Canadians have been attracted to Subway’s healthier meal alternatives since the brand opened its first Canadian location in St. John’s, N.L. in 1986. With a presence in food courts, strip malls and stand-alone operations with drive-thru facilities, Subway remains a strong player in the Canadian market, with 3,266 of its 44,936 global units located in Canada.
According to F&H’s 2017 Top 100 Report, the privately held company (operated by Milford, Conn.-based Doctor’s Associates Inc.), posted $1.7 billion in gross sales in Canada for 2016 — up from $1.5 billion in 2015 — but Chicago-based market-research firm Technomic reported the brand’s sales fell three per cent in the U.S. (approximately US$400 million) last year.
The decline, according to the report, was due to the rise of fast-causal restaurants offering consumers fast-food made with the higher-quality ingredients they are willing to pay more for. Subway was a pioneer in made-to-order sandwiches but, while brands such as Chipotle and Panera have long been offering antibiotic-free meats, artisanal breads made from non-GMO grains and additive-free toppings, Subway only recently began to catch up. In 2015, the brand announced it was moving to remove artificial flavours, colours and preservatives from its menu by the end of 2017. This includes serving banana peppers coloured with turmeric instead of Yellow No. 5 and using vinegar rather than the preservative propionic acid for its turkey slices.
Subway also suffered negative press when azodicarbonamide (a food additive used as a flour bleaching agent and a dough conditioner) was reportedly found in its bread. The company has since removed the ingredient — used in the production of yoga mats — from its food. Earlier this year, CBC’s Marketplace ran a report looking at several chicken sandwiches offered at fast-food restaurants in Canada and found the chicken strips used in the Subway Oven-Roasted Chicken Sandwich and the Subway Sweet Onion Chicken Teriyaki contained only half chicken DNA. However, two independent and accredited labs in Canada and the U.S. that specialize in food science (Maxxam Analytics and ElISA Technologies) tested Subway chicken and the findings of the lab tests showed the allegations to be false.
Earlier this year, the Freshii restaurant brand took out a full-page ad in the Globe and Mail, laying out founder and CEO Matthew Corrin’s growth strategy, arguing Subway would benefit from partnering with Freshii. He also claimed struggling Subway franchises would fare better by being reinvented as Freshii locations.
Moving Fresh Forward
“When I look at the competitive landscape today, I see it’s evolving and changing,” says Don Fertman, chief Development officer with Subway. “People looking to eat out today have numerous options and numerous ways of acquiring those options — from traditional take-out service to online ordering and apps. It’s a much more diverse landscape from when we first started and it was just us and those guys who have the arches. The challenge is to get the attention of the customer. We need to keep the customer at the centre and make [Subway] the destination of choice. We want the customer to choose us.”
Subway’s Fresh-Forward design is the brand’s new strategy aimed at transforming the customer experience. Trevor Haynes, vice-president of Operations with Subway, says the new Fresh-Forward design touches on every point of the customer experience — from the design and look of the franchise locations to how customers order their meals.
U.K.-based visual-identity and packaging-design agency Turner Duckworth helped revitalize Subway’s brand identity — from the revamp of the company’s iconic logo last year, to the new colour palette, as well as new packaging, uniforms and signage. U.S.-based retail-design consultancy FRCH Design Worldwide created new designs for the franchise locations, which emphasize the use of fresh, healthy ingredients. The refreshed locations feature large and visible display areas to showcase the fresh vegetables that are cut and used every day, while the use of green and yellow reinforce the fresh and healthy concept. Updated seating areas with USB charging points and free Wi-Fi access are also part of the design, as well as self-order kiosks and digital menu boards. Customers will have an option to use Samsung or Apple pay.
Haynes emphasizes the new direction is an effort by the company to create a modern and inviting design that will give choices to both its long-time customers and to new customers — from how they order their food to how it’s picked up.
Currently, there are 12 pilot locations featuring the Fresh-Forward design, including Tamarac, Orlando and Winter Park in Fla.; Chula Vista, Cali.; Knoxville, Tenn.; Palmview, Texas; Hillsboro, Ore.; and Vancouver, Wash. In Canada, a 25-table standalone location has opened in Granby, Que. and a 2,000-sq.-ft., 17-table unit has opened in Beauport, Que. An international location in Manchester U.K. is also part of the pilot program. “Subway has always been evolving, from the time it began with its first store,” says Haynes. “We’ve had several different design packages over the last 20 years and this is simply another step forward and an evolution of our brand.”
Haynes adds that as franchisees update their locations to the new design, they will be given a Fresh Forward local shop marketing toolkit, which can be customized for their operation to help them market the new design to their community.
Haynes says Canadians have already embraced the new Fresh-Forward design in Quebec. “Traditionally, we’ve been a lunch-focused and take-out focused experience,” Haynes adds. “And, don’t get me wrong, we are still focused on that market. But we also see that outside of that lunch market, afternoons and evenings are times people want to sit down, relax and eat.” He says features such as bright decor, comfortable seating and Wi-Fi work together to create a welcoming atmosphere that encourages dining in. “We’re raising awareness of all these features — from the food to the design layout — so our customers know they have just as many options for how they order and dine at their Subway as they do for what they order. This [Fresh-Forward] design ensures Subway remains competitive in this marketplace and has something compelling to offer our customers. We want to build a relationship with our Canadian consumers [so it’s] a guest-first approach.” The key to successfully rolling out the new design in Canada, says Fertman, is not taking a one-size-fits-all approach. He says the company will be sitting down with each franchisee to determine if their location and store footprint will benefit from the new design. There is no fixed number of Canadian units set to receive the Fresh-Forward facelift in the next year. Instead, the company is taking a location-by-location approach and optimizing the design for each chosen restaurant.
“The long-term goal is for all Subway restaurants around the world to feature the new look,” adds Haynes. “It’s very important that we remodel the right location with the right format and the right franchisees. That’s going to take time, so this will be a multi-year project.”
“We are not about to take and transform every restaurant we have,” says Haynes. “We will work with our franchisees to look at their leases and even to see if there is another location that they can move to that will give them better street frontage for improved signage, or to move to a freestanding building or even one with a drive-thru. We really want to work with them, to give them guidance so they can make the best decision for the location they are in.”
“We’re working with our franchisees on the investment by providing competitive financing in collaboration with the franchisee-owned Independent Purchasing Co-Op, along with incentives from the company and our vendors,” Haynes continues. “The design is available in different tier and price points, giving them more options to better accommodate their restaurant needs and styles. The cost of the new design is within the general range of previous Subway decor options.”
This is particularly important for locations looking to take advantage of Subway’s mobile-app strategy. Taking a cue from Starbucks’ popular app, which allows customers to order ahead and pick-up the order from the nearest location, Subway’s app and Messenger bot — set to launch in the fourth quarter of this year — allow customers to design their own sandwiches, place their orders at their nearest Subway location and pay for them through the apps — orders will be waiting for them when they arrive.
The footprints of these locations will need to accommodate the extra staff required to keep up with orders placed through the app without impacting the day-to-day operations and food preparation for customers who come into the location to place an order.
Menu Evolution
Another key to the new strategy is overhauling the menu to meet the demands of today’s customers who not only want greater choice when it comes to their food, but also higher-quality ingredients.
Many traditional Subway classic sandwiches will remain, but consumers will now have more options. For example, in April of this year, Subway added four new gourmet Panini — Chipotle Steak & Cheese, Tender, Triple Cheese, Chicken Cordon Bleu and the Italian B.M.T. Melt — featuring fresh-baked ciabatta bread. Plans are underway to begin testing grilled-chicken wraps. Fresh Forward will see the addition of new toppings such as pico de gallo, various sauces and house-made pickles.
“Guests now have more options for how they customize their sandwiches and salads, but our classic sandwiches, like the Turkey Breast, Classic Tuna, B.M.T. and Steak and Cheese, will always be part of the menu,” Haynes adds. “We will always serve fresh-baked bread and fresh veggies sliced and prepared in each restaurant. We are giving customers more choices to create their perfect meal, but our core menu is not changing.” “With our Fresh-Forward design and our product mix, we want people to walk into Subway and say ‘this is a fantastic experience’,” says Fertman.
