Could the millennial trend of quality over price lead to more fast food restaurants like Subway to become a dying brand?
One of the biggest trends of 2017 has been the onslaught of dying brick and mortar retail stores, with an estimated 7000 to be closed by the end of this year.¬† But along with this of course are declines in dining out, as seen by the bankruptcy of chains such as the Ignite Restaurant Group which was part of a total¬†1500 chain restaurant stores¬†to close this year.
And sadly, the majority of those restaurant closures came from a single well-known chain…. Subway.
‚ÄúSubway is in the¬†midst of a massive transformation,¬†and change of this size takes time,‚ÄĚ a representative for the company¬†told Business Insider. ‚ÄúOur goal is to strengthen the Subway brand in every market around the world to give Subway franchisees the greatest opportunity to successfully grow their businesses.‚ÄĚ
Confirming that Subway has indeed peaked in its 5 decades-long business¬†cycle, even as management desperately attempts to engineer a soft landing,¬†a Subway representative said that another 909 locations have been closed in 2017, representing more than 3% of the chain‚Äôs¬†2016 U.S. stores.
This is the second consecutive year that subway has closed hundreds of locations.¬†The company is currently operating 25,835 shops in the U.S., compared with¬†26,744 at the end of 2016.¬†Sales in 2016 have also declined -1.70% after 359 locations were dropped.¬†It‚Äôs¬†evident that a domestic sales slowdown has rippled its way through the company in 2017, and will most likely persist¬†through 2018.
There is more bad news: the company‚Äôs¬†international business has stalled with the decline¬†of 471 international shops. In 2017, the chain had 44,014 worldwide, down from its 44,485 stores in 2016. Subway has failed to keep pace with¬†fast-casual competitors: Panera,¬†Starbucks, and Sweetgreen, as the company, is not deemed cool by millennials. –¬†Zerohedge
Just as the advent of games and apps on inexpensive tablet devices are replacing toys for most children, so too are ‘assembly line’ restaurants failing to entice an entire generation of eaters who demand an experience and quality over lower prices and convenience.
Every 50 years or so retail goes through a paradigm shift that comes from either economics, technology and innovation, demographics, or some other cultural shift that finds what was once on top no longer in demand by the consumer.¬† And since most shopping today is quickly moving to the convenience and speed that online portals now provide, when consumers, especially millennials, do leave their homes to go out, if restaurants now don’t provide an experience as well as quality then they too could soon end up on the chopping blocks.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.