As high prices continue to affect consumer spending, more fast food restaurants are introducing value meals to lure customers back through their doors. Subway North America President Doug Fry joins Wealth! to discuss how the sandwich chain is dealing with weakening consumer spending.
As more restaurants offer value meals, Fry warns that “sometimes greater value comes with a sacrifice. And that sacrifice is often a sacrifice in quality to get to the price.” He explains that Subway offers a variety of menu items to suit all budgets without sacrificing quality. As consumers look for on-the-go snacks, Subway has introduced “Sidekicks” in the form of pretzels, churros and cookies. The company is now releasing “Dippers” for $3.
He notes that Subway is focused on balancing quality, quantity and price when creating new menu items. Fry also emphasizes the importance of loyalty in the industry and points to Subway’s MVP rewards, which offer promotions and perks.
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This post was written by Melanie Riehl
Video transcript
As high prices continue to affect consumer spending.
Fast food restaurants have been hit, especially as low-income consumers dine out less frequently.
Therefore, in an effort to ensure we can attract customers back, chains like McDonald’s, Wendy’s Starbucks and Subway are adding value offerings to their menu here to discuss Subway’s latest efforts.
We have Doug Fry, who is the president of Subway, North America. Doug, it’s great to have you in the studio with us today.
Thanks Fred.
I’m very excited to be here.
I mean, what are you feeling in the environment right now among consumers, where they’re refusing certain menu items and where they’re relying on some of the quick service restaurants to listen to what their needs are as well on the menu right now.
Yeah, I think if you look at the food service industry today, consumers, we as consumers see everywhere that all of a sudden these, these items are appearing on the menu and they’re, you know, offering greater value.
The challenge I have with this is that sometimes greater value comes with a sacrifice and that sacrifice is often, you know, a AAA sacrifice in quality to get to the price.
And we at Subway don’t believe our guests should sacrifice quality for price.
And that’s why we’re offering a wide variety of menu items to fit everyone’s budget and appetite, too.
And like, as you know, when I look and it’s not just about price, when I look at value, I really look at price, quality and quantity and that comes down to something that you also want to feel good about eating.
And, you know, consumers are looking for on-the-go snacks.
Consumers are looking for something that’s a great price and still tastes, you know, tastes good.
And, you know, earlier this year, you know, we launched our, our foot-long dipper or foot-long, uh, fellows, our foot-long pretzel, a foot-long cookie and a foot long.
Uh, and now this week we’re launching our long dippers that cost $3, you know, with 11 different sauces to choose from.
And it is once again offering value, great taste, great product, without sacrificing quality.
What responses do you also hear from franchisees?
I mean that they are investing their money to ensure that they can increase their wealth through an investment and because of a nationally known brand like Subway.
So what are they, what are franchisees?
Yes.
What is the response that you are hearing from them as well in terms of some of the new promotions that may also be put on the market?
Yes.
Well, these, these $3 dippers are a great example of where we, you know, collaborate and work with our franchisees to listen more to our guests and understand what our guests are looking for and our guests are telling us that they’re looking for snacks on the go.
And so, uh, instead of reorganizing a menu, we’re launching a new menu innovation to really speak to those guests and bring new guests to the front of the restaurant who, you know, will be really attracted to $3, you know, a foot long shell that they can take and use and, and that’s the kind of work that we do with our franchisees to really find that balance so that we can meet the needs of our guests to exceed their expectations, but also meet the needs of our franchisees from a profitability point of view when we think about it and this is something you mentioned just now.
And I think it was so right that when you see some value offerings that are put out there, they are put out there with a kind of sacrifice of quality and, and part of that sacrifice of quality has been in the food system, especially in the USA compared to other areas around the world as well.
Are we, are we making a significant or sustainable change in that where there’s not as much of a sacrifice in quality when there are new menu items that are also brought to market?
Well, I can certainly speak for Subway.
I mean, when I think about quality, I’m thinking about, you know, freshly cut meats, fresh vegetables, freshly baked bread, everything, you know, wrapped up in something that you can feel good about eating and also spending on. your money.
And that’s what, you know, quality means to me.
And it is, and we came back to this before, uh, point out what value means as well.
It’s a question of quality, quantity and price.
Um, and so when we look at new menu items, it’s about trying to counter that, you know, continue in that vein of offering, you know, something for everyone when you think about the consumer now as well.
I mean, there’s the wave of G LPs, the weight loss drugs that are affecting appetite, to what extent are you seeing that trickle down to the menu items that are being purchased?
Uh And, and in a certain cadence, when people are engaging with Subway even now, which I think engaging with Subway, they’re, they’re engaging, you know, I look at some of our super fans who are, you know, part of our loyalty program, our MVP rewards.
Uh, and these are also the people who are, you know, promoting us on tiktok or Instagram and they’re talking about snacks.
They’re talking about, you know, great products that taste great, that taste good that can be picked up and gone.
They’re also talking about our six-inch submarines.
They’re also talking about the footlongs, uh, and certainly the sidekicks, because they were a big hit in the, uh, when we launched them in January.
Um, and I would say that’s where people are talking, they’re talking about our food, they’re talking about the quality of their food.
Uh, and they’re talking about the value of this for the price.
How does this impact prices in the long term?
I mean, if consumers become really, you know, attached to some of these value deals, what does that mean for price normalization in the future as well?
Yes, I look, I see what we offer and we have daily, daily prices, we have promotions, we have loyalty.
Uh, and I think when you look at the food service industry, let’s talk about loyalty for a second here.
I think loyalty is a very important aspect of this industry.
And for Subway, ours is called MVP Rewards.
We relaunched it about nine months ago and it’s really about, you know, our super fans would say this is the place to get the best deals, the best perks, they get, you know, free Chip Fridays, they get birthday gifts. and they get money back.
In fact, in these nine months since launch.
It’s about, I think, uh, my God, it’s about 60 million or so dollars of cash back to those superfans, those loyal users through loyalty.
And I think that’s where consumers are starting to really look at, you know, how can I get, you know, the biggest return on my investment and how do I, you know, really get the value out of it?
And that’s certainly where you’ll start to see loyalty programs.
I think people, um, you know, get more out of it as consumers.
I know.
I certainly do.
Yes, same here.
Doug Fry Subway, President of North America.
Thank you very much for taking your time here.
Thanks.
Appreciate it.
Absolutely.
