Subway $5 footlong promotion

The Subway $5 footlong promotion was a promotion by the fast food restaurant chain Subway, which was launched in the United States in 2008 by offering footlong (30 cm) submarine sandwiches for US$5. Coinciding with the Great Recession, the promotion was very successful for the chain, spurring competitors to make similar moves to cut prices to attract customers. The promotion also helped start an ongoing trend of round price points on consumer goods. However, the price increased 20% to $6 in 2015.

History

In 2004, Stuart Frankel, an owner of two Subway franchises inside Jackson Memorial Hospital in Miami, Florida, noticed that sales were slower at his stores on the weekends. In order to help boost sales, Frankel decided to lower the prices on the footlong subs for the weekends only. A fan of round numbers, Frankel decided to make every footlong sub $5 each. At the time, Subway had various prices for its subs.^[1]

Sales shot up immediately. Two local Palm Beach/Broward County franchisees took notice and started to implement $5 footlongs in 50 of their stores, also noticing sales increases. The move couldn't have come at a better time: the United States housing bubble was about to go bust, which hit Florida especially hard. Unlike most such promotions, the Subway franchises didn't see a decline in profit margins, nor did it sell each sub at a loss.^[1]

Meanwhile, Subway executives at the company's headquarters in Milford, Connecticut were getting tired of the company's longtime ads featuring Jared Fogle, and wanted something to compete with the various dollar menus at McDonald's, Burger King, Wendy's, and Taco Bell. Although several stores were skeptical of offering $5 footlongs, stores in Chicago and Washington, D.C. followed in the Miami stores' footsteps and saw instant sales increases.^[1] Some stores in blue-collar neighborhoods (notably East Cleveland, Ohio locations) were seen offering steeper discounts at the height of the promotion, such as 5 dollar footlong combos (Sub plus chips/cookie and a drink) Sales shot up immediately for the company. To go with the promotion would be the "$5 footlong song", created by Jimmy Harned of the NY based jingle firm, Tonefarm, which was deliberately designed to be campy and has in itself spawned a life on its own, including singing contests and as an internet meme.^[1][2]

Subsequent $5 footlong promotions

There were nine $5 footlongs available on a regular basis in North America, and a tenth one as a monthly promotion in the United States. Of the nine regular footlongs, four are exclusive to some Canadian restaurants:^[3] As of September 2014, "Dropped" subs are now $5.25 in the U.S. Alaska and Hawaii charge more for these value subs.

United States

Following the initial $5 footlong promotion's discontinuation in May 2008, Subway created a permanent menu with five footlong subs available at $5 every day (except for Alaska) The company also experimented with $5 meals, which include a six-inch sub with a drink and a side. The program remains franchise-optional. In 2009 alone, the various $5 footlong promotions spawned $3.5 billion in sales for Subway.^[6]

Throughout every February since 2008, plus the month of September in 2013, Subway sells all 21 regular footlongs for $5 each. Subs in the Premium and Supreme categories cost more.^[7] In September 2014, most subs were raised to $5.25 or $5.95 and only two regular $5 footlongs remain. By Christmas, all the subs now cost $5.50, though those at $5.95 fell down to $5.50 as well.

Canada

Subway launched the $5 footlong promotion in the province of Ontario on January 11, 2010.^[8] It featured the same value submarine sandwiches found on the value menu in the United States, although Canada also made them available as $5 salads. By April 20, 2010, the promotion was extended to Quebec and called "12 pouces, 5$" (12 inches, 5 dollars) in French.^[9] The deal was made available throughout Canada on December 30, 2011.^[10] Outside of Québec, the promotion ceased by Q4 2012 and now charged at least $5.25 per footlong sub, despite a massive $5 footlong campaign in the previous fiscal quarter. By the end of the year, salads in those regions also faced a price hike, leaving only the egg and cheese footlong at a $5 price point.

For most of Q3 2013, Ontario stores selling $5.25 footlongs now charged $5.50 for them. Québec, however, continues the $5 footlong promotion to this day. The $5 price point returned on September 16, 2013 throughout Canada. It coincides with the United States' "SUBtember" promotion and the launch of a new falafel sub in some Canadian markets.^[11][12] It continued throughout October 2013, after which these footlongs faced price increases: $5.50 at the time for most subs, and $5.95 in September 2014. In all cases, prices are set by franchisees and thus may vary per location.

International

No international $5 footlong promotions exist, except for trial runs in some British Commonwealth nations.^[1]

The UK now has their own value menu range where a 6 inch sub (from a limited menu) and a drink costs £3 called a "Subway Lunch" (just under $5, inc taxes) or a footlong as a lunch (again, from a limited menu) will also cost just £5.

In Australian stores a similar campaign runs for its cheapest subs at $7 instead of $5. This is the same pricing as in New Zealand stores.

In India, Subway ran a similar value campaign called 'Sub of the Day'. Each day of the week had a different 'Sub of the Day' and that 6-inch sandwich would be sold for ₹80 (US$1.20) on that day.

Other

In March 2013, Subway started to do a 6-inch select, of which they had a 6-inch sub for $3.^[3] The deal ended in May, and had been replaced with the $4 Lunch deal, which was then replaced with a Simple $6 menu of 8 subs with chips and a small drink. In 2014, the 6-inch sub specials are going for $3.50, and late in 2014, $3.95.

Subsequent promotions

Despite eliminating the $5 price point, Subway has offered other deals to attract customers. As part of a regular menu item, the company launched its Simple $6 Menu in 2014, offering select six-inch subs with chips and a drink for $6.^[13]

To celebrate the unofficial holiday National Sandwich Day on November 3, 2015, Subway offered a Buy One sandwich, Give One sandwich free promotion.^[14] Although successful, many Subway locations ran out of bread due to heavy demand.^[15]

On February 4th, 2016, Subway relaunched its Any Regular Footlong promotion, but at $6 instead of $5, leading to many people on social media to complain about the price hike. Subway's responses were linked to inflation as a factor. Subway also reportedly promised its franchisees that it would be a "one-off" promotion as it tries to move away relying too heavily on price promotions to drive traffic to stores.^[16][17][18]

Effect on the competition

Several competitors ended up following Subway's success with the $5 footlongs, including Pizza Hut, Arby's, and KFC, which introduced similar round price points. Many consumer goods outside of the restaurant industry have also adopted round price points as well.

While Subway allowed the "$5 footlongs" to remain franchise-optional, Burger King took the opposite route, requiring all locations in 2009, both franchised and corporate-owned-and-operated, to sell the double cheeseburger for $1. The move led to over 80% of their franchisees suing the parent chain, claiming that they were losing money on the items selling for $1, and that Burger King couldn't dictate maximum prices.^[19] Although Burger King later won the lawsuit,^[20] it raised the price of its double cheeseburger to $1.19 in response to the lawsuit.^[21]

References