Does Growing Too Fast Undermine Innovation?

Subway’s biggest problem has nothing to do with shamed former spokesman Jared Fogle. The company dismissed its weight-loss pitchman last week after his house was searched in an FBI investigation and one woman accused him of making inappropriate comments about middle-school girls. While the scandal with Fogle will pass, the company’s rapid expansion plan is a bigger issue that could hurt business, according to Jonathan Maze at Nation’s Restaurant News.

“It’s really been a victim of its own success,” David Henkes, from the consulting firm Technomic, told Bloomberg. “It’s really saturated the market. It’s got over 27,000 (US) locations now. The unit economics are very tough. Competitors have really come in and provided some alternatives to consumers that have caused Subway to suffer some sales losses.”‘

Subway has 44,000 restaurants worldwide, more than McDonald’s. Executives say the company eventually plans to reach 100,000 locations. Subway’s US sales last year fell by 3%, the biggest fall for any of the top 25 fast-food chains, Drew Harwell reports at The Washington Post. Subway also fell two spots to become the third-most-popular fast-food restaurant for the first time in seven years. The expansion plan is backfiring, according to The Post.

<a href=”http://chiefexecutive.net/does-growing-too-fast-undermine-innovation/”>http://chiefexecutive.net/does-growing-too-fast-undermine-innovation/</a&gt;

Read more at <a href=”http://chiefexecutive.net/does-growing-too-fast-undermine-innovation/”>Chief Executive</a>.

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