The very popular $5 footlong has been a staple in many peoples' fast food diets over the course of almost 10 years. Customers loved the idea of spending that small amount of money on that large amount of food, while also giving them rather healthy options when it comes to fast food. This week, however, marks the end of the $5 footlong era, as Subway has announced that they will be raising the prices of their famous footlong sandwiches to $6.
Obviously, after nearly 10 years of existence, with regards to inflation, the $5 footlong has been decreasing in value constantly, and Subway is finally acting on that. The article also mentioned production costs increasing, which gives Subway no other option than to raise their prices.
In my opinion, this idea will come with backlash and a decrease in sales due to multiple reasons. Earlier, in 2015, the Jared Fogle situation somewhat blackened Subway's reputation, and after some time, Subway has worked to cut off as many of their ties that still remained with Jared. But now, to the average person who doesn't consider the economy and inflation (or doesn't know about inflation in general), they won't understand that Subway had to make the decision to increase their prices. Some people will be angered and for lack of a better term, will boycott Subway in a sense. This of course, is all speculation.
http://www.foxnews.com/leisure/2016/02/04/subway-raises-price-its-footlong-to-6/
I feel that this is going to hurt subways business a lot. The reason i say that is people don't understand inflation and don't understand that prices of goods will go up eventually. A reason why they also will possibly stop going to subway is there are other companies that offer deals that are still $5 and actually some fast food places have lunch deals as low as $4. In the past 10 years subway was always the place to go for a healthy fast food lunch but there are other competitors that are starting to offer healthier options which makes them more competitive.
ReplyDeleteI agree with Zach's comment above because there are cheaper options at other fast food restaurants subway most likely faces lower sales; unless, they are able to show that a customer receives more for the high price. For instance, increase the serving of each topping, but they would have to balance this increase with the expense of producing each sandwich.
ReplyDeleteIt will be interesting to see if other fast food restaurants increase their prices. I just imagine that with subway's increase cost of production the other fast food chains will also inquire the same increase of cost.
ReplyDeleteit will be interesting to see what happens with the number of costumers they get. I feel like subway used to be big on the $5 footlong a few years ago, but i can't remember the last time my sub cost $5 there. with increased production cost it was only a matter of time before they raised their lowest menu prices, but overall i don't think it will do too much harm to the fast food chain.
ReplyDeleteI agree with Kyle on this one. Not many sandwiches on Subway's menu were $5 to start with. However, I feel like the increase in price from $5 to $6 will hurt their sales initially because consumers never like to hear about an increase in prices, but later the consumers will start to buy Subway again when they realize the prices only changed by a small amount.
ReplyDeleteSubway should strongly reconsider their approach on this one because if they want to remain competitive in a very cutthroat market. Loyalty customers may disappear feeling betrayed, so Subway need to advertise in some way to communicate to customers they are still getting value despite the increase in prices.
ReplyDeleteI think that Subway should reconsider keeping the original price of the footlong before they make any decisions. They should know that they are known for this, everyone recognizes the "$5 footlong." If they change the price it can affect their business and possibly decrease their sales.
ReplyDeleteI believe that the price of goods only depends on the quantity demand and quantity supply. Since the 10 years inflation, $5 is not as valuable as 10 years ago and the profit Subway could earn becomes less and less. The increase of the price of footlong would certainly decrease the quantity demand, but I believe that it could bring more profit to Subway because the new price is closer to the equilibrium price.
ReplyDeleteI don't think this will have an impact on Subway's profit. The prices that they offer are still relatively lower than their competitors. Additionally, since they try their best to brand themselves as a healthy option, it will attract more people. It is not like people are going to change their minds over a 1-2$ price increase.
ReplyDeleteI agree with David, in that I don't think the rise in price's will really effect Subway's profit. In September 2014, most subs were raised to $5.25 or $5.95 and only two regular $5 foot longs remained. By the Christmas of 2014 , all the subs cost $5.50. A sub that cost 5$ in 2008 is equal to 5.50$ in todays terms because of inflation. I do agree that most people do not understand inflation but McDonalds really was not hurt when the decided raise their prices on their dollar menu. While in the short run it may have been hard for consumers to grasp the idea that their food went up by thirty cents, in the long run it will not hurt Subway just like it didn't hurt the fast food chains.
ReplyDeleteThe raise in prices comes at a tough time when considering their struggle with Jared. Is it because the 5 dollar footlong is decreasing in value or that Subway is struggling with sales? It would be interesting to look into the fact that they may be doing this to have a higher sales number. The company was hit hard with Jared, and this could be the way of increasing sales. Subway may thought that they won't lose many customers with just the small raise in prices.
ReplyDeleteI don't think a $1 increase is really as significant, specially since it is changing after 9 years. Jared Fogle definitely is something the company will have to pay the price for sometime now, until people forget.
ReplyDeleteI think most reactions from customers are coming only because Subway announced the change on Twitter. Had it not done so, most people probably would not even have cared as much.
I think that one of the biggest aspects to consider with this change is how it is going to effect the way they market the "$5 foot long" jingle that they have based a lot of their advertisement off of. If they can find a way to get that out of customers heads then I don't believe that a dollar increase will have that much of an effect on the entirety of consumers.
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