The once-ubiquitoussubway closing stores chain, known for its “Eat Fresh” slogan, is undergoing a dramatic transformation. In recent years, the company has closed thousands of stores globally, sparking speculation about its future. From financial struggles to shifting consumer trends, multiple factors have contributed to Subway closing stores. This article explores the 10 key reasons behind the shutdowns and examines whether the brand can adapt to survive in a competitive fast-food landscape.
Why Is Subway Closing Stores? Unpacking the Major Factors**
Subway closing stores reflects a mix of internal mismanagement and external pressures. Once the world’s largest fast-food chain by locations, Subway has shuttered over 3,000 U.S. stores since 2016. Declining sales, franchisee dissatisfaction, and fierce competition have all played roles. Additionally, the brand’s failure to innovate its menu and marketing strategies left it struggling to resonate with younger consumers. These challenges, compounded by the pandemic’s economic fallout, created a perfect storm for closures. Understanding these factors is critical to predicting Subway’s ability to recover in a rapidly changing industry.
Financial Struggles: How Declining Revenue Forced Subway Store Closures**
Subway’s financial health has deteriorated sharply over the past decade. Average annual sales per store plummeted from $495,000 in 2013 to $420,000 by 2020, squeezing franchisees’ profits. The company’s heavy reliance on franchise fees, rather than corporate-owned stores, left it vulnerable when owners began exiting en masse. With rising operational costs and stagnant foot traffic, many locations became unsustainable. Subway closing stores became inevitable as revenue declines outpaced cost-cutting measures. The brand’s inability to secure long-term financing for struggling franchises further exacerbated the crisis, leaving hundreds of stores with no choice but to shut down.
Competition Heats Up: Rival Chains Eating Into Subway’s Market Share**
Subway’s dominance in the sandwich sector has eroded as competitors like Jimmy John’s, Jersey Mike’s, and even convenience stores expanded their fresh-food offerings. These rivals capitalized on trends like customization and premium ingredients, areas where Subway lagged. Fast-casual chains like Panera Bread also drew health-conscious customers away with transparent nutritional labeling. Meanwhile, delivery apps redirected traffic to newer brands with stronger digital strategies. Subway closing stores highlights its struggle to differentiate itself in a crowded market. Without a unique value proposition, the chain risks fading into obscurity as competitors continue to innovate.
Pandemic Aftermath: How COVID-19 Accelerated Subway’s Downsizing**
The COVID-19 pandemic dealt a devastating blow to Subway. With lockdowns eliminating foot traffic in urban centers and office areas—key locations for the chain—sales dropped by up to 25% in 2020. Franchisees faced rent burdens and labor shortages, forcing many to close permanently. While competitors leaned into drive-thrus and delivery, Subway’s reliance on in-store ordering left it lagging. The pandemic also accelerated shifts toward digital ordering and off-premise dining, trends Subway was slow to adopt. These factors turned temporary challenges into existential threats, speeding up the timeline for Subway closing stores across high-cost markets.
Franchisee Challenges: Why Subway Owners Are Throwing in the Towel**
Subway’s franchise model, once its greatest strength, has become a liability. High royalty fees (up to 12.5% of revenue), rigid supply-chain rules, and costly renovations drained owner profits. Many franchisees accused corporate of prioritizing expansion over support, leaving them to manage rising labor and ingredient costs alone. Lawsuits over unfair practices further strained relationships. By 2022, over 20% of U.S. franchisees had left the system. Subway closing stores is a direct result of this exodus, as disillusioned owners shut down unprofitable locations. Without addressing these systemic issues, the brand risks losing more partners.
Shifting Consumer Preferences: Health Trends Impacting Subway’s Popularity**
Subway’s “healthy” image took a hit as consumers questioned the nutritional value of its processed meats and sugary bread. The rise of plant-based diets, organic ingredients, and low-carb trends further alienated its core audience. Competitors like Sweetgreen and Cava gained traction by offering fresher, more transparent options. Meanwhile, Subway’s attempts to rebrand—such as removing artificial additives—came too late to regain trust. Younger diners, prioritizing sustainability and ethical sourcing, viewed the chain as outdated. Subway closing stores underscores its failure to adapt to these evolving preferences, losing relevance in a health-driven market.
Overexpansion Woes: Did Subway Grow Too Big, Too Fast?**
At its peak, Subway operated over 44,000 stores globally—more than McDonald’s. However, this aggressive expansion led to market saturation, with multiple outlets cannibalizing each other’s sales. Rural and low-income areas, once considered growth frontiers, became oversupplied as consumer demand plateaued. Corporate’s focus on quantity over quality also diluted brand standards, leading to inconsistent customer experiences. By 2023, the chain had shrunk to 37,000 locations. Subway closing stores reflects a necessary correction to its bloated footprint, but the downsizing raises questions about whether the brand can sustainably rebuild its presence.
Rising Costs: How Inflation and Supply Chain Issues Hurt Subway Stores**
Inflation and supply chain disruptions post-2020 squeezed Subway’s already thin margins. The cost of ingredients like beef, cheese, and vegetables soared, while wages rose due to labor shortages. Franchisees, unable to hike prices without losing customers, saw profits evaporate. Supply chain delays also led to menu shortages, frustrating diners. Unlike larger chains with bargaining power, Subway struggled to negotiate better rates with suppliers. These financial pressures made it impossible for many owners to stay afloat. Subway closing stores became a survival tactic for franchisees, but long-term solutions will require corporate intervention to stabilize costs.
Legal Battles and Lawsuits: The Hidden Pressures Behind Subway Closures**
Subway has faced numerous lawsuits that damaged its reputation and finances. The 2013 “11-inch sub” scandal, where franchises were accused of selling shorter sandwiches, sparked a class-action settlement costing $525,000. More recently, franchisees sued over misleading earnings claims and unfair fees. Legal fees and settlements diverted funds from innovation and support, worsening the chain’s financial strain. These battles also eroded trust in corporate leadership, discouraging potential franchise investors. Subway closing stores is partly a consequence of this legal turbulence, highlighting the need for transparency and reform to rebuild stakeholder confidence.
What’s Next for Subway? Rebranding, Restructuring, or More Closures?**
Subway’s future hinges on bold reforms. In 2023, the company announced a $100 million rebranding effort, including store redesigns, menu revamps, and improved digital ordering. It also plans to close underperforming stores while focusing on high-potential markets. However, franchisees remain skeptical, citing past unfulfilled promises. The chain’s sale to Roark Capital in late 2023 could inject fresh investment, but Roark’s cost-cutting reputation worries owners. While Subway closing stores may continue in the short term, its survival depends on balancing innovation with franchisee support. Success requires aligning with modern tastes while honoring its legacy.
Conclusion**
Subway closing stores is a symptom of deeper issues plaguing the brand: outdated strategies, franchisee discontent, and failure to keep pace with industry trends. While the pandemic and inflation accelerated its decline, the root causes—like overexpansion and menu stagnation—were years in the making. The chain’s recent rebranding efforts and ownership changes offer a glimmer of hope, but Subway must act decisively to regain customer trust and franchisee loyalty. Whether it evolves into a leaner, more agile competitor or continues downsizing will depend on its ability to innovate while addressing systemic flaws. The sandwich giant’s next chapter is still unwritten.
FAQs
Why is Subway closing so many stores?**
Subway is closing stores due to declining sales, franchisee disputes, rising costs, and competition. The pandemic and shifting consumer preferences worsened these challenges.
How many Subway stores have closed?**
Over 3,000 U.S. stores closed between 2016 and 2023, with global numbers exceeding 7,000.
Are all Subway locations closing?**
No. Subway plans to focus on profitable markets while shutting down underperforming stores.
Did the pandemic cause Subway’s decline?**
The pandemic accelerated closures but wasn’t the sole cause. Pre-existing issues like overexpansion contributed.
How have franchisees been affected?**
Many franchisees faced financial strain from high fees, leading to lawsuits and exits.
Is Subway going out of business?**
Subway isn’t bankrupt but is restructuring to adapt to market changes.
What changes is Subway making to survive?**
Rebranding stores, updating menus, and improving digital ordering are key strategies.
Which countries are most impacted by closures?**
The U.S., Australia, and the U.K. saw significant closures due to market saturation.
Can Subway recover its former popularity?**
It’s possible with innovation, but success depends on addressing franchisee and customer concerns.
How does Subway’s closure affect employees?**
Employees at closed stores face job losses, though some may transfer to remaining locations.