With New CMO, Subway 'Recalibrating' Strategy Amid Agency Review, Jared Scandal
Pity Chris Carroll.
While Subway has not confirmed reports that Mr. Carroll is stepping into former Subway CMO Tony Pace's shoes, people familiar with the business say that Mr. Carroll is now leading marketing at the battered $11.9 billion sandwich chain as it looks to get its mojo back.
And what a task it will be: Once-beloved pitchman Jared Fogle has taken a stunning fall from grace, with news that Mr. Fogle would plead guilty to sex acts with minors and distribution of child porn. Sales are slumping for the first time in years. The chain's marketing department is in flux, while at the same time managing a creative agency review.
Mr. Pace will be leaving by the end of September to start his own consultancy. While there has been industry-tongue wagging about the timing, people familiar with the business said Mr. Pace's departure was in the works before Mr. Fogle's child pornography scandal erupted. Those people also say Mr. Carroll, who had a stint at the chain from 1999 to 2005, returned in an advertising role while Mr. Pace was still in his post. Mr. Carroll is now among the execs charged with the agency review, which could wrap up as soon as September.
In the hunt are finalists BBDO, the Martin Agency and McCann Erickson, which are pitching ideas. People familiar with the matter said discussions about reviewing or changing agencies began last winter.
Mr. Carroll and other execs at the company are "recalibrating" and "reassessing" the company's strategy, according to people familiar with their thinking.
Branding and crisis experts said Subway would likely re-emphasize its use of fresh ingredients and the ability to customize sandwiches, which helped it become the largest restaurant chain by number of locations, with more than 44,000 doors globally.
Industry experts have pinned falling sales -- down 3% in the U.S. last year, according to Technomic -- on the fact that Subway has moved away from its $5 Footlong value proposition, focused too much on premium products and lacked innovation. "In the long run, this may turn out to be a benefit to Subway because now Subway has to come up with a new direction and some new thinking," said Gene Grabowski, who handles crisis communications as a partner at kglobal.
Given the debacle with Mr. Fogle, the company may be reluctant to rely heavily on one spokesperson moving forward. "They wouldn't hire someone new again, not anytime soon," said Peter Shankman, a customer service and marketing consultant.
A memo obtained by Ad Age illustrates the issues Subway has had distancing itself from Mr. Fogle since news of the investigation first broke. On July 15, five weeks before Mr. Fogle's plea deal was announced, Franchise World Headquarters, a service organization for Subway franchisees, emailed franchisees details on how to remove Mr. Fogle's likeness from all restaurant
The organization had already pushed restaurants to remove Mr. Fogle's image but said it heard from customers and its own consultants in the field that many restaurants had not complied.
Franchisees were asked to cut Mr. Fogle from a window sign and remove menu board signs featuring his image. The memo also gave instructions on how to print a breakfast menu without Mr. Fogle's likeness.