Subway $5 footlong promotion
Encyclopedia
The Subway $5 footlong promotion is an ongoing promotion by the fast food
Fast food
Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with preheated or precooked ingredients, and served to the customer in a...

 restaurant chain Subway
Subway (restaurant)
Subway is an American restaurant franchise that primarily sells submarine sandwiches and salads. It is owned and operated by Doctor's Associates, Inc. . Subway is one of the fastest growing franchises in the world with 35,519 restaurants in 98 countries and territories as of October 25th, 2011...

, which was launched in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 in 2008 by offering footlong subs
Submarine sandwich
A submarine sandwich, also known as a sub among other names, is a sandwich that consists of a long roll of Italian or French bread, split lengthwise either into two pieces or opened in a "V" on one side, and filled with various varieties of meat, cheese, vegetables, seasonings, and sauces. The...

 for US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

5. Coinciding with the late-2000s recession, the promotion has been very successful for the chain, having spawned competitors to make similar moves to cut prices to attract customers. The promotion also helped start an ongoing trend of round price points
Price point
Price points are prices at which demand for a given product is supposed to stay relatively high.- Characteristics :Introductory microeconomics depicts a demand curve as downward-sloping to the right and either linear or gently convex to the origin...

 on consumer goods.

History

In 2004, Stuart Frankel, an owner of two Subway franchises inside Jackson Memorial Hospital
Jackson Memorial Hospital
Jackson Memorial Hospital is a non-profit, tertiary care teaching hospital and the major teaching hospital of the University of Miami Leonard M. Miller School of Medicine in Miami, Florida...

 in Miami, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

, noticed that sales were slower at his stores on the weekends. In order to help boost sales, Frankel decided to lower the prices on the footlong subs for the weekends only. A fan of round numbers, Frankel decided to make every footlong sub $5 each. At the time, Subway had various prices for its subs.

Sales shot up immediately. Two local franchisees took notice and started to implement $5 footlongs as well, also noticing sales increases. The move couldn't have come at a better time: the United States housing bubble
United States housing bubble
The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. On December 30, 2008 the...

 was about to go bust, which especially hit Florida hard. Unlike most such promotions, the Subway franchises didn't see a decline in profit margins, nor did it sell each sub at a loss.

Meanwhile, Subway executives at the company's headquarters in Milford, Connecticut
Milford, Connecticut
Milford is a coastal city in southwestern New Haven County, Connecticut, United States, located between Bridgeport and New Haven. The population was 52,759 at the 2010 census...

 were getting tired of the company's longtime ads featuring Jared Fogle
Jared Fogle
Jared S. Fogle , also known as The Subway Guy, is a spokesman employed by Subway Restaurants in its advertising campaigns...

, and wanted something to compete with the various dollar menu's at McDonald's
McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...

, Burger King
Burger King
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain...

, Wendy's
Wendy's
Wendy's is an international fast food chain restaurant founded by Dave Thomas on November 15, 1969, in Columbus, Ohio, United States. The company decided to move its headquarters to Dublin, Ohio, on January 29, 2006. It has been owned by Triarc since 2008...

, and Taco Bell
Taco Bell
Taco Bell is an American chain of fast-food restaurants based in Irvine, California. A subsidiary of Yum! Brands, Inc., which serves American-adapted Mexican food. Taco Bell serves tacos, burritos, quesadillas, nachos, other specialty items, and a variety of "Value Menu" items...

. Although several stores were skeptical of offering $5 footlongs, stores in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

 and Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

 followed in the South Florida
South Florida metropolitan area
The South Florida metropolitan area, also known as the Miami metropolitan area, and designated the Miami–Fort Lauderdale–Pompano Beach, FL Metropolitan Statistical Area by the U.S...

 stores' footsteps and saw instant sales increases.

Although Subway didn't require its franchises to implement $5 footlongs, it rolled out the promotion nationally on a limited time basis in March 2008. Sales shot up immediately for the company. To go with the promotion would be the "$5 footlong song" which was deliberately designed to be campy
Camp (style)
Camp is an aesthetic sensibility that regards something as appealing because of its taste and ironic value. The concept is closely related to kitsch, and things with camp appeal may also be described as being "cheesy"...

 and has in itself spawned a life on its own, including singing contests and as an internet meme
Internet meme
The term Internet meme is used to describe a concept that spreads via the Internet. The term is a reference to the concept of memes, although the latter concept refers to a much broader category of cultural information.-Description:...

.

Today

Subway has continued with a limited $5 promotion since the initial one ended in May 2008, having a list of eight subs that are $5 footlongs on a regular basis. It has also led the company to have $5 meals, with buying a six-inch sub with a drink and a side for $5. The program remains franchise-optional. In 2009 alone, the various $5 footlong promotions spawned $3.5 billion in sales for Subway.

Every year in February since the original promotion, Subway has brought back the "any regular footlong for $5" promotion on a limited time basis, excluding subs that have extra meat or require them to be sold at a significant loss. After the 2011 promotion ended, Subway began the "monthly $5 footlong", offering an additional sub for $5 for only one month alongside the regular eight "$5 footlongs".

Although the $5 price point is inevitably expected to end at some point in the future due to inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

, Subway plans to keep having some sort of value menu for the foreseeable future. Except for trial runs
in some British Commonwealth nations
Commonwealth of Nations
The Commonwealth of Nations, normally referred to as the Commonwealth and formerly known as the British Commonwealth, is an intergovernmental organisation of fifty-four independent member states...

, the promotion has only been run in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

..

In Australian stores a similar campaign runs for it cheapest subs at $7 dollars instead of $5.

Although the Subway Franchisee Advertising Fund and Trust still employs Jared Fogle
Jared Fogle
Jared S. Fogle , also known as The Subway Guy, is a spokesman employed by Subway Restaurants in its advertising campaigns...

 in its ads, both Fogle's health-conscious ads and any "$5 footlong" ads are ran concurrently as separate ads.

Effect on the competition

Several competitors ended up following Subway's success with the $5 footlongs, including Pizza Hut
Pizza Hut
Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including pasta, buffalo wings, breadsticks, and garlic bread....

, Arby's
Arby's
Arby's is a fast food restaurant chain in the United States and Canada. Roark Capital Group owns 81.5% of the company, with Wendy's Company owning the other 18.5%. It is primarily known for selling roast beef sandwiches and curly fries. The Arby's menu also includes chicken sandwiches, appetizers,...

, and KFC
KFC
KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global...

, which have introduced similar round price points. Many consumer goods outside of the restaurant
Restaurant
A restaurant is an establishment which prepares and serves food and drink to customers in return for money. Meals are generally served and eaten on premises, but many restaurants also offer take-out and food delivery services...

 industry have also adopted round price points as well. Togo's
Togo's
Togo's Eateries, Inc., is a chain of fast casual sandwich restaurants owned by Mainsail Partners. Its headquarters are in San Jose, California....

 Sandwiches also has a similar offering, where consumers can purchase a "$5 Daily Special Deal", consisting of that day's sandwich, a drink, and chips, with also the choice of purchasing the sandwich separately for $3.99.

While Subway has allowed the "$5 footlongs" to remain franchise-optional, Burger King
Burger King
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain...

took the opposite route, requiring all locations in 2009–both franchised and corporate-owned-and-operated–to sell the double cheeseburger for $1. The move led to over 80% of their franchisees suing the parent chain, claiming that they were losing money on the items selling for $1, and that Burger King couldn't dictate maximum prices. Although Burger King later won the lawsuit, it raised the price of its double cheeseburger to $1.19 in response to the lawsuit.
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