Brands seeking ways to be different
The sandwich segment is touching on some familiar notes, but change is afoot at some of the strongest growth brands.
First, the old news: the market shift away from Subway and Quiznos continues. While systemwide sales declined for the segment more than 2 percent, Subway’s loss of $1.1 billion is the key reason. That’s a loss almost as large as the sales of Jersey Mike’s and Firehouse Subs combined.
Excluding Subway and Quiznos, the segment has grown sales by a robust 16.8 percent. Yet Subway still dominates, with 78 percent of systemwide sales and 85 percent of the locations.
Now, brands that had enjoyed unfettered growth are looking to differentiate themselves among a group of strong concepts, without compromising on the core tenets that propelled them in the first place. That means investing in innovation and learning the truths sandwich pathfinders learned the hard way.
At Firehouse Subs, CEO Don Fox said he’s wary of following Quiznos path of extremely rapid expansions, saying that putting up 1,000 units a year “comes with significant compromise,” a trade he’s not willing to make.
“If you told me I had a thousand franchisees and all the capital lined up, there aren’t a thousand ‘A’ sites that we could be out there competing for,” said Fox. “So we have to be patient and discerning in our approval process.”
At Penn Station East Coast Subs and Which Wich, marketing and technology spurred incredible growth.
Craig Dunaway, president at Penn Station, said in the push for millennial diners, they upended their marketing program in late 2014, going all digital. With the same budget, he saw a slew of awards and an 11.3 percent sales lift.
He said it was a simple, if hyperbolic, equation to reach millennials: “They spend 20 percent of their time watching TV, but where they spend 200 percent of their time is their smartphone or computer, and yet we were going out trying to reach them in places they don’t go.”
Which Wich tweaked its format to better utilize non-traditional spaces, but also invested heavily in mobile and online ordering, allowing customers who didn’t want to wait to bypass the line. The brand also started experimenting with delivery.
“That’s really been the growth that you’ve seen in the brand,” said Hala Habal, VP of communications at Which Wich.