Subway, franchisees clash over new footlong promotion
Franchisees worry they will eat the cost of the deal
FOX Business’ Tracee Carrasco on the sandwich chain Subway having a dispute with its franchise location owners.
Subway's franchisees expressed concerns over the chain's upcoming "buy a footlong and get a footlong" promotion, saying it may pose a financial risk, according to a new report.
The National Association of Subway Franchisees project the company's franchisees will see a loss in profits due to the nearly month-long promotion when it hits stores nationwide in March, The New York Post reported, citing sources familiar with the plans.
"Is there going to be any compensation from Subway to the franchisees for the loss they are going to incur with this promotion," Nayanika Barker, chair of the National Association of Subway Franchisees asked Subway. "After all the franchisee is giving a footlong free for every footlong?"
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The American privately-held restaurant franchise responded to the concerns, saying it will not be offering "additional compensation."
A Subway sandwich is seen in a Miami restaurant. (Photo by Joe Raedle/Getty Images)
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"No, similar to other offers, there is no additional compensation," Subway responded.
Subway and the National Association of Subway Franchises have not responded to FOX Business' request for comment.
The promotion, set to end around April 15, will be readily available for customers who order online or use the company's mobile app. The move is an effort by the company to boost its online and mobile business, sources familiar with the plans told the outlet.
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The move comes as companies are vying to capitalize on the rising popularity of ordering in instead of dining out.
The $26.8 billion online ordering market is the fastest-growing source of restaurant sales in the United States, according to David Portalatin, a food industry adviser for the NPD group. Digital orders, while still accounting for just 5 percent of all restaurant orders, are growing some 20 percent each year. Restaurant visits, meanwhile, remain mostly flat.
As it stands now Subway's mobile and online business makes up a mere 1.4 percent of its total business, the Subway Franchisee Advertising Trust Fund said this week, according to the Post.
The company aspires to have that number swell to at least 5 percent, according to the Post.
The Associated Press contributed to this report.