![[Eloy Trevino]](/images/eloy-trevino.gif)
The Subway Derails
By Eloy Trevino, May 17, 2007 — "Subway – Eat Fresh” describes one of the great brand positions of recent decades. While the fast food world built an epicenter around pre-cooked bacon burgers and super-sized fries, Subway built an empire by owning “healthy” in the middle of an obesity epidemic. And it did so with a gift from the marketing gods – Jared Fogel.
Over pizza, however, this subway has derailed.
The company recently unveiled plans for selling a deep-dish pizza in its U.S. stores. This full fat, pre-made (read: not fresh), oven-baked pie of indulgent goodness could not be further from Subway’s position of “eat fresh” and “healthy.” Cindy Kopazna, Subway project manager told BrandWeek, "We're not trying to be all things to all people but we do have a menu that does have variety on it so those who want to enjoy a meatball sub or one of Jared's favorites have the option." What she hasn’t addressed is how a frozen deep dish pizza aligns with “Eat Fresh”.
Apparently this moment of insanity from such a highly successful (and usually focused) business came from a failure to analyze three questions critical to brand extensions.
Where does your brand credibility allow you to expand? “Eat Fresh,” “Fit Fresh,” and pre-made frozen deep dish pizza?
Where are the untapped opportunities/need states we can own? Pizza is the most competitive, fragmented, and saturated segment with both national chains and “mom & pop” restaurants in nearly every strip mall. Pizza Hut and Dominos are experiencing declining sales. And the worst performing daypart for pizza consumption is lunchtime – Subway’s prime consumption hours.
What organizational competencies/business models can we more effectively leverage to drive innovation? Subway’s current restaurant model allows for the creation of a fresh meal in front of the customer, fast. These pizzas require new ovens and baking time. Plunking a frozen pizza on the countertop, tossing on a few meatballs, and asking the customer to “please wait off to the side while it cooks” doesn’t exactly drive home the “Eat Fresh” positioning.
This line extension will do little to lure pizza lovers into Subway. It will most likely tarnish the “Eat Fresh” healthy image the company has worked to build. I can only imagine what Jared will say as he holds up his oversized pants and a frozen meatball pizza in commercials touting the new line.
Comments
The first sandwich I had from Subway was meatball sub, circa 1988. And while I now frequent subway for a healthy alternative and get something more sensible, the meatball sub is still on the menu. I too believe Subway should stick to their eat-healthy position. Yet, there are a few things I need to be objective about. 1.) It’s rare that at least one person in line doesn’t order a meatball, steak & cheese, or BMT while I’m there. 2.) The footlong is still regularly ordered (I don’t care how low in fat it is, a footlong has enough calories to feed a small village). And 3.) I don’t see them struggling to sell soft drinks and chips. This helps support the argument that a pizza extension is a logical one for their indulgent customers, and logistically all they need is pizza crusts, as the remaining ingredients are already there. According www.slashfood.com , it only takes 90 seconds to cook (I’d consider that fast). Personally, I wouldn’t do it and would definitely not position around it. However, if I think objectively about it and if their expectations are realistic, it’s not a bad idea. I don’t believe they are trying to lure a new consumer. They are trying to provide an existing customer (a very loyal one to Nicholas’ point) another meal choice. And in the end, how different is a meatball sub from a pizza? …this one is going to be fun to watch.
I am a big fan of Subway but lately have felt bored with their offerings. I know I am not alone in this feeling and think Subway needed a new product offerings to spruce up their menu. This product extension can be a solid differentiator for Subway and is much needed. I like the idea that Subway is offering customers more alternatives and allowing them to determine if they are in the mood for something healthy and 'fresh' or if they desire something with a few more calories however, Subway needs to carefully craft its messaging to avoid confusing customers and discrediting its positioning. The real challenge and opportunity for Subway moving forward would be to make the new pizza offering a healthier choice so that it fits even better with Subway's positioning. Doing this would ease Eloy's concerns and also make the Subway brand stand further apart from its competition.
If Subway wanted to get into the market, it strikes me that the best way is to set it up under a separate brand. The volumes for Subway are never going to be enough (from the reports) to make the investment pay back as is - give it its own space and the 90 second pizza may work but more than likely people will realise that it's not a real pizza, it's not good for them and it's not as quick as the regular sandwich.
If Subway want a new product, how about Flatbreads or Tacos?
From Nicholas Daniel on May 18, 2007
I believe this is Subway's reaction to the full scale attack on their core business by some formidable, "fresh" competitors ie. Jimmy Johns, Potbellys, in the sandwich business. However, I am always amazed by the loyalty of the Subway customer and the success of this organization.
Pizza is tough. Little Caesars seems to be the only national with a great deal of momentum as "Hot & Ready" just nails the low end market. I think Subway will be hard pressed to make money in this market. This article nails it. Wrong target, store investment, lunch traffic and fragmentation.
Subway should stick to the health conscious approach (and work in some green lettuce and red tomatos.)