Subway CEO predicts 2023 will provide pricing pressure ‘relief’ for consumers: We’re through the ‘worst part’
The index for 'food away from home' rose 8.3% from last year, according to the U.S. Bureau of Labor Statistics
2023 to see a ‘decrease’ in food-basket costs: Subway CEO John Chidsey
Subway CEO John Chidsey discusses the economic outlook of the company along with the impact inflation has had on business on ‘Mornings with Maria.’
Subway CEO John Chidsey is sounding off on a financially agonizing problem that food-industry consumers have fought off for years – inflation-induced pricing pressure.
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Chidsey told FOX Business host Maria Bartiromo, Thursday, that franchisee profitability is "looking up," an optimistic assertion that could contribute to pricing pressure "relief" in 2023.
MUNICH, GERMANY - JUNE 15: Subway CEO John Chidsey joined "Mornings with Maria" to discuss the impact inflation has had on the company and the anticipated pricing pressure relief that consumers can expect in 2023. (Photo by Miguel Villagran/Getty Ima (Getty images / iStock / Getty Images)
"We've taken some pricing, I'd say we're pretty much in line with the rest of QSR. Actually, in 2023, I think we're going to see a decrease in terms of maybe 200 to 300 basis points, in terms of the food basket cost that our franchisees are facing. So, not back to the levels it was, but I think we're through the worst part of that," the Subway CEO said on "Mornings with Maria."
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"I think things are actually looking up, from a franchisee profitability standpoint."
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Inflation-induced price hikes in food commodities have placed unprecedented pressure on both the food industry and consumers. According to the Bureau of Labor Statistics, many of the common items used to make a Subway sandwich have skyrocketed. From December 2021 to December 2022, the price of lunch meats has risen by 15.1%, bread by 15.9%, lettuce by 24.% and cheese by 12.8%.
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Rising food costs have continuously put business leaders in the food industry in a difficult position. However, the Subway CEO touted that reactive price spikes have finally "crested."
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"We probably take an 8% pricing, I would say in the last 4 to 6 quarters, maybe 9% pricing. Some of that through menu mix shift, given that the signature series – the Subway Series – products are more indulgent than higher priced, but we're actually taking some price as well," the CEO explained.
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"My comment earlier was just that I think we've crested that. So I actually think while there are elevated levels, you're going to see reductions and franchisees are going to feel some relief in terms of pricing pressure going into 2023."
HOUSTON, TEXAS - APRIL 29: A Subway fast-food restaurant is seen on April 29, 2022 in Houston, Texas. The fast-food chain looks to continue its expansion by building more restaurants in its international market throughout 2023 and beyond. ((Photo by Brandon Bell/Getty Images) / Getty Images)
On Thursday morning, Subway reported a 9.25% increase in same-store sales globally and a 7.8% increase in North America - a strong report that will, Chidsey hopes, add "fuel to the fire" in the company's continued growth, and provide pricing pressure relief for consumers.