Subway has closed hundreds of stores across Australia: What's behind the struggles

Subway's emergency meeting with franchisees of its 19,000 US stores amid falling sales could be an indicator it is battling similar headwinds on Australian shores.

The sandwich chain has more stores in Australia than competitor McDonald's but a much smaller share of industry revenue - 5.6 per cent compared to the burger joint's majority 20.3 per cent,according to retail data firm Geotech Information Services.

McDonald's earlier this month revealed its first sales slump in four years as inflation pushed up its prices and budget-weary consumers spent less,with one marketing expert pointing out: 'When it's bad for McDonald's,it's bad for the entire industry'. 

While national sales figures for Subway aren't publicly available,one telling indicator is the number of stores across the country,which have been steadily dropping in recent years.

Between 2015 and 2022 Subway closed 202 locations - a sizable 14 per cent of their total footprint - plunging the number of stores from 1444 to 1242.

Accredited dietician Anna Debenham said a change in the eating habits of Australian consumers who were 'more aware of what's going in their bodies' was likely a factor.

'If you look at the options you've got salad bars,healthy Mexican restaurants or places doing sushi rolls... Then you've got your fresh food delivery services like HelloFresh and Marley Spoon,' Ms Debenham previously told Daily Mail Australia.

Since then a further 22 locations have closed their doors with the number of Subway stores now sitting at 1220. McDonald's is closing in at 1,043 despite the cost to establish a Subway being a small fraction of that to open a 'Maccas'. 

Mexican themed Guzman y Gomez has established itself as a major disruptor in Australia's fast food market in a few short years

A few years ago Subway Australia rolled out a store refresh for many locations in order to reposition the brand as trendy.

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

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

A class action lawsuit was also launched against Subway in 2020 accusing it of deceiving the public about its '100 per cent tuna' products.

The case relied on lab testing of 20 tuna samples from 20 California restaurants - of which it claimed 19 had 'no detectable tuna DNA sequences'. 

Subway labelled the allegations 'meritless' and the lawsuit was quietly thrown out of court in 2023 - receiving far less press than the wild claims about its tuna.

WHY SUBWAY'S SALES HAVE SLUMPED 

'Coming out of lockdown,people became more focused on health and nutrition,' accredited dietician Anna Debenham said.

A US business consultancy expert said 'Subway has sat on its laurels for so long'.

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,' a spokesman said. 

The Covid pandemic 

Subway's struggles have coincided with the pandemic - which led to a string of well-known Australian retail chains either closing their doors for good or shutting down stores. Lockdowns also forced thousands of workers out of the CBDs - where many Subway franchises are located. 

The competition 

Subway has competition from McDonald's,Grill'd,Hungry Jacks,Zambrero,KFC and Guzman y Gomez in Australia and chains such as Jimmy John's,Potbelly and Panera in the US.

In 2016,the tide started to turn for Subway in the US with the chain closing more stores than it opened for the first time.