How did Subway, a maker of submarine sandwiches, become the clear leader in the healthy fast-food subcategory with so many large and a well-resourced competitors in place? Although like any success story, the answer is complex, I believe, however, that there are three explanations for Subway’s success.
There is no doubt that Subway won the battle for this fast growing and influential subcategory some years ago and has retained that position. In 2009, Zagat Fast-Food Survey rated the Subway brand as the number-one provider of “Healthy Options. A benchmarking 2011 study by CustomersDNA among a representative sample of some 15,000 U.S. consumers found that of the 15% of customers who eat regularly at fast food restaurant and choose brands based on health Subway just dominates — capturing 76% of the this segment.
The subcategory is important over and above its sales because it provides brand energy and it influences those that are not primarily looking for healthy options. Some of these customers will associate the freshness deliverable with taste or would like to go to a place with a healthy option “just in case.”
The vision has translated into market success. Subway now has nearly 35,000 restaurants in 90 countries surpassing McDonalds. Three success drivers. Subway was strategically opportunistic. The strategy and brand vision was not planned but resulted from exploiting an opportunity that was thrust on them and then running with it. In 1999, an article appeared in Men’s Health about a college student, named Jared Fogle, who lost 245 pounds by walking and by eating a Subway diet consisting of a two sandwiches each day. Subway recognized several realities.
First, there was a robust interest in healthy eating and the visible role of fats. Second, Subway had a portion of their menu that was (relative to fast food offerings) healthy. In fact, they had already identified seven of their sandwiches that contained under 6 grams of fat and branded them as “7 under 6.” Third, the competitors in the fast food space were either struggling with healthy offerings or image or, more likely, failures or non-participants in the healthy trend. Fourth, it was not easy to provide differentiation and energy to a brand in this space and a healthy eating claim with substance could do both. So there was an opportunity for a new strategy and Jared and his story would provide the visibility and credibility.
The marketing was a cut above in terms or creativity, consistency, and effectiveness. Jared was leveraged with events, programs, and advertising. Subway associated itself with the reality TV show “The Biggest Loser” where contestants were on a weight-reduction race and had a placement win on the Chuck TV show. A subset of sandwiches were branded as FreshFit to guide ordering and to help tell the story.
To support FreshFit, 150 Subway brand ambassadors awarded bicycles and thousands of Subway Cash Cards to consumers and spectators for their “random acts of fitness”—such as climbing stairs or power -walking. A FreshFit for kids meal with healthier–for-you side options such as apple slices, and Dannon yogurt was accompanied with a school education program. Subway’s tag line “Eat Fresh” was simple but told the healthy eating story and linked to the fresh brand (baked on site) core Subway attribute.
The in-store experience supported the brand vision. The “healthier” claim with nutritional information that was visible, for example, not hidden under the counter. Third, Subway was committed to the strategy. After 2000 Subway was all about healthy eating. Unlike their competitors there were no false starts, changes in positioning sometimes from year to year, or diffused image by a brand trying to connect with too many segments.
They developed and improved products to deliver on the promise and generate energy. The fiber in the bread was increased, trans fats were removed, and line of carb-controlled wraps with under 5 grams of fat introduced. The commitment enabled and provided direction for the marketing program and allowed it to cumulatively build a formidable position.
I have noted in my book, Brand Relevance, that the only way to really win is to get out of the “my brand is better than your brand” box and dominate a subcategory that contains some “must haves” that make competitors irrelevant. In doing so, barriers to competitors need to be created and the concept needs to be scaled. In a tough market, Subway is to me a role model of how to do exactly that.