Saturday, November 6, 2010

“Healthy Decadence”—How Subway Can Challenge McDonald’s & Win

In the world of positioning, the sandwich chain Subway is in an enviable place. In a February 2010 survey by market research firm Decision Analyst, nearly 1 out of every 4 consumers (24.2%) “completely trust” its nutritional claims – more than any other restaurant in the quick service category. The second in line, Chick-fil-A, had less than half that See chart.

And Subway is undoubtedly an incredibly successful fast-food brand, coming in second only to McDonald’s in 2009.

You might think that Subway, with an estimated $10 billion in sales last year compared with more than $30 billion for McDonald’s in the U.S. alone, doesn’t stand a chance of overcoming that behemoth bastion of serious and classic American fast food—cheeseburgers, shakes, and salty French fries.

I am here to tell you that it can—Subway had 4.2% sales growth last year vs. 2.9% for McDonald’s—but that for some reason it’s not leveraging the positioning opportunity that it has.

That opportunity is to grab and run with the “healthy decadence” position, which is slowly taking root but hasn’t really exploded yet.

You can see “healthy decadence” happening in a few scattered areas—La Crème yogurt “that is dessert,” for example—but the problem is that often these products aren’t actually all that healthy. One serving of La Crème, for example, has nearly 19 grams of sugar.

In scattered places there is “healthy decadence” that is actually healthy. Low-calorie, high-nutrition Vitatops muffins are a great example. So is the eatery Funxion, which bills itself as “the first FIT restaurant and bar in America.” (See photo of the cover of Funxion’s menu.)

Neither of these are really mass-market brands, because they’re too expensive. But if someone could capture the formula and get the price down, they would be.

Why can’t that brand be Subway?

Right now when I look at a typical Subway menu board, I see that the “heavier” aspect of the sandwiches is emphasized—choices like Meatball Marinara come first. And of course, most people are going to put sauce and cheese on dishes like that. Which is going to make the calorie count skyrocket.

Yet the company does little to glamorize the much healthier and very low-priced choices that are available. You can easily get a “loaded” (with vegetables and non-fat condiments) 6” Veggie Delight at Subway for just 230 calories. That is nothing for a sandwich. Add a scoop of tuna to make it more filling and you’re still only around 350 calories, by my estimate.

The company has other great choices in the “healthy decadence” area. Look at the breakfast menu—who else gives you egg white sandwiches for 150 calories? You can’t get that at McDonald’s!

I get the sense that Subway is struggling with how much to push the healthy aspect of its food. It’s like they want to be all things to all people—telling people that they’re the healthy alternative, but once they get people to go there, offering less healthy alternatives along with the really good stuff.

Further, although the printed materials on display are informative, I have found that the staff at most Subways, although amiable enough, totally does not push the healthy message.

In fact, one day when I asked for a Veggie Delight with mustard and one scoop of tuna (to cut the calories), the person behind the counter seemed to find the request annoying.

My suggestion to Subway, if they truly want to succeed, would be to do the following:

  • Focus on the “healthy decadence” brand position and stop trying to be all things to all people
  • Make the calorie count even clearer than it is now
  • Expand the “Fresh and Fit” menu and perhaps even brand the heavier items with another name—then they can say that everyone has a choice of what to eat at a Subway
  • Train and engage the franchisees
  • Set a goal of knocking McDonald’s off their perch

And now…let the brand games begin!