Jan. 11, 2010

11 Jan

1 pm

Subway

1 foot-long chicken breast sandwich on wheat

handful of pretzels

1 bottle of water

The Subway next to my apartment still offers the chicken breast for $5, which isn’t the case with the one on Wilshire Blvd. when I worked at Comcast. That one only offered six or so. Ham, meatball, the horrifying seafood sensation, and of course, veggie. It’s up to each franchisee to decide which sandwiches to offer for $5, and it was inevitable that some franchisees try to whittle down the discounts to as little as possible, since profit margins can be perilously thin at some fast-food outlets. Burger King and McDonald’s had the same problems with their discounted menus. Subway’s $5-foot-long promotion was undoubtedly the most successful ad campaign from a fast-food chain in 2009 and it defined them last year. Lines went out the door at most stores. Business-wise, the company grew at a staggering pace in a year where other fast-food chains struggled. Just as McDonald’s $1 menu forced a similar concept on Burger King and Wendy’s (they always had one, but had to expand it), Subway forced other chains like Quizno’s and even Domino’s to match them with discounted sandwiches. And then there was that annoying jingle that burrowed itself into everyone’s ear but was devastatingly effective in reminding us of the deal. Despite the growth in profits, offering every sandwich on the menu for $5 was untenable. They ended the promotion in April and some stores tried scaling back the menu to the bare minimum.

But they can’t ever get rid of it. Subway’s predicament is similar to Hyundai’s. Back in the 1980 and 1990’s, their horrible cars and awful reliability led to weak sales and an embarrassing reputation. In 1998, the company re-organized itself, set about to make their products better and wanted customers to give them a chance. To do that, they offered an unprecedented 10-year, 100,000 mile powertrain warranty. For the decade that you owned a Hyundai, they would pay for any engine and transmission fixes. At the time, a 5-year, 60,000 warranty was considered great, but a 10-year one was staggering. If Hyundai continued turning out crappy cars, they’d lose a ton of money fixing cars for free. But the promotion worked. Sales increased dramatically as buyers figured a Hyundai was low-risk if repairs were free. Conversely, Hyundai’s quality and reputation had to keep up, and they got a lot better.

Eventually, Hyundai outgrew the long warranty and didn’t need it to justify their lack of quality. They now rate as the best in overall quality for a non-luxury brand and a generation of new car buyers don’t remember the crappy Hyundais of yore. But they couldn’t get rid of the deal, customers grew to associate Hyundai with the best warranty in the auto industry and used that as a primary reason to buy a Hyundai. They tried rolling it back once but was unsuccessful. And with weak sales in 2009, other manufacturers started matching Hyundai’s warranty. Chrysler, in their attempt to pull a Hyundai-like turnaround, now offers a lifetime warranty. Hyundai is now stuck with the 10-year warranty for the foreseeable future. And this is where Subway finds itself. They are tied to the hip with $5 sandwiches and need it to compete with other restaurant’s meal deals. They’ll eventually have to find new ways to draw in customers with a strategy that doesn’t have such a slim profit margin. So far, they’ve expanded their breakfast menu and tried out several cheap new $5 sandwiches like the beef barbocoa, chicken parmigiana and buffalo chicken. We’ll have to see if Subway can ever make us forget that at one time, a foot-long Subway club only costed us $5, and if we’ll accept their lesser fare.

Also, I have to congratulate Jared Fogle on his engagement if I’m going to devote an entire post to Subway. He said he gained 45 pounds recently but will lose it by his wedding day. I’m assuming he’ll go on Weight Watchers or something.

7 pm

1/2 box Kraft macaroni n’ cheese

1 can of Diet Coke

I’ll write about the other 1/2 box tomorrow, complete with pictures.

8 pm

McDonald’s

1 soft-serve ice cream cone

I can’t believe this is the first time a McDonald’s soft-serve ice cream cone made it’s first mention on this site. I get one regularly, in fact it’s usually the only reason why I go to McDonald’s. It’s cheap, between 70 cents to a dollar, not as bad for you as ice cream and it’s conveniently served from a drive-thru. Yes, it’s no fancy gelato, it’s not even Baskin-Robbins and I’ll never go out of my way for one. But if I happen to drive by a McDonald’s, I’ll sometimes pull through the drive-thru and buy one ice cream cone. My friend Helen is the only other person who saw the virtue of this, and she probably was even more excited about this ice cream cone than me. I’m perplexed why no one else is OK with this regular 70-cent ice cream habit. It’s just what we need in these tough economic times.

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