Subway's $5 Foot-long Becomes Yardstick for Fast-Food Meal Deals

Chains Fight to Keep Up With Competitor, but Will Consumers Buy It?

By Emily Bryson York
Published: June 08, 2009

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.

"It's become the institutionalized yardstick against which all of the meal specials are going to judged," said Brand Keys President Robert Passikoff. "They're looking to expand their lines and their income streams. Doing that allows them to try and migrate the brands in different directions, and say, 'We have more than just fill-in-the-blank.'" The degree to which consumers will accept it, he added, is a moving target that also hinges on the marketer's ability to execute.

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.

5 Comments

By theRetailDoctor | Coxsackie, NY June 8, 2009 11:42:00 am:

What are franchisees saying about food costs with the $5 deal? Anecdotally I've heard of people coming in and buy one, splitting it and sharing, which has diminished the whole point - to grow sales.

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By jay_miletsky | totowa, NJ June 8, 2009 12:47:03 pm:

Cost is one thing, but taste is another. They're building a Sonic across the street from my office, and no $5 promotion from any other chain will be able to lure me away from there. At least until they build a Chic-fil-A somewhere nearby...

What was the number of that fitness club again?

Jason Miletsky
CEO, PFS Marketwyse
Author, 'Perspectives on Marketing'

http://twitter.com/jason_miletsky

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By JeffGriffith | New York, NY June 8, 2009 02:33:28 pm:

Burger King, McDonald's and especially Wendy's are slamming away at the economics of food purchase but only Subway has a catchy jingle that solidifies the price point. Especially in the QSR category, Subway has made it memorable.

HOWEVER, What's your option? Whopper combo? Chipotle?
My concern is that Jared needs to be a part of this program quickly or Subway can easily be usurped by a healthy alternative. If you're not gluten intolerant, you'll be more than happy to get 12 inches of bread for only $5....but if you are remotely concerned about your health, you'll be looking at the $4 salad combo across the street.

The price game is a short-term answer or else they'll be selling burgers and sandwiches for 25 cents within a year.

Jeff Griffith, Co-Founder/Creative Director
Jugular
http://www.jugularnyc.com

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By awrb84 | Gainesville, FL June 9, 2009 05:05:06 pm:

Right now, I have a feeling Subway is staying ahead of their competitors by being the first to really boast a $5 meal and they are still perceived as the healthy alternative. That's the one thing I never understood about Quizno's and Domino's trying to compete with subway on the amount of meat/taste or price. Neither chain screams healthy and it's not like people think Subway tastes bad. Price won't work because the $5 price has been attached to Subway. So the other chains will have to focus on something that Subway doesn't have. Domino's should go back to focusing on pizzas, especially the 2x Tuesday deal. That's a deal I think tons of people like and there is no way Subway can offer a deal like that.

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By davidavisok | San Bernardino, CA June 9, 2009 07:22:55 pm:

The only reason why Subway has such a monopoly over their $5 deal is because most people have already associated Subway with low-cost sandwiches. People view their move as a safe and accomodating and consumers feel they'd better make use of this or miss out.

Quiznos? Their meals are despicable and were never worth worth their prices. You always feel like you're getting ripped off. After they introduced their $4 sub, it was like they were trying to seduce their ex from better opportunities. That baguette is so tiny, it's a little embarassing when ordering their terrible tasting sandwiches like using coupons to purchase designer clothes.

The whole idea of Subway making their $5 subs is to make sure people keep spending (at their franchises).

David H. Alder

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