Once the undisputed leader of the sandwich world, Subway is now facing a dramatic shift in its U.S. footprint. Recent reports have revealed that the company is in the process of closing hundreds of stores nationwide, raising eyebrows among analysts, franchisees, and fast-food consumers alike.

With over 21,000 locations still open across the U.S., Subway remains a massive presence. However, the brand has already shrunk significantly from its 2013 peak of nearly 27,000 outlets—and now, another wave of closures is underway.

So, why is Subway pulling back? Is this part of a broader business transformation or a symptom of decline? Let’s explore the data, decisions, and future outlook behind the closures.

Subway’s Shrinking Footprint: A Decade in Retreat

In 2013, Subway was at the height of its powers. It had the most locations of any fast food chain in the world—even more than McDonald’s. But the rapid expansion came with a cost.

Over the last 10 years, the company has quietly been reducing its footprint. According to internal reports and franchise data:

• Subway has closed more than 6,000 stores since 2015
• It closed 571 stores in 2023 alone
• The number of stores in the U.S. is expected to fall below 20,000 in 2025

These closures aren’t isolated—they’re part of a strategic shift toward smaller, more profitable locations and a cleaner, digitally modern brand image.

Why Subway Is Closing Stores

1. Overexpansion During Peak Years

One of the biggest reasons behind the closures is overexpansion. During the 2000s, Subway aggressively franchised its model, sometimes opening multiple stores within the same neighborhood. This cannibalized sales across locations and strained franchisee profitability.

As more stores opened, per-store revenue dropped. By the mid-2010s, many franchisees were operating at razor-thin margins, especially in competitive urban markets.

Now, with pressure from delivery, inflation, and local competition, these locations are increasingly unviable. Closing low-performing outlets is part of restoring long-term financial health.

2. Franchisee Frustration and Internal Disputes

Subway’s franchise model has come under fire for years. Many franchisees have complained about:

• High royalty fees (often around 8%)
• Mandatory participation in deep discount promotions
• A lack of control over marketing and pricing decisions

The result? Disillusionment among operators, with some even suing the company for unfair contract terms. Several long-time franchisees have opted to walk away rather than renew.

This unrest has accelerated closures in markets where operating costs are high and margins are shrinking.

3. Rising Operational Costs and Inflation

Like all restaurants, Subway has been hit by post-pandemic inflation. Input costs—particularly for proteins, vegetables, and bread—have risen sharply.

In addition, labor shortages have pushed up hourly wages in many states. For a brand like Subway, where many locations operate on minimal staff, even small wage increases can squeeze profits.

As rent, wages, and food prices climb, some outlets have simply become unsustainable.

4. Increased Competition in the Sandwich Segment

Subway no longer dominates the sandwich space the way it once did. Competitors like:

• Jersey Mike’s
• Firehouse Subs
• Jimmy John’s
• Potbelly

have eroded its market share, particularly among younger, urban consumers seeking higher-quality or customizable options.

These brands are often perceived as fresher, trendier, and more premium, compared to Subway’s traditional fast-food positioning. As a result, Subway has lost foot traffic, especially in metro areas.

5. Brand Identity Crisis and Consumer Fatigue

For years, Subway relied on “Eat Fresh” and $5 Footlongs to drive traffic. But a series of controversies—from the Jared Fogle scandal to debates over bread quality and protein authenticity—have damaged its reputation.

Despite efforts to revamp menus and introduce new items, Subway still struggles with a perception of being generic and outdated.

Store closures are part of a larger effort to refocus on quality, reduce operational complexity, and rebuild trust.

A New Strategy Under New Ownership

In 2023, Subway was acquired by Roark Capital, a private equity firm with significant investments in food and hospitality, including Arby’s, Sonic, and Dunkin’.

Under Roark’s ownership, Subway is pursuing a multi-pronged transformation plan:

• Modernizing store designs (sleeker interiors, digital kiosks)
• Streamlining menus to focus on bestsellers and premium options
• Investing in drive-thru and pickup formats
• Expanding globally, especially in Asia and Latin America

The current closures should be seen in this context—not as pure retreat, but as part of a “shrink to grow” strategy. Cut underperformers, reinvest in winners.

Digital Is Now a Priority

Subway has been late to the digital party. Unlike McDonald’s or Starbucks, it had limited online ordering options for years.

But this is changing. The company is now investing in:

• App-based loyalty programs
• Delivery partnerships with DoorDash and Uber Eats
• Digital-only kitchens (ghost kitchens)
• POS and analytics software to help franchisees track performance

Locations that can’t integrate with these systems are more likely to be phased out.

Impact on the U.S. Labor Market

Subway’s closures will naturally lead to some job losses, especially in rural and low-volume areas.

However, the shift toward fewer but busier stores could lead to better wages, more training, and better conditions for the remaining workforce.

Roark is expected to push for improved operational standards, which may raise expectations but also support more sustainable employment practices.

Global Expansion Offset

While U.S. closures dominate headlines, Subway is expanding internationally. The brand is particularly focused on:

• India
• China
• Latin America
• UAE and Saudi Arabia

By the end of 2025, Subway expects to open more stores globally than it closes domestically, suggesting that the brand’s long-term vision is far from shrinking—it’s just pivoting geographically.

Final Thoughts

Subway’s decision to close stores may look alarming on the surface—but for those watching closely, it represents a necessary and overdue restructuring of a brand that expanded too far, too fast.

The fast food industry is evolving. Consumers now expect convenience, customizability, tech integration, and quality—not just price.

Subway’s ability to adapt, modernize, and retain franchisee confidence will determine whether this retreat leads to a strong rebound—or a continued decline.

If the company can balance consolidation in the U.S. with thoughtful innovation and global expansion, it may once again be a dominant name in fast casual dining.

Disclaimer

This article is for informational purposes only and should not be construed as financial advice. The views expressed are based on publicly available data and business trends.