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Subway CEO Suzanne Greco to Step Down

Subway IP Inc., which oversees franchises under its Subway brand, announced Wednesday that its embattled chief executive officer, Suzanne Greco, is stepping down. The franchising firm has appointed Chief Business Development Officer Trevor Haynes as interim CEO. Greco will officially retire on June 30.

Interim CEO Trevor Haynes joined the franchising firm in 2006 in Australia as Queensland territory manager. He moved to the United Kingdom in 2009 to serve as senior area developer for the UK and Ireland, followed by a move to New York in 2014 to serve as the firm’s global director of restaurant operations. Haynes has a master’s degree in international management from Australia’s Queensland University of Technology.

Greco, having joined the Subway system in 1973 as a sandwich stuffer. She became the franchising firm's president in June 2015, while her brother Fred DeLuca, co-founder and CEO of Subway, struggled with leukemia in the last weeks of his life. He died in September 2015. Greco then became CEO.

The franchise system’s store count in the United States began to decline almost immediately after DeLuca’s death and under his sister’s leadership. Store profits and same-store sales dropped. The net store count dropped by 1.7 percent in 2016, followed by the system's net shrinkage of over 800 shops in 2017.

As traffic, sales and locations of franchised stores began to decline, some franchisees anonymously leaked to the media that the company needed to find a new CEO, although they were not specific about whom. They lacked a cohesive voice. The North American Association of Subway Franchisees, a trade group of Subway store business owners that was designed by franchisees to be their mouthpiece and arm, was publicly quiet during the turmoil, although it did manage to negotiate with the franchisor to waive certain stores from opening at 7 a.m. for breakfast.

Franchisees have informed this journal that Subway’s mantra has been to develop no matter what. One franchisee said, “Subway demanded that I create another store a few blocks down the road or else they would find someone else that would and who was aggressive enough to replace my store.” He invested in the second store, but said that although royalty payments from the two stores collectively went up slightly for franchisor Subway, the net profit in his own original store was decimated and his second store could not make a profit. Traffic and revenue increased only slightly from his original store but were now split between two stores.

The Subway system under DeLuca grew to become the largest franchised restaurant chain in the United States and the world as measured by store units. It presently has 44,000 franchised sandwich shops worldwide, with 26,000 of them in the United States.

Last week Bloomberg reported that Subway anticipates that the owner-operators of troubled stores will vacate their shops to such an extent that the system will contract in 2018 by a net loss of 500 locations.

“We focused in the past on restaurant count. We’re focused now on strengthening market share,” CEO Greco told Bloomberg's reporter Leslie Patton in a phone interview. “Store count isn’t everything.”

Now Greco is moving on.

Franchisees are surprised at the speed of her departure after it had been leaked out by some franchisees and area representatives, which Subway calls development agents, that she should go.

“It’s time for me to have more balance in my life,” said the outgoing CEO. Greco added, “I feel very good about the strategic moves we’ve made in the last three years, and I have confidence in the future of the company.”

The board of directors of Subway IP Inc. is currently searching for a new chief executive to lead the 100 percent franchised system.

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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email