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In recent years, Subway has closed thousands of stores and also the fast-food chain seems to it is in on the rocks.

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Following is a transcript that the video.

Narrator: With much more than 42,000 restaurants in end 100 countries, Subway has the most locations of any kind of fast-food chain top top the planet. And also at first, that sounds choose a authorize of a flourishing sub giant. However, Subway is anything but. Subway"s closed countless stores in the last 3 years and also saw a 25% fall in organization from 2012 come 2017. So what happened?

The chain began as Pete"s super Submarines in Bridgeport, Connecticut, in 1965. Three years later, cofounders Fred DeLuca and also Peter Buck rebranded that to just Subway.

Announcer: Subway"s famed giant foot-long sandwiches room made right prior to your eyes, the means you want "em.

Len van Popering: What was so compelling then and still is today about Subway is really an open-kitchen format. In plenty of ways, they yes, really pioneered that and the capability to customize her sandwich.

Narrator: The brand redefined rapid food v fresh ingredients that customers could see. Contrasted to various other fast-food chains at the time, that felt healthy. And it worked. Through 1981, there to be 200 locations across the US, and also soon after, Subway went international.

Joel Libava: In the so late "70s, and also in the "80s, and in the "90s, everyone knew about Subway. I mean, they were everywhere. They"re still everywhere.

Narrator: That"s Joel Libava, an skilled in franchising. If each keep looks and also smells the same, they"re all independently owned franchises.

Libava: The style is nice simple. You buy a franchise, you get trained, they aid you secure a location. They help with a cool opening, and you"re open. You"re open for business. Follow the several-hundred-page operating manual, execute the advertising, and customers will come in.

Narrator: Not only were Subway franchises successful, they were, and also still are, one of the cheapest chains to franchise. The costs between $116,000 and $263,000 to open a Subway franchise. Compare the to opening a McDonald"s, which costs up to $2.2 million.

Because Subways were simple to open, the number of stores skyrocketed. In between 1990 and also 1998, store locations rose native 5,000 come 13,200. And also in the same duration of time, gross sales rose by around $2.1 billion. Subway"s success ongoing into the early on 2000s. In ~ a time when excessive weight was rising quickly in America, Subway ongoing to sector itself together a healthy alternative to rapid food.

Kate Taylor: among their greatest successes for certain was the Jared Fogle story. Anyone remembers those ads, whereby it"s the in those substantial pants whereby he"s showing just how he lost all of this weight. And also that simply made lock so lot money, and also it yes, really made people think about Subway together a really an excellent health brand. That was among the best advertising wins that any type of chain"s had in recent decades. So that was a huge, huge component of their brand.

Narrator: Subway lugged Fogle"s success story for almost a decade. However by 2008, the world was experiencing from the impacts of the great Recession . And for plenty of Americans, searching for deals changed the obsession with load loss . So Subway changed up its message. In in march 2008, it presented a new promotion that would pertained to define the chain.

♪ 5 ♪ ♪ five dollar ♪ ♪ 5 dollar footlongs ♪

Narrator: By august 2009, as various other restaurant chains were struggling through the Recession, the $5 footlong had actually pulled in $3.8 exchange rate in sales because that Subway, a 17% run in united state sales from the year before. Yet even the ideal deals operation their course.

♪ five dollar ♪ ♪ 5 dollar footlong ♪

Narrator: beginning in 2014, Subway"s sales started steadily dropping. Behind the scenes, many of the factors for Subway"s success had actually turned top top them. Quiznos was once Subway"s key competition, however tons of below chains, prefer Jimmy John"s, Firehouse, Potbelly, and also Jersey Mike"s, and also fast-casual chains choose Panera, were providing seemingly fresher and healthier options. And also they started stealing market share.

Taylor: They to be competing against people who lug in fresh produce every day. A many Subway areas only carry in fresh create once or double a week.

Narrator: On peak of that, fast-food chain that had actually been roughly as lengthy as Subway were coming up v healthy alternatives of their own and getting creative with brand-new menus.

Taylor: an ext and more fast-food chain really desire to have that innovation pipeline where they"re happen something out brand-new almost every month. Fast-food areas are looking for ways to bring in new customers, drive traffic, and also Subway has actually not tried to carry out that in the same way other areas have.

Narrator: however other fast-food chain weren"t the only competition for Subway franchises. V Subway"s franchising version making the so easy to open locations, shop inevitably began opening up around the edge from each various other in financially rewarding markets. Take it downtown Manhattan, for example. In ~ a 15-minute to walk in much less than half a square mile, there space 10 Subway locations. And these areas in nearby proximity started cannibalizing each others" sales.

Libava: The Subway franchise agreement, the contract, it says they can open anywhere. There is no protected territory. So franchisees really have no say-so in wherein the various other franchisees space going come open. It"s a problem.

Narrator: and Subway this firm wasn"t protecting against it, since the firm benefited indigenous a high variety of locations. More locations meant much more franchising fees and also high royalties come Subway corporate, which decreased the impact of falling sales indigenous a solitary location.

Taylor: once franchisees" sales are type of slipping, as lengthy as they"re remaining open, it doesn"t necessarily hurt Subway as much as it would certainly some other chains. If everyone"s sort of, like, chugging along, like, opening brand-new locations, then they can kind of save on maintaining on, and it"s no gonna it is in the end of the people for the this firm office.

Franchise owners, ~ above the various other hand, took the hit. In 2012, every Subway franchise created an average of $482,000 a year. 4 years later, the number had actually slipped to $422,000 a year. For comparison, the average annual revenue the a McDonald"s franchise in 2016 to be $2.6 million.

And to do matters worse, Subway would lose the challenge of that company. In 2015, the male who had actually embodied Subway"s "eat fresh" mission was charged through possession of boy pornography and also having sex with minors. Subway reduced ties through Fogle, and also he to be sentenced come 15 1/2 year in commonwealth prison.

Taylor: and also the Jared Fogle thing sort of usually went indigenous a vast positive to substantial liability. Like, the worst things possible that her brand could be associated with.

Narrator: every one of these things created the perfect storm for Subway. And soon, locations started to close. In 2016, Subway closed 359 stores in the US. It to be the first year the chain closed more locations than it opened. In 2017, the number to be over 800, and by the finish of 2018, over 1,000 locations had actually closed.

With every these cake ingredients, it"s difficult to imagine Subway might bounce back. Yet the chain is certainly trying. In 2017, Subway introduced its new Forward program, starting with remodeled stores. The revamped places featured new menu boards, WiFi, USB ports, update furniture, and music.

Libava: i will provide Subway credit. They"re act something interesting. They are offering grants where, if a franchisee applies and everything"s in line, they can obtain up come $10,000 towards remodeling.

Narrator: by the end of 2020, end 10,000 places will have actually this new restaurant design. However Subway says food is its next priority, and also it"s backing the up through an $80 million invest in updated food selection items. Subway"s partnered v the media agency Tastemade to build hundreds of new menu ideas, like the eco-friendly Goddess Tuna Melt and the Southern layout French Dip. In 2018, the chain presented its cheesy garlic bread, its many successful promotion in the last five years. And in 2019, a line of ciabatta sandwiches and also Halo top milkshakes struggle stores.

Van Popering: Historically, Subway would certainly evaluate about six or seven new menu items every month, but we"ve collection up a procedure and invest in capabilities whereby we"re literally experimentation at the very least 100 new menu items every month.

Narrator: together for whether or not all these food selection items and also revamped draft will avoid shuttering stores and also dropping business, just time will tell.

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Taylor: They require to figure out who they desire their customer to be. Ns think it"s really an uphill fight for them. But if they kind of go back to the basics, think about what human being want, ask people what castle want and also think about it a small bit much more innovation, that"s kind of going to it is in a an excellent start because that them.