CHICAGO (AdAge.com) -- If fast food has one truism, it's that success breeds imitators.
Subway handily beat its competition last year with the incredibly popular $5 foot-long promotion. Doing so, it also crystallized the $5 price point as the one to meet or even beat. The sandwich chain closed the year with double-digit same-store sales increases, and competitors went back to the drawing board. Subway, which is the nation's largest restaurant chain, has since made the $5 promotion permanent for a handful of subs, and occasionally offers all of its sandwiches at $5 for a limited time.
Subway continues to push $5 sandwiches, but with a lot more company. Domino's launched a $5 toasted sub this winter, Quiznos has a $4 sandwich, and Kraft has introduced frozen sandwiches under $4 from its DiGiorno and California Pizza Kitchen brands. Pizza Hut launched a $5 calzone over Memorial Day weekend. Even McDonald's billboards in New York show a Big Mac, fries and a drink pointing to a full meal at the critical $5 mark.
In some cases, the competition has gotten nasty. Subway sent Domino's a cease-and-desist letter in response to an ad from Crispin Porter & Bogusky that says Domino's beat Subway in a national taste test by a 2-to-1 margin. Domino's president David Brandon then burned the letter in a TV spot.
While Subway claims that the ongoing promotion is sustainable for its system because of its size and subsequent leverage over vendors, how long smaller competitors can bear up remains to be seen. Some Quiznos franchisees have roundly criticized low-price promotions that affect their margins, but the corporation has said the $4 Torpedo was designed to boost franchisee profit. In most cases, it's too early to say what products are getting the most traction.
Hear from Fortune 500 brands that have been forced to pivot as consumer preferences evolve, as well as entrepreneurs building brands from scratch to meet new consumer needs. This event peels apart the layers of brand building with a carefully crafted roster of top marketing, technology, and creative leaders.Learn more