Did you know Subway, famous for its foot-long sandwiches and that whole Jared debacle, operates a series of coffeehouse-like cafes? It's true, and the company may be expanding this cafe footprint in a bid to diversify and possibly compete with one of America's most successful chains, Starbucks.
So far however, the move doesn't appear all that successful. Though the concept first came to light as far back as 2011, there are still less than 100 of the cafes in operation (a Subway spokesperson wouldn't provide an exact number). And though it's only been five years, some of the prototypes appear to have reverted back to traditional Subways.
The OC Register reports that a Subway Café in Orange, Calif., about seven miles south of Anaheim, opened Friday in a location that previously housed a coffee shop. According to the Register, the store has "the same coffee house features as a Starbucks: communal tables, cushioned seats," and phone-charging stations.
The Subway Café concept was first launched by a franchisee in Alexandria, Virginia. A 2011 press release said the concept had expanded to 20 locations and noted that the new stores offered "upscale coffeehouse ambience, an expanded menu, and Seattle's Best coffee offerings including espresso drinks, lattes and frozen blended beverages, along with amenities such as Wi-Fi, and DIRECTV, to allow customers to enjoy local news and sports events with their sandwiches."
According to that same release, a Subway Café in San Diego had "far exceeded sales projections" in its first month. A worker who answered the phone at that location, however, said the store has since reverted back to a traditional Subway. The store "used to be called a Subway Café because it carried frappucinos [blended coffee drinks], coffee and stuff," said the employee. "But we don't anymore. But the [Subway Café] sign is still up. Now it's just a normal Subway, though."
When asked what makes the original Subway Café store, in Alexandria, different from a typical store, an employee at that location said the cafe "has coffee, like a Starbucks," before hanging up the phone.
Rohit Marwaha's company, Marwaha Group, owns 166 Subway locations, including three Subway Café stores. When asked whether his group will continue to open Subway Cafés, Marwaha responded via email, writing that his company has "many unique traditional and non-traditional locations. Subway Café is one of the concepts that we continue to open where we think it is appropriate." He added that his company is "building additional" cafes, but would not specify how many.
In a statement provided to Eater, Subway spokesperson Bob Brown said the concept "is in a limited number of markets," but did not provide an exact number. "The development of the Subway Cafés is very limited," he said. "There are less than 100 in the system." Brown added that "franchisees do have the option to transition from the Subway Café concept to a traditional Subway sandwich shop."
Subway isn't the only chain taking a page from Starbucks' playbook. Dunkin' Donuts is also delving further into the espresso-based drinks market, and has seen sales grow as a result of its coffee drinks and breakfast sandwiches. Of course, the leap from doughnuts and coffee to a wider variety of coffee drinks is somewhat more understandable than the jump from deli sandwiches to coffee and pastries.
According to a franchise document filed May 2 and first reported on by Bloomberg, the success seen at Dunkin' hasn't exactly translated at Subway, where expansion is slowing. U.S. revenue fell for the second consecutive year in 2015, dropping 4.3 percent. Despite the fact that the company only opened a net 34 stores last year (it opened 911 new stores, but closed 877), the document suggests it isn't yet abandoning it's Café concept.
"We intend to continue establishing franchises in other location opportunities," reads the document. "We are also establishing franchises in schools as a test and offering additional menu items under the Subway Plus Program and Subway Café program."