🔒Competitive Bite: Subway revamps offerings as state’s sandwich wars heat up

After nearly two years standing vacant, workers finally began renovating the longtime Subway sandwich shop on the New Haven Green in late July. The Subway logo was still stuck on the door even as the building’s iconic 1930s-vintage glass windows were punched out to make way for a new business.

Now the nearest place downtowners can get a classic, Connecticut-born Subway sandwich is a half-mile away on York Street near the hospital district. Several other restaurants are a short drive away, although the Subway on Whalley Avenue in Dixwell was listed on Google as “temporarily closed.”

Subway’s retreat from downtown New Haven seems emblematic of the chain’s overall move away from its Connecticut roots in recent years. Subway founder Fred DeLuca opened his first eatery in 1965 in Bridgeport, spawning the world’s largest restaurant chain, which topped 27,000 outlets in the U.S. alone at its peak.

Long headquartered in Milford, Subway in June confirmed rumors that it was leaving its longtime headquarters at 325 Sub Way.

Part of the mega-chain’s operations are moving 10 miles away to Shelton, into a 90,000-square-foot office at 1 Corporate Drive in developer R.D. Scinto’s Enterprise Corporate Park. But all customer-facing functions are moving in coming months to Miami, home of CEO John Chidsey, accelerating a steady decline in the Connecticut headcount.

Chidsey told CNBC in May that he had actively recruited outside of the chain’s legacy executive ranks to change Subway's corporate culture, making the company “much more risk oriented.” Only about 30% of employees date from before he took over in 2019, he said.

“It was a bit of a bloated organization so we slimmed it down dramatically,” he added.

The move from Milford — along with the closing of the Chapel Street restaurant — reflects a chain seeking new footing in the increasingly competitive sandwich market, industry experts say. Subway has been steadily winnowing its stores, closing more than 5,100 U.S. outlets since 2017. Underperforming restaurants and those located in stagnant retail markets have been targeted for closure.

The owner of the Subway on the New Haven Green blamed the pandemic's hit on downtown foot traffic for the closing of his restaurant, which had been in operation at the site since 1996, according to the New Haven Independent.

New look and branding

To fight flagging pandemic-era sales, Subway has been revamping its U.S. branding and marketing, launching the “Eat Fresh Refresh” campaign in 2021. Sports stars and celebrities were signed to promote the chain’s new menu, better quality ingredients and renovated stores.

That campaign has seen results, with Subway reporting that U.S. sales outperformed projections by nearly $1.4 billion in 2021, with 75% of outlets reporting a 7.5% increase in same-store sales last year compared to 2019. Due to investments in online ordering systems and infrastructure in stores, digital sales also tripled in 2021 compared with 2019, rising to a total of $1.3 billion, Subway said.

“The Eat Fresh Refresh campaign is part of our multiyear transformation journey to improve across all aspects of our business and build a better Subway,” said Trevor Haynes, Subway’s president for North America. “There is more to come as part of our transformation journey.”

Part of the campaign is refurbishment of existing stores, Haynes said, with nearly 6,800 remodeled across the U.S. and Canada and 3,800 more stores slated for improvements for the rest of this year.

“We are seeing excitement about the inviting, modernized look from guests, our franchisees and their team members,” Haynes said.

Staffing for the chain’s U.S. restaurants also saw a boost from a national hiring campaign to attract 50,000 new workers to franchises. The rollout of the hiring campaign in June saw a 27% bump in the number of total job applications, according to Haynes.

“The application process has been streamlined to make it easier for interested candidates to apply online and in-store,” he said.

A new slate of menu items was also launched this summer — the “Subway Series” — featuring 12 new combinations with new versions of cheesesteak, chicken, Italiano and club sandwiches.

Promoted as a “whole new way to Subway,” the new sandwich line was notable for its lack of customization — “Subway is encouraging fans across America to try the best sandwich they've never created,” the chain said in a statement on the July 5 launch.

In surveys, Subway customers said they found ordering a pre-designed sandwich more convenient, Haynes told the Associated Press in July.

“The guest today has told us that they want us to change. They want us to make it easier for them,” he said.

Going into the latest changes, Subway's share of the sandwich market had shrunk from 41% in 2013 to 28% in 2020, according to Restaurant Business, an online industry publication. Part of the cause is stagnation in the overall “limited-service sandwich” sector, but the rise in competition by similar chains also played a role, the publication said.

That new competition can be seen clearly at locations across the New Haven area. In North Haven, a Jersey Mike’s recently opened across Universal Drive from an established Subway. In Milford, a Jersey Mike’s sits a few minutes down the road from a Subway, with a DiBella’s Subs sitting in between them.

Adjacent competitors like Panera Bread and local contenders like Waterbury-based Nardelli's Grinder Shoppe on Crown Street and Ray and Mike's in Hamden are also nearby in many locations, seeking to take a bite of Subway's customer base.

‘East Coast sub’ throw down

Among the national chains, Jersey Mike’s has seen the most aggressive growth in Connecticut in recent years, with two new restaurants opening in Danbury alone this spring, bringing the total in the state to 22.

Another sub-sandwich contender, Illinois-based Jimmy John's, opened its first Connecticut restaurant in Norwalk in February. That chain has operated an outlet in Worcester, Mass., since 2017, but has mostly focused its expansion on the Midwest and California.

Jersey Mike’s hopes to stand out in the state by focusing on its customizable sandwiches, familiar regional flavors and sliced-to-order meats and cheeses, President Hoyt Jones said.

Based in Manasquan, N.J., Jersey Mike’s was named the fastest-growing sandwich chain for 2022 in the Nation’s Restaurant News Top 500. The chain is now in all 50 states, and an additional seven restaurants are planned for Connecticut in the near future.

“We're pretty much expanding across the country right now,” Jones said. “We're growing pretty much everywhere. It's growing at a pace that's great for us.”

Jones credits authentic East Coast flavors like red wine vinegar in Jersey Mike’s subs for their growing popularity with diners seeking quality at an affordable price. You can order your sub “wet” if you want more vinegar, he added.

“We serve the authentic East Coast sub,” Jones said, based on the versions made at the chain's first outpost, which opened in Point Pleasant in 1956. “We really haven't changed the recipe in all those years. It’s been working and resonating across the country.”

Meanwhile, Subway says it is not ready to cede the field to newcomers.

"The Subway Series is the most ambitious undertaking in company history, as we are changing the nearly 60-year-old blueprint that helped make Subway a global phenomenon," Haynes said in announcing the new sandwich lineup. “We continue to improve and get way better. Whether you leave the sandwich-making to us or are craving your custom creation, there are more reasons than ever to make Subway your dining destination."