Subway made 2 mistakes that are destroying its business

For years, Subway ruled fast food.

But the sandwich's chain future is looking increasingly bleak.

Subway's US sales last year fell 3%, the most of any of the top 25 fast food chains, reports Drew Harwell at The Washington Post.

Subway also fell two spots to become the third most-popular fast food restaurant for the first time in seven years.

The fast food chain's current problems can be traced back to two mistakes, according to Harwell.

1. Not keeping up with the competition.

With its vegetables and lower calorie counts, Subway arguably invented the idea of "fresh" fast food two decades ago.

But while Subway stayed the same, better competitors got into the space.

Chipotle offers food that is raised without fillers or antibiotics and is prepared fresh in stores. Firehouse Subs and Potbelly offer elevated ingredients and side dishes like gourmet kettle chips and potato salad.

Americans who once praised Subway's low-fat offerings are now concerned the chain's lunch meats and sauces are overly processed with fillers and additives.

"What Americans see as healthy has evolved," Harwell writes. "Subway hasn't."

2. Focusing only on restaurant growth.

As American tastes evolved, Subway food remained largely the same.

Subway opened more stores without changing the menu. Today, it has more than 42,000 locations worldwide, making it bigger than McDonald's.

The expansion plan is backfiring, according to The Washington Post.

"More people have money to spend, and they're choosing to spend a little bit more on better concepts where they get a better product," said Darren Tristano, executive vice president of industry research at data firm Technomic. "Subway's strategy has only been to open more stores, and ultimately those stores just cannibalize each other."

In other words, Subway is so ubiquitous that customers leave one restaurant to go to a closer one.