Hi there,

Today, we will talk about how Subway reset its franchise system after years of pressure in its core markets.

Subway was once one of the biggest success stories in fast food. Its small-restaurant model helped it grow quickly in the United States and in many other countries. But after years of pressure, Subway had to fix its franchise system and prove that the brand could grow in a healthier way.

Executive Summary

Subway’s reset was not only about opening more restaurants. The company had to improve store quality, support franchisees, refresh its menu, and work with stronger operators. This matters because a large store count is not useful if many restaurants are weak.

In April 2024, Subway completed its sale to Roark. Roark has strong experience in restaurants and franchise businesses. After the sale, Subway focused more on international growth, better franchise partners, store upgrades, and a new restaurant design.

Background

Subway grew through a simple franchise model. Franchisees could open smaller restaurants with lower costs than many other fast-food brands. This helped Subway become a global name in malls, airports, gas stations, towns, and cities.

But fast growth also created problems. Some markets became too crowded. Some stores became older, and competition became much stronger.

The Business Challenge

1. Too Many Weak Stores

A large restaurant network can look powerful from the outside. But if many stores are too closed, outdated, or unprofitable, the whole system becomes harder to manage.

2. Franchisee Pressure Grew

Franchisees needed stronger sales and better support from the company. When franchisees struggle, they may not have enough money or energy to improve service and upgrade stores.

3. The Brand Felt Tired

Subway had a famous name, but many of its stores looked old. The menu also needed to feel more exciting for modern customers.

4. Competition Became Tougher

Subway faced strong competition from sandwich chains, fast-casual restaurants, and value-focused brands. With more choices, customers had stronger reasons to return, so Subway needed stronger reasons to keep them coming back.

5. Growth Needs Better Control

Opening more restaurants was no longer enough. Subway needs better operators, stronger markets, and a smarter plan for future growth.

The strategic moves

1. Sell to Roark

Subway chose new ownership by selling the company to Roark in 2024. This gave Subway an owner with deep franchise experience, but it also increased pressure to improve faster.

2. Upgrade the Restaurant Image

Subway pushed store remodels and introduced a new design called Fresh Forward 2.0. This helped make restaurants feel cleaner, warmer, and more modern.

3. Work With Stronger Operators

Subway moved toward larger and more experienced franchise partners in many markets. Stronger operators can manage teams better, open more stores, and follow brand standards more consistently.

4. Expand Internationally

Subway signed more than 20 master franchise agreements over the past 3 years. The company also reported more than 10,000 future restaurant commitments.

5. Refresh the Menu and Digital Sales

Subway improved its menu and promoted new products. It also focused more on digital sales because customers now expect easy ordering, apps, and convenience.

Execution

1. Remodel Existing Stores

Subway said more than 18,000 global locations had a modern image by early 2024. The company will also complete more than 4,000 remodels in North America in 2023.

2. Roll Out Fresh Forward 2.0

The new design was planned for global rollout in 2025. It focused on better convenience, digital support, a warmer store experience, and better franchisee profitability.

3. Use Master Franchise Deals

Subway used master franchise agreements to grow in international markets. These deals helped local partners manage development, operations, and customer needs in each market.

4. Build Digital Momentum

Subway reported double-digit global digital sales growth in 2023. In North America, digital sales increased 21.8%, which showed that customers were using online ordering more.

5. Improve Store Economics

Subway focused on better sales, stronger operations, and better remodel results. This was important because franchise growth only works when store owners can see better returns.

Results and Impact

1. Sales Improved

Subway reported 6.4% global same-store sales growth in 2023. North America's same-store sales grew 5.9%, indicating the brand was gaining some momentum again.

2. Digital Became Stronger

Digital sales gave Subway a better way to connect with modern customers. It also helped the brand compete in a market where apps, loyalty, and convenience matter more.

3. Global Growth Reopened

International growth became one of Subway’s biggest opportunities. The company said new restaurant openings in 2024 were on track to exceed 2019 levels.

4. The U.S. Reset Stayed Hard

Subway still faces pressure in the United States. Many stores had closed over several years, which showed that the reset still required difficult cleanup.

5. The Brand Became More Focused

Subway moved away from simple store-count growth. It focused more on better stores, better partners, and better execution.

Lessons for Business Leaders

1. Growth Needs Quality

A business should not grow only for the sake of size. Leaders must check whether each location is healthy, profitable, and useful for customers.

2. Franchisees Are Partners

A franchise brand cannot win if franchisees are struggling. Leaders must help operators with better products, stronger marketing, and store formats that can make money.

3. Old Brands Need Fresh Proof

A famous name can help a brand, but it cannot carry the business forever. Customers return when the experience feels clean, useful, convenient, and worth the price.

4. International Growth Needs Local Strength

Subway’s global push shows why local partners matter. A company should not enter new markets without people who understand local customers and daily operations.

5. A Reset Takes Discipline

Subway’s case shows that a turnaround is not one simple move. It takes better ownership, store upgrades, stronger operators, better execution, and patience.