Subway's rough road to recovery as it searches for new CEO

4 months ago by Joshua Fruhlinger in Trends

Last month, Subway ($PRIV_SUBWAY) announced that Chief Executive Officer Suzanne Greco would be retiring. Greco had been with the company since 1973 when she joined at the very bottom as a "sandwich artist". It was also announced that Chief Business Officer Trevor Haynes would be appointed interim CEO during the transition.

After Greco's departure, CEO ratings for Haynes shot to 100%. Ratings for the outgoing CEO had been around 65%, which Glassdoor tells us is average.

So are employees suddenly much happer with Greco gone? It's not likely, but Greco leaves behind a company hurting from tumbling sales and unhappy store owners.

Stores are hurting

In February, Subway recently launched Subway MyWay, a customer loyalty program designed to bring more customers into stores and ideally reverse slumping sales. The program awards customers money — rather than sandwiches — to spend as they please. The program appears to be working, with reports that enrollment in the program has exceeded expectations by a factor of 10.

The problem for store owners, though, is that the program levies a 1.9 percent loyalty fee, and they don't believe the fee is justified in an environment where they're already hurting financially. In a position paper acquired by Bloomberg news, franchisees said that Subway had not "provided [them] with documentation of a profitable business case to justify the additional expense."

Trevor Haynes' healthy new ratings are more likely due to the fact that Glassdoor resets ratings when a new CEO is appointed. That would mean that his current 100% rating is simply due to mathematics: the new incoming reviews, as few as there are, are largely positive, and this rating will more than likely sink to more realistic levels.

In fact, since he took over (Glassdoor lists him as CEO for the first time on May 20), the total number of Glassdoor reviews for Subway went down, meaning there was some scrubbing of data to account for the transition. While this is normal for Glassdoor, it's evidence that the jury is still out for Haynes, especially as employees are anxious for a turnaround for the fast-food chain.

The DeLuca inner circle

There is also anxiety at the company in regards to who will ultimately take over as a permanent CEO. The company, despite its size, remains a privately owned family affair. It was started by the DeLuca family and has always been led by a family member. In fact, outgoing CEO Suzanne Greco is co-founder Fred Deluca's sister.

In other words, for the first time, America's largest fast-food chain in terms of locations is bringing in outsiders, and employees (including franchisees) are feeling uneasy.

Overall rating for the company from employees on Glasdoor has been lukewarm, sitting around 3.2 out of 5 for the past year.

The ratings mix has been steady as well, with a small uptick in 1-star ratings in the past month during the CEO transition and following the MyWay program launch.

Subway Locations in the US [Source: Thinknum Data Lab]

It's also worth noting that among the 5,322 employee reviews of Subway on Glassdoor, many are likely from store workers who aren't necessarily focused on C-level executive policy shifts. Then again, the new positive reviews could be a sign that store managers like the fact that they're about to see some new leadership. 

Joshua Fruhlinger

Joshua has been writing about technology, lifestyle, and business for over 20 years. He's one of the original writers and editors for Engadget, and still writes a...

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