Subway faces latest challenge: Getting out from Jared’s shadow

Associated Press

NEW YORK

Subway benefited hugely from Jared Fogle’s weight-loss story. Now the sandwich chain needs to figure out how to prevent him from overshadowing its future.

It’s not clear how customers will react to Fogle’s plans to plead guilty to allegations that he paid for sex acts with minors and received child pornography, since it doesn’t have anything to do with Subway’s food. But the association of the company’s name with crimes that evoke such universal disgust come at a rough juncture for Subway.

Subway is facing intense competition and concerns that it’s overgrown. The company’s co-founder and CEO is fighting cancer. And at a time when attitudes about the definition of healthy are changing, Subway is trying to convince people about the quality of its food by removing artificial ingredients from its menu.

“For a while, when you see a Subway ad, you’re going to think about that child-pornography charge,” said Allen Adamson of the brand consulting firm Landor Associates.

Companies like having famous representatives, because it’s a way to make people feel like that they could somehow be more like those individuals – which in the case of Fogle meant losing weight and being able to keep it off. But such relationships also can backfire when celebrities run into trouble.

The charges against Fogle are tough because he wasn’t just a one-time endorser; he is famous solely for dropping more than 200 pounds with his “Subway diet.”

Subway leaned on Fogle’s story for more than 15 years as it more than doubled its locations in the U.S. The pitchman appeared in Subway TV ads as recently as last month, on the day his home was raided by state and federal investigators, according to iSpot.tv, which measures national TV ads. That ad recapped how Fogle lost weight, and the latest chapter in his life as a family man with two children.

The revelations about Fogle come at a bad time for Subway, which had been struggling with sales.

Subway is privately held and doesn’t publicly report its financial results. But average annual sales at U.S. Subway locations fell 3 percent last year, according to industry tracker Technomic. That was the first decline since 2006.

The company is dealing with changing attitudes about food, with industry executives saying people are paying closer attention to ingredients, not just calories or fat. To keep pace, Subway said in June it would remove artificial ingredients from its food.

Overextension might be part of the problem, too. Subway says it has about 27,000 locations in the U.S., nearly twice as many locations as McDonald’s, the next biggest chain.

Don Sniegowski, editor of Blue Maumau, a site for franchisees, said it’s difficult to predict how business might be affected by the Fogle scandal, but he thinks sales will be hurt slightly.