customer base.

‘The research tells us that consumers won’t see us in a new light until 50 per cent of our network reaches that standard,’ a Subway spokesman said. 

The brand hopes to hit that target by the end of 2022. 

Subway did not reveal its 2021 revenue figures to Daily Mail Australia when asked, but claims its sales figures over the summer period were the highest in six years. 

However in 2017, their revenue of $128.1million for Australia was down from $145.3million the year before. 

Those figures are consistent with Subway’s business in the US – where net sales fell 28 per cent to USD$689.1million ($966million) between 2019 and 2020. 

Subway’s global brand has endured a series of controversies in the US in recent years, with its former spokesman Jared Fogle sentenced to 15 years in jail in 2015 after pleading guilty to child pornography charges.

Then last year, a class action lawsuit was launched against Subway accusing it of deceiving the public about its ‘100 per cent tuna’ products.

The case relies on lab testing of 20 tuna samples from 20 California restaurants – of which it claimed 19 had ‘no detectable tuna DNA sequences’. Subway has labelled the allegations ‘meritless’ and said it would seek to have the lawsuit dismissed. 

Similarly to Australia, an industry expert said last year American dietary habits have changed and Subway had been left behind.

‘Subway has sat on its laurels for so long; it’s kind of difficult to pull out of this hole,’ Pacific Management Consulting Group principal John Gordon told Bloomberg.

‘The sales have fallen so much in the store.’ 

A Subway spokesman said the brand was keeping up with changing food habits by offering vegetarian and vegan options.

‘[Subway sandwiches] are packed with as many freshly sliced veggies as they can fit and topped with a range of proteins,’ the spokesman said.

‘We’re also listening to guest feedback and regularly trailing exciting new menu options.’  

In 2019 Subway Australia said it was struggling to keep up with millennial food trends, with customers who would normally seek out a Subway sandwich instead choosing healthier alternatives.

‘Over the past 10 years, the tastes and the palates of our Australian guests have changed quite significantly, and what they’re looking for, for their lunch or for their dinner has changed as well,’ the spokesman said at the time.  

Franchisees who opted into the chain when Subway’s business was booming a decade ago spoke of their struggle to make ends meet as profits dwindled.

Some could not cover the cost of their own salary, so were forced to work for free, while others were trying their best to sell their shop. 

‘I cannot afford it. I am in too much debt at the moment I have taken out a lot of personal loans to survive. If I take another loan from the bank I cannot pay as it is too high. My life is hell now. I am stuck,’ one business owner told the Brisbane Times. 

On commercial real estate website BusinessForSale.com, there were 56 separate listings for Subway franchises in Australia with asking prices between $99,000 and $799,995. 

Subway said it was regularly trialling new menu and customisation options to keep its customers on side.

‘Giving our guests full control of their meal is at the core of that fresh Subway experience,’ the spokesman said.

‘Whether guests order through the Subway app or in-restaurant, we’ll continue to deliver on our mission to provide the food guests crave, personalised to their liking and readily available.’ 

Subway’s battle to rejuvenate its brand in recent years has coincided with a string of well-known retail chains either shutting for good or closing down stores.

In May 2020, 167 Target stores were closed down after feeling the bite of the Covid pandemic. 

Then in September of that year, Australian fashion label Colette by Colette Hayman closed more than 100 stores to save the business.

Amazon and other online retailers have forced Australian brands out of the market, spelling the end for many beloved stores.