Starbucks has passed Subway to become the No. 2 restaurant chain in U.S. sales — second only to McDonald’s.
That’s the conclusion of the restaurant industry’s widely watched annual report on domestic sales, “2015 Top 500 Chain Report,” compiled b y the research firm Technomic.
With almost $12.7 billion in U.S. sales in 2014, Starbucks pulled away from Subway and claimed the No. 2 slot for the first time, according to the report. Subway, which is privately held, does not generally report its U.S. sales, but it informed Technomic that its 2014 U.S. sales were $11.9 billion. McDonald’s remains far-and-away No. 1, with U.S. sales of $35.8 billion in 2014.
Darren Tristano, executive vice president at Technomic, says that if the trends continue — and McDonald’s domestic sales continue to falter — there could someday be a battle for the U.S. sales top slot. “It would take an enormous negative impact from McDonald’s to do that, but if Starbucks continues its growth path, you might see 15 years down the road that they could pass McDonald’s.”
Even then, the domestic sales growth of Starbucks, up 8.2% last year, and the domestic sales decline of Subway, down 3.3%last year, is most significant, says Tristano. Domestic success, he says, is often a driver of success abroad.
The heated battle for second place is the most engaging, says Tristano, because it’s so much closer than the fight for first.
Tristano criticized Subway for focusing too much on franchise growth. Also, he says, Subway’s “Simple $6” menu has not been as effective as its $5 subs. And, he says, other chains, like Chipotle, are stealing the “healthy” mantle from Subway.
“Starbucks continues to invest in the brand, and Subway continues to invest in franchising,” he says.
Subway spokesman Kevin Kane said, in a statement, “Subway is always improving and working to meet our consumers’ rapidly evolving needs, from our better-for-you menu choices to how we interact with our customers. Most recently, we’ve seen positive momentum as it relates to our flavor and quality improvements, as well as growth in customer perception of our everyday affordability at Subway with the ‘Simple $6’ menu.” Starbucks executives declined to say if they ever plan to pass McDonald’s in the U.S.
But CFO Scott Maw said, in a statement, “Our business has never been stronger, and we owe it all to our partners (employees) and customers who have been with us on this journey.”
“Starbucks continues to invest in the brand, and Subway continues to invest in franchising.”
Darren Tristano, executive VP at Technomic
“Our business has never been stronger,” CFO Scott Maw said, in a statement.]]>