Subway Struggles to Attract Multi-Unit Franchisees in the U.S., Announces Major Expansion in Another Country Subway has been attempting to sign new franchisees to multi-unit deals to improve its ownership model. However, the franchisees it's looking for aren't taking the bait.
By Madeline Garfinkle •
Subway has closed nearly 1,600 stores in the U.S. over the past seven years and shuttered 571 in 2022 alone, according to the chain's latest franchise disclosure document obtained by Reuters.
Now, the sandwich franchise is attempting to revamp its ownership model by attracting more multi-unit franchisees rather than its current pool of owners, most of whom operate one or two units. However, the candidates Subway is attempting to attract aren't taking the bait.
Several prospective buyers analyzed the possibility of signing on with Subway but ultimately stepped away after realizing the franchise lacked profitability, two advisors for multi-unit franchisees told Reuters.
Subway has not disclosed its annual sales for U.S. stores, but industry experts told the outlet that the figure could be as low as $500,000 per unit — considerably less than other franchise competitors such as Jersey Mikes ($1.1 million) and Firehouse Subs ($900,000), per Reuters.
Related: Subway Is Considering Selling Its Sandwich Chain Business With $10 Billion Deal
Franchise attorney Justin Klein told Reuters that his firm analyzed multi-unit franchise deals for three clients and all three walked away due to the brand's low margins of profitability and the possibility of needing to renovate outdated stores.
Meanwhile, as Subway struggles to revamp its presence in the U.S., the brand is taking its business elsewhere. On Monday, Subway announced it will open about 4,000 new units in China over the next two decades.
"China is a key market with significant long-term growth opportunity, and we look forward to bringing the Subway experience to even more guests in the region," John Chidsey, Subway's global CEO, said in a statement.
