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Subway: ‘Ambitious’ plan calls for 9,000 store remodels a year

Subway's 'ambitious' plan calls for 9,000 store remodels a year

Chain reduces cost of year-old Fresh Forward design to accelerate lagging franchisee adoption

When Subway launched its redesign plans last year, the company said it planned to have 3,000 to 5,000 new and remodeled locations adopt the Fresh Forward look by the end of 2018.

A year later, only 454 of the 44,000 Subways around the world have embraced the Fresh Forward design, the company said. Of those, 271 locations are in the United States. About 490 locations, both internationally and domestically, are in various stages of construction.

Even if those get done by the end of the year, Subway still lags behind its initial projections.

Tracy Steinwand, director of global operations, said in interview with Nation’s Restaurant News that the store refresh is a massive undertaking for a global chain whose stores are 100 percent franchisee-owned.

“It takes time to turn a ship that big,” Steinwand said.

To accelerate the remodels, Subway has reduced the cost of the Fresh Forward design, which is now $90,000 to $100,000 per store. That’s about half of what it was a year ago, said Steinwand.

This summer, the Milford, Conn.-based sandwich chain also introduced Fresh Start, a lower-cost redesign that showcases the most important bells and whistles of Fresh Forward but at a deep discount, roughly $40,000. Since August, the number of restaurants adopting the Fresh Start look has gone from two to 12. Another 30 are in the pipeline, Subway told NRN. 

Fresh Start

Steinwand, promoted from director of franchisee services in January, said the tiered options should boost conversions. 

That’s prompting the brand to remain aggressive with its rollout projection.

The company said it is “shooting for a five-year rollout” of the new look, either Fresh Forward or Fresh Start, at all 44,000 stores.

That’s, on average, nearly 9,000 remodels a year.

“This is a multi-year project and the goals are ambitious and will take time given the size of the chain,” the company said in a statement.

Raghu Marwaha, a San Diego, Calif.-based franchisee with 155 stores in Southern California, said the tiered options are “making it less of a challenge for the franchisee.”  

Marwaha has updated two of his stores with the Fresh Forward look. He plans to invest in 16 more remodels, a mix of Fresh Forward and Fresh Start designs.

“We finally brought the cost down to a number that the adoption rate will improve dramatically,” Marwaha said during a phone interview Monday. 


Sales uptick at Fresh Forward units

Subway also hopes to entice owner-operators with new data on the store remodels.

The company said restaurants with the Fresh Forward design, on average, have seen a “sustained uptick in sales and traffic, and guest reaction has been overwhelmingly positive.”

In a survey sampling an undisclosed number of Fresh Forward U.S. restaurants, the company said gross profit is 11 percent higher than those stores without the new look. The Fresh Forward stores are being compared to units with similar geographic markets as well as sales and traffic patterns, a Subway representative said.

Foot traffic is also up more than 8 percent.  In an interesting twist, relocated restaurants with the top-tier design saw an even higher lift in sales — about 18 percent; those restaurants also saw visits increase 15 percent.

Marwaha said sales at his two Fresh Forward stores have been “very impressive.”

Customers, he said, are spending more time in the restaurant because of the new communal seating, mobile-device plug-in stations and free WiFi.

While he would not provide revenue details, he said the return on investment is so good that he plans to convert six more stores into the Fresh Forward design and 10 with the less expensive Fresh Start look. 

Menu, merchandising enhancements coming soon

Subway has also put a third blueprint in place to modernize stores with the Fresh Now option that debuted during the summer.

Fresh Now, a combination of food and minor aesthetic tweaks, is in almost 500 locations across the United States. The program, which comes at no cost to franchisees, includes new sandwich artist uniforms, a new flavor station featuring premium ground spices and sauces, easier to read menu boards and the addition an Agua Fresca beverage station.

The company expects all U.S. restaurants to get the mini facelift by summer 2019.

Beyond design initiatives, the company is revamping its culinary program with an eye towards adding regional flavors in markets where it makes sense.

The company is also betting big on its Signature Wrap program, which launched in March with three 6-inch protein-packed wraps. In the coming weeks, Subway plans to test new wraps, and introduce a new addition to its steak collection.

Steinwand, who started at Subway in 1993 as a field consultant in Canada, said her team is working to create efficiencies in the sandwich-making process.

Changes being considered are relocating the ovens so they are closer to the sandwich-making stations and tweaking the assembly-line ordering system, often dubbed the Subway Shuffle.

Instead of several sandwich makers assembling your meal along the line, Steinwand said there could be one person working with a customer all the way down the line until the hand off at the cash register.  This would occur only during peak hours.

Steinwand emphasized that the chain’s assemble-as-you go system will not change.

“Customization is such a part of our DNA,” she said. “That’s not going away.”

In a CNBC interview published Monday, interim Subway CEO Trevor Haynes said the company is also testing paninis in California. The brand also plans to make the $5 Footlong deal, which Subway brought back in January at a $4.99 price point, an option for franchisees.

Giving franchisees more options is a trend for the brand this year. In April, Subway began allowing franchisees to opt out of serving breakfast.

Privately held Subway is owned by Doctor’s Associates Inc.

Contact Nancy Luna at [email protected] 

Follow her on Twitter: @FastFoodMaven 

Clarification: The headline was adjusted to clarify that Nation's Restaurant News, not Subway, calculated the average number of remodels planned based on Subway's 5-year rollout plan.

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