Subway turns to $2-off loyalty program to reverse slump


Subway Restaurants, facing one of the biggest sales slumps in its five-decade history, is looking to win back customers with a new incentive: $2 discounts through a revamped loyalty program.

The sandwich chain will let diners use their loyalty rewards on any menu items, lifting restrictions under the current program. The new system, which will expand to 28,500 U.S. and Canadian locations next month, will offer frequent customers freebies such as cookies and chips and let them use their balance via a mobile app and other channels.

"It made sense for us to revisit our loyalty program," Chief Digital Officer Carissa Ganelli said in an interview. "We're putting the customer first. We have to be everywhere they are and engage with them how they want to engage."

The Milford, Connecticut-based chain is fighting to reverse its U.S. decline: Sales fell 4 percent last year after a 1.7 percent drop in 2016, according to industry researcher Technomic. That's the worst performance in at least a decade. The brand's cachet has worn off as rivals entice customers with sleek store designs and expanded healthy options. Other competitors have deepened discounts and expanded delivery.

Closely held Subway is increasingly turning to technology to reverse the decline. Last year, it introduced a new mobile-phone application, and it's adding touch-screen kiosks at restaurants. The new rewards program will also represent a significant expansion, since it's currently only available at about one-third of North American locations.

With the revamp, customers can earn $4, roughly enough for a 6-inch sub and drink, after spending $100. Along the way, they will also receive "surprise" rewards such as cookies, chips and possibly sandwiches, Ganelli said. Before, they needed to spend $50 to get a 6-inch sandwich.

The chain said its millions of existing rewards members will automatically be enrolled in the updated program. Ganelli predicted the changes will entice loyal Subway eaters to visit more frequently.

"The goal here was really to reward our most valuable customers," she said.

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