The downfall of Subway spokesman Jared Fogle has had a significant impact on the reputation of the sandwich giant, according to a new report from a reputation consulting firm.
The report from The Reputation Institute found that between the first and third quarters this year, Subway’s reputation score fell 6 points, from 77 to 71. In other words: Its score fell from nearly excellent to slightly above average.
It was also a steep decline in just a short period, said Brad Hecht, chief research officer at the firm. “By any definition, a five-point move in any direction is significant,” he said. “Their overall reputation has definitely been impacted by the Jared situation.”
But Hecht said the company had already been losing ground on its reputation to more aggressive fast-casual competitors — particularly on the health and freshness front — even before federal authorities raided Fogle’s Indiana home during a child pornography investigation.
“Over the past two or three years, their reputation has been good,” he said. “But the reality is that other organizations, the companies in the fast-casual space, have business models that have addressed the eat-healthy concept that Subway pioneered, and even exceeded it.
“But there’s a perception that the Paneras of the world are doing something to have a positive impact on society. The issue, I think, is that Subway has struggled a bit the past few years.”
Subway pioneered the assembly line process to make sandwiches in front of customers, a model that has been mimicked by many fast-casual concepts including Chipotle Mexican Grill. It also became the first major quick-service concept to use health as a primary marketing strategy when Fogle became a company spokesman after losing weight eating Subway sandwiches.
“Subway was the granddaddy of the healthy eating narrative — fresh food, fresh ingredients, choose your own menu,” Hecht said.
Yet Subway relied largely on Fogle for the health angle. And the company also marketed its price, specifically with the successful $5 Footlong sub promotion.
The company didn’t evolve with the times. “The problem is, they didn’t change the narrative,” Hecht said. “What replaced it became price and a singular spokesperson. They lost the opportunity to create a narrative to move beyond that.”
Fast-casual chains have worked on transparency and local sourcing while also working to have a positive impact on their communities.
Hecht said that the raid on Fogle’s home, which resulted in Subway dropping its longtime spokesperson, as well as the later charges Fogle agreed to plead guilty to, only accelerated the company’s decline in reputation.
Subway’s reputation is certainly not poor, he noted. Yet as a company’s reputation falls, consumers’ “willingness to spend” or support that company, falls with it. The decline accelerates once the company’s reputation falls below 70. That makes it important that the chain work to boost its reputation, to avoid falling further into average territory.
Hecht said that’s possible. “Situations like this provide an opportunity to do a reset,” he said. “It’s an opportunity to look at everything. And it’s not just an opportunity, but a need to have a strategic transition away from those two things.”
To be sure, he said, Subway has worked on a lot of those things already. The chain released a new sustainability effort Thursday that makes LED lighting standard for new and remodeled restaurants. The effort also includes changes to reduce water use, safer cleaning supplies and the use of more recycled products.
“They’re doing the right things, not only in cutting the relationship with Jared, but in thinking about sustainability,” Hecht said. “You just wish that had happened sooner. But it’s something they’re doing in the right way.”
“Yes, they can recover,” he added. “There are two parts of it. They need to make sure they’ve wrapped up and moved past the Jared crisis. For the most part, they’ve moved past it. And they need to focus on the key drivers of reputation: Products and services; corporate attributes around openness and transparency; and the positive society, social and environmental impact Subway is having on its own business.”