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Subway Franchisees Struggling to Survive

Subway Pearl City, HawaiiOver 900 Subways in the US closed this year and franchisees are leaking to the press that hundreds more face closure in 2018. Talk from the franchisee side, not publicly backed by hard numbers, is that anywhere from one-third to one-half of Subway shops are losing money.

The chain has 25,835 shops open and operating in the US, according to the [Subway company] representative, compared with 26,744 at the end of 2016.

In 2016 sales at the chain reportedly fell 1.7% and its store count dropped by 359 locations in the US — marking the first time in the company's history that the chain closed more stores than it opened. — Subway closes over 900, Kate Taylor, Business Insider

Subway is 100 percent franchisee-owned, with no company-owned shops, meaning that the company doesn't have direct daily experience in facing the challenges and consequences of running Subway restaurants. The franchisor is also privately held, so is not held to SEC public financial disclosure rules.

Franchisees are disclosing to the business press that produce is only delivered once a week, sometimes twice, which one of those brave enough to speak to Business Insider, on the condition of anonymity, maintains has a significant effect on the quality of sandwiches:

"Years ago, we ordered local produce daily," a franchisee who owns two locations told Business Insider. "They forced us to stop doing that."

Instead, the franchisee said, produce is delivered once a week — twice if sales are especially high.

"By the end of the week ... the lettuce is just a massive problem," she said, describing its taste after a few days as "shredded paper. — What went wrong, Kate Taylor, Business Insider

Not every franchisee agrees that produce delivery once a week is a problem:

Another franchisee said that, while most locations only get one shipment of produce a week, he doesn't believe it to be a major issue for the chain.

In a statement to Business Insider, Subway said it works with more than 100 family farms and suppliers in the US to help make sure its restaurants have fresh produce. But the company would not say whether or not produce shipments were only delivered once to twice a week. — Franchisees say Subway blocks fresh deliveries, Kate Taylor, Business Insider

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