Introduction
Subway, the once-dominant force in the quick-service sandwich industry, finds itself in a precarious position after years of declining sales, store closures, and intensifying competition. The brand that revolutionized fast food with its made-to-order sub sandwiches and "Eat Fresh" positioning now faces threats on all sides as rival chains up their game and new players enter the fray.
Subway‘s U.S. store count has fallen by nearly 30% from its peak of 27,103 locations in 2015 to just 19,896 at the end of 2022, according to Restaurant Business. Sales have also deteriorated significantly, dropping from $12.3 billion in 2013 to $9.4 billion in 2019 before the pandemic hit, as per industry estimates. In 2021, Subway‘s estimated U.S. sales fell another 4.2% to $8.3 billion while its market share declined to 28% in the sandwich category, down from nearly 41% a decade ago, reports Technomic.
So what happened to the chain that once seemed unstoppable? Changing consumer tastes, operational challenges, and a failure to evolve quickly enough all played a role. But perhaps the biggest factor has been the rise of new competitors and the resurgence of old rivals that have chipped away at Subway‘s dominance by offering better quality, more innovation, and a superior experience.
The Sandwich Wars Heat Up
In the early 2000s, Subway had a virtual monopoly on the made-to-order sandwich business with over 20,000 U.S. stores and a focused menu centered around affordable, customizable subs. But as the chain expanded, consistency and quality suffered and competitors saw an opportunity to steal market share.
Today, Subway faces a barrage of direct competitors in the sandwich category, each carving out a distinctive niche and bringing something new to the table, so to speak. Chains like Jersey Mike‘s, Jimmy John‘s, Firehouse Subs, Potbelly, and Which Wich are winning over customers with signature flavors, high-quality ingredients, unique combinations, and an elevated experience.
"The sandwich category has exploded over the past decade as consumers seek out higher quality, more artisanal offerings," said restaurant industry consultant Tim Powell. "Rivals are differentiating through bread, proteins, toppings, and preparation methods. Customization is still key but with a twist – the emphasis is on flavor and craft, not just variety."
Jersey Mike‘s, the fastest-growing chain in the segment, has more than doubled its sales over the past five years to $2.4 billion by focusing on authentic East Coast-style subs with generous portions of fresh-sliced, premium meats and cheeses. Jimmy John‘s has built a loyal following around "Freaky Fast, Freaky Fresh" service and irreverent marketing. Firehouse Subs has made a name for itself with hot specialty subs and support for first responders.
"Consumers simply have more high-quality sandwich options today and that‘s pressuring Subway," said Powell. "It‘s not about one competitor, it‘s about the collective impact of having so many strong alternatives that are siphoning off occasions and sales."
Other sandwich chains making their mark include Potbelly, known for its toasted subs and neighborhood vibe; Schlotzsky‘s, with its signature round buns and Austin-inspired flavors; and Capriotti‘s, beloved for "The Bobbie" Thanksgiving-themed sub. Smaller regional brands like Mendocino Farms, Lennys Grill & Subs, and Cheba Hut are also staking their claim.
The Broader Battleground
Subway‘s woes extend beyond its direct sandwich rivals. The chain is also losing market share to competitors in other fast-food categories that have expanded and upgraded their offerings to be more convenient, flavorful, and in sync with consumer trends.
According to a recent survey by the National Restaurant Association, the attributes that matter most to fast-food customers today are food quality, value, and convenience, in that order. Consumers also increasingly expect restaurants to offer digital ordering, delivery, and loyalty programs. On all these fronts, Subway faces steep competition.
Burger chains like McDonald‘s, Burger King, and Wendy‘s may not specialize in sandwiches but they pose a significant threat with strong value propositions, extensive digital and delivery capabilities, and massive marketing and real estate scale. McDonald‘s, in particular, has been doubling down on chicken sandwiches, wraps, and breakfast – all core parts of Subway‘s menu.
Chick-fil-A has become a juggernaut with estimated sales per unit over $5 million – more than three times that of Subway. The chicken chain‘s simple menu, warm service, and cult following drive unmatched customer loyalty. Other chicken players like Popeyes, Raising Cane‘s, and Zaxby‘s are also posting strong gains.
Mexican fast-casual brands like Chipotle and Qdoba have reinvented the assembly-line model with higher-quality, customizable bowls, burritos, and salads featuring fresh ingredients, bold flavors, and natural and organic options. Digital orders now account for over 50% of their sales, enabled by user-friendly apps and websites, making them a formidable force at lunchtime.
When it comes to delivery, pizza giants Domino‘s and Papa Johns have built robust digital platforms and efficient logistics networks that get hot pies to your door in 30 minutes or less. Sandwich delivery is a tougher proposition but these brands have an edge in technology, scale, and consumer trust.
Finally, coffee chains like Starbucks and Dunkin‘ have made an aggressive push into breakfast and all-day food in recent years, putting further pressure on Subway‘s morning business. Starbucks now generates nearly a quarter of its U.S. sales from food. With their massive footprints, loyal customers, and digital muscle, these brands are a growing competitive threat.
Key Industry Trends and Subway‘s Response
Several overarching trends are reshaping the fast-food industry and raising the bar for Subway and its competitors. Here‘s a closer look:
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Healthier Choices: As consumers become more health-conscious, they are seeking out foods that are fresh, natural, organic, and free from artificial ingredients. According to Technomic, 40% of consumers say health is an important factor in choosing a restaurant. Subway has long positioned itself as a healthier alternative to burgers and fries but rivals like Sweetgreen and CAVA are taking this to the next level with plant-based options, superfoods, and locally sourced produce.
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Digital Dominance: Digital orders now account for over 30% of total fast-food sales and are growing rapidly. Chains that offer easy-to-use apps, mobile ordering, contactless pickup, and rewards are seeing the biggest gains. Starbucks generates over 50% of its orders digitally and has 31.4 million active U.S. rewards members. Subway has lagged peers in digital but is now investing heavily to catch up.
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Delivery on Demand: The rise of third-party delivery services like DoorDash, Uber Eats, and Grubhub has been a game changer, enabling any restaurant to reach new customers with the tap of an app. While Subway was late to the delivery game, it is now available on all major platforms and is seeing strong growth in this channel. However, high fees remain a challenge for franchisees.
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Loyalty and Rewards: Loyalty programs are becoming table stakes as a way to gain insights, personalize offers, and drive customer frequency. Starbucks Rewards is the gold standard with 51% of U.S. sales now tied to loyalty. McDonald‘s, Chipotle, and Domino‘s also have popular programs. Subway has struggled with disjointed, decentralized programs but recently launched a new unified "MyWay" rewards program to catch up.
To compete in this rapidly evolving landscape, Subway has been working to transform every aspect of its business under CEO John Chidsey, who joined the company in 2019 after successful stints at Burger King and Avis. His four-pillar strategy focuses on menu innovation, digital excellence, franchise support, and brand relevance.
"Our goal is to make Subway the easiest brand to access digitally with the most convenient and seamless experience, whether you‘re ordering through our app, third-party delivery services, or in person," Chidsey told Restaurant Business. "At the same time, we‘re bringing more culinary innovation to our menu and empowering our franchisees to deliver a great guest experience every day."
Recent moves include a complete overhaul of Subway‘s menu with 20 signature sandwiches, the launch of a mobile app with delivery integration and a new loyalty program, updated store designs with pickup areas and digital kiosks, and amped-up marketing featuring sports stars like Steph Curry and Serena Williams.
Subway has also been working to improve relations with franchisees, many of whom have been critical of the company‘s strategy and support. Last year, Subway invested $100 million in franchisee incentives and is giving operators more flexibility on pricing, promotions, and hours.
"We‘ve made good progress but still have significant work ahead to achieve our potential and reclaim our leadership position," acknowledged Chidsey. "The competition is fierce but I‘m confident we have the brand, the scale, and the team to win in the long term."
Conclusion
There‘s no question that Subway faces an uphill battle to regain its footing in an intensely competitive fast-food industry being reshaped by changing consumer demands and digital disruption. The chain that once dominated the sandwich game now finds itself squeezed on all sides by old rivals and new upstarts offering higher quality, bolder flavors, and a better overall experience.
To win back market share, Subway will need to innovate faster, execute flawlessly, and give consumers a more compelling reason to choose its sandwiches over the myriad other options out there. The company‘s ongoing transformation efforts show promise but it remains to be seen if they will be enough to reverse years of declines and restore Subway to growth.
One thing is clear: the battle for America‘s fast-food dollar will only get fiercer in the years ahead as legacy brands fight for relevance and insurgent concepts stake their claim. In this rapidly changing landscape, only those who can adapt, differentiate, and consistently deliver on their brand promise will thrive. For Subway, the journey ahead is daunting but the opportunity is still there for the taking. The question is, can it rise to the challenge and reclaim its spot at the top of the food chain?
Sources:
- Restaurant Business – "Subway‘s U.S. Store Count Drops Below 20K for the First Time Since 2001"
- Technomic – "Subway market share data"
- National Restaurant Association – "2022 State of the Industry Report"
- The NPD Group – "Digital orders now account for 30% of fast-food sales"
- Business Insider – "Subway CEO John Chidsey on the Company‘s Future"
