Subway Static, Potbelly Progressing

It's all about fresher, healthier, build-your-own meals

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By David Hammond

Last week, the Chicago Tribune ran a story about the current state of a chain represented on Lake Street in Oak Park. It was entitled: "The Rise and Fall of Subway, The World's Biggest Food Chain." And Subway is, indeed, the world's biggest franchise system, having more restaurants than even McDonald's, but apparently its having some trouble and it's been losing market share.

The Tribune writer attributes Subway's decline to fact that "the chain's fast-rising rivals, like Chipotle Mexican Grill and Firehouse Subs, are beating Subway at the game it helped create, offering seemingly fresher, healthier, build-your-own meals. Diners increasingly say they want to know their meat has been cut fresh, not peeled off wax paper; their meal heated by steamer, not microwave. That's led to what analysts say is one of the sub empire's biggest threats yet: What Americans see as healthy has evolved. Subway hasn't."

In Downtown Oak Park, Subway's most comparable competitor seems to be Potbelly, another sandwich maker. Last week I went to Potbelly for lunch to see if, indeed, they themselves have evolved.

I had one of Potbelly's new Flats, which is a piece of flat multi-grain bread, toasted and enfolding a low-fat protein like chicken or turkey, with lots of lettuce and some spice contributed by a giardinera-type pickled pepper condiment.

The Flat had good textural contrast between the crisp crust and the much softer insides (I had turkey). I thought it was a good sandwich…not go-out-to-eat-on-a-first-date good, but definitely good enough for a fast lunch. It's also representative of a chain that is trying to change with the times: the Flat has fewer calories than the original Potbelly sandwich, as well as less carbs, and because there's a lower bread-to-other-ingredient ratio, you can actually taste the ingredients more clearly.

One thing I like a lot about Potbelly's sandwiches is that they're toasted, in line with Hammond's Rules of Ordering, #5: If you're ordering a sandwich, have them toast the bread; it makes for a better bite and heck, a sandwich is so simple you might well get a little more value added to the deal.

Grant Achatz, chef-genius behind Michelin three-star Alinea (1723 N. Halsted), is himself a fan of Potbelly, having told Food & Wine Magazine:

If I could eat at Potbelly Sandwich Works once a week, I would. They're all over Chicago [and elsewhere in the country]. You can't beat it. For three or four dollars you get awesome toasted bread, great meat, fresh vegetables.

Potbelly carries a higher price than a sandwich from Subway, but it seems like many people are getting used to the idea that higher quality is going to carry a higher price. If you want something better, you're going to have to pay more for it.

Having said all that, I think there's a way for Subway to snap back, but it would probably involve changing out their menu, upgrading their offerings, maybe remodeling their stores…and charging the customer more. A sandwich from Subway is an economy meal; people are accustomed to seeing it that way; if Subway suddenly started charging more, they could risk eroding their current customer base, and losing market share – even if it's the result of a strategic repositioning – is probably something Subway simply cannot afford to do.

Potbelly, on the other hand, though not offering a super-premium product, has always offered a higher-quality product for a slightly higher price, so they have room to move their price up a little without their clientele feeling like they're being squeezed.

Potbelly is evolving by making incremental innovations in their basic product line (McDonald's did the same thing over the years by offering, for instance, the Big Mac and later the Filet-o-Fish, a somewhat paradigm shifting menu item at the time).

The vibe in Potbelly has remained pretty much the same since the day it opened: kind of old-timey, with vintage photos and other barely credible antiqued accoutrements, but still nicer than the Denny's-type ambiance of Subway, which may, alas, be stuck in time.

 

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Nathaniel Grotte from Oak Park  

Posted: June 16th, 2015 1:57 PM

My hot take: Subway and other old-guard fast food places are losing market share because they're old and boring, not because their products are inherently inferior to what's offered by Chipotle et al. A 6" Subway sub costs less than half of a burrito and comes stacked with as many fresh(ish) vegetables as you can ask for. I agree Potbelly makes a better sandwich, but they're substantially more expensive and nowhere near as ubiquitous. (BTW, the story was originally published in the Washington Post and reprinted in the Trib.)

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