What went wrong with Subway in US? Overexpansion, competition and changing tastes

QSR Magazine reported that Subway’s US store count fell for a tenth straight year in 2025. Between 2016 and 2025, the company closed a net 8,345 restaurants across the country. The chain once operated roughly 27,000 US stores in 2015, but that number has steadily dropped as sales weakened and franchise owners struggled with profitability.

For decades, McDonald’s built one of the most powerful restaurant brands in the world. The company started in 1940, but its biggest rise came in the 1970s when it perfected a fast-food model based on speed, consistency and convenience.

“Our aim was to insure repeat business based on the system’s reputation rather than on the quality of a single store or operator,” McDonald’s founder Ray Kroc wrote in his book “Grinding It Out: The Making of McDonald’s.”

McDonald’s plans to reach 50,000 restaurants worldwide by the end of 2027 as part of an aggressive global expansion strategy. Financial research firm Zacks.com said restaurant development remains a key part of the company’s long-term growth plan despite pressure on consumer spending across the restaurant industry.

The expansion puts McDonald’s on track to eventually challenge Subway for the title of the world’s largest restaurant chain by number of locations. Subway has held that position since 2011.

Subway overtook McDonald’s in the United States more than two decades ago. According to the USA Today Network, the sandwich chain later surpassed McDonald’s globally as well.

Fox News reported in February 2002 that Subway operated 13,247 stores in the United States, which was 148 more than McDonald’s at the time. Subway founder Fred DeLuca rapidly expanded the brand across the country during the 1990s and early 2000s.

Even after losing the store-count battle, McDonald’s remained financially stronger and culturally bigger than Subway.

“The fact that there are more Subway restaurants in the United States may be a boost in visibility, but does not add up to huge financial gains,” fast-food analyst Mark Kalinowski of Salomon Smith Barney told Fox News in 2002.

“If you have a person walking down the street or driving along in their car, they’ll see more Subways. It’s a convenience factor to have a lot of units open. But ultimately, from a financial perspective, it’s not that big of a deal,” he said.

Why did Subway start losing restaurants?

Subway’s decline began slowly but turned into a long-term problem. The company closed 357 restaurants in 2016, followed by 866 in 2017 and 1,108 in 2018. Subway shut another 996 locations in 2019. The downturn worsened during the pandemic when 1,601 stores closed in 2020.

Closures continued after that. AOL reported that Subway shut 1,043 restaurants in 2021, followed by 571 in 2022, 443 in 2023, 631 in 2024 and 729 more in 2025.

The company’s downturn started around the same time as the 2015 arrest of longtime spokesperson Jared Fogle. Federal prosecutors charged Fogle with distributing and receiving child pornography and engaging in illegal sexual activity involving minors.

“United States Attorney Josh J Minkler announced today the filing of formal charges against Jared S Fogle for distributing and receiving child pornography, conspiring to do so, and repeatedly traveling to engage in commercial sex acts with underage minors,” the FBI said in a press release at the time.

Subway immediately cut ties with Fogle after the arrest became public. Crisis management experts warned that the scandal could damage consumer trust in the brand.

“They have to acknowledge they are in a horrific situation and then pivot back to the fact that the spokesperson’s actions will in no way affect the brand’s dedication to providing customers with a healthy fast-food alternative,” Patrick Hillman of Levick Communications told Marketing Dive.

Industry analysts believe the scandal alone did not cause Subway’s problems, but it added pressure during a difficult period for the chain.

Can Subway recover from years of decline?

Restaurant industry experts say Subway’s biggest problem came from expanding too fast. Nation’s Restaurant News Editor in Chief Jonathan Maze wrote that falling same-store sales and excessive growth hurt franchise owners across the country.

“The simple explanation for this decline is that same-store sales have been falling since 2012, and unit count has followed,” Maze wrote.

He added that aggressive expansion hurt store profitability because too many locations competed against each other.

“Operators tell me privately that aggressive development over that period cannibalized existing locations and hurt unit economics,” Maze said.

Some franchise owners also admitted that sales weakened sharply in stores that once performed well.

“Stores that were exceptionally strong five years ago are much weaker now,” one franchisee told Maze.

Subway also faced stronger competition from newer fast-casual chains. In the early 2000s, the company gained popularity with its “Eat Fresh” campaign, which promoted healthier food compared with burgers and fries sold by rivals like McDonald’s.

Over time, however, customer tastes changed. Chains such as Chipotle and Jersey Mike’s offered fresher ingredients and higher-quality meals, even at higher prices.

Food Network personality Ali Khan said Subway failed to keep pace with those changing expectations.

“In the early 2000s, Subway’s ‘Eat Fresh’ branding resonated with a health-conscious public in contrast to McDonald’s,” Khan wrote in a social media post.

“But over time, new fast-casual competitors with an eye on quality like Chipotle and Jersey Mike’s opened the door to a new era of higher quality chain fast food,” he said.

While Subway struggles to stabilize its business, McDonald’s keeps expanding. If McDonald’s reaches its target of 50,000 locations by 2027, the company could soon reclaim the crown as the world’s largest restaurant chain.