Subway is closing another 500 stores - here's why

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Subway is closing another 500 stores - here's why

Subway close

Kate Taylor

A shuttered Subway in Brooklyn, New York

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Subway is closing another 500 stores, after years of declining sales.

The sandwich chain told Bloomberg that it planned to close about 500 of its US locations this year. Subway's US store count fell by 909 in 2017, losing almost three times as many locations as the year before.

"Store count isn't everything," CEO Suzanne Greco told Bloomberg. "It's about growing the business."

Franchisees and other internal Subway sources told Business Insider in recent months that up to a third of the chain's more than 25,800 US locations were not profitable, and that franchisees were bracing for more closures.

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Franchisees said that Subway has tended to focus on growing its store count over helping franchisees increase sales. Greco acknowledged in her interview with Bloomberg that the company had "focused in the past on restaurant count."

"I believe that Subway was more interested in the opening of stores," a former corporate employee told Business Insider. "That is where they made the most money - the franchise fee."

Fred DeLuca, Subway's former CEO and cofounder, "made his money from the franchise fee," the person said, adding: "The more stores he opened, the more dollars he made."

"I saw the handwriting on the wall with the focus being on opening as many units as possible, even if it angered franchisees," Scott Godwin, who owned three Subway locations in Virginia until the early 1990s, told Business Insider.

Subway is attempting to address concerns with international expansion, as well as changes such as the loyalty program and redesigned locations. The chain is also working to relocate up to 1,000 struggling locations this year - one of the few Subway initiatives that franchisees with knowledge of the situation told Business Insider successfully boosts sales.

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Here's a deeper look into why Subway is shrinking:

Exclusive FREE Report: The Next Frontier in Customer Relations by Business Insider Intelligence

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