As high prices continue to affect consumer spending, more fast food restaurants are introducing value meals to get customers back in their doors. Subway North America president Doug Fry joins Wealth! to discuss how the sandwich chain is handling weakened consumer spending.

As more restaurants roll out value meals, Fry warns that "sometimes greater value comes with a sacrifice. And that sacrifice is often a sacrifice on quality to get to price." He explains that Subway offers a variety of menu items for all budgets without sacrificing quality. As consumers look for snacks on the go, Subway has released footlong "Sidekicks" in the form of pretzels, churros, and cookies. The company is now rolling out footlong "Dippers" for $3.

He notes that Subway is focused on balancing quality, quantity, and price when creating new menu items. Fry also stresses the importance of loyalty in the industry and points to Subway's MVP rewards, which offer deals and perks.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video Transcript

As high prices continue to affect consumer spending.

Fast food restaurants have been taking a hit, especially as low income consumers, they're dining out less often.

So in an effort to make sure that we can lure back customers, chains like mcdonald's, Wendy's Starbucks and Subway adding value deals on to their menu here to discuss Subway's latest efforts.

We got Doug Fry, who is the Subway, North America president Doug, great to have you here in studio with us today.

Thanks Fred.

Really excited to be here.

I mean, what, what are you sensing in the environment right now among consumers where they're pushing back on certain menu items and where they're relying on some of the quick service restaurants to hear what their needs are as well in the menu right now.

Yeah, I think if you look at the food service industry today, consumers, we as consumers see it everywhere that suddenly these, these uh items are popping up on menu that are are, you know, offering greater value.

The challenge I have with that is that sometimes greater value comes with a sacrifice and that sacrifice is often, you know, AAA sacrifice on quality to get to price.

And uh we at Subway don't believe that our guests should have to sacrifice quality for price.

And that's why, uh you know, we are offering sort of a wide variety of menu items that fit everyone's budget and everyone's appetite as well.

And as, as you know, you know, when, when I look at and it's not just about price, when I look at value, I really look at price quality and quantity and that wraps up into something that you also want to feel good about eating.

And, you know, consumers are looking for snacking on the go.

Consumers are looking for something that's a great price point that still has the flavor still has the, you know, has the taste to it.

And, you know, earlier this year, you know, we've launched our, our foot long dipper or foot long, uh, sidekicks our foot long pretzel, foot long ch foot long cookie.

Uh, and now this week we're launching our foot long dippers which are $3 you know, with 11 different sauces to choose from.

And it's once again offering value, great taste, great product um, without sacrificing quality.

What, what are the responses that you hear from franchisees as well?

I mean, that are putting up their money to make sure that they can grow their wealth through an investment and because of a nationally known brand like Subway.

So, so what are, what are franchisees?

Yeah.

What's the response that you're hearing from them as well with regard to some of the new promotions that are being able to be put into market also.

Yeah.

Well, these, these $3 dippers are a great example where we, you know, we collaborate and work with our franchisees to listen to our guests more to understand what our guests are looking for and our guests are telling us they're looking for snacking on the go.

And so, uh instead of sort of reorganizing a menu, we're, we're coming out with new menu innovation to really speak to those guests to bring in new guests into the restaurant front that are gonna, you know, be really attracted by a $3 you know, foot long dipper that they can take and run with and, and it's, that's the type of work we do with our franchisees to really find that balance so that we meet the needs of our guests to exceed their expectations, but also meet the needs of, of our franchisees from a profitability perspective when we think about and this is something that you mentioned a moment ago.

And I think it was so correct in that when you see some value offerings that are put out there, they're, they're put out there with kind of the sacrifice on quality and, and some of that sacrifice on quality has been in the food system, especially in the US compared to other areas around the world as well.

Are we, are we making a significant or sustainable turn in that where there isn't as much of that sacrifice on quality when there are new menu items that are put into market as well.

Well, I can cer certainly speak for Subway.

I mean, when I think about quality, I'm thinking about, you know, freshly sliced meats, fresh veggies, freshly baked bread, all, you know, wrapped up into something that you can feel good about eating and also good about spending your money on.

And that's what, you know, uh quality means to me.

And it's, and it comes back to that earlier, uh point around what value means as well.

It's about quality, quantity and price.

Um And so as we look at new menu items, it is about trying to contain that, you know, continue along that line of offering, you know, something for everyone when you think about the consumer right now too.

I mean, there's the wave of the G LP ones, the weight loss drugs that are impacting appetites to what extent are you seeing that flow through to which menu items are being purchased?

Uh And, and at a certain cadence when people are engaging with Subway even right now, what I guess engage with Subway, they're, they're engaging, you know, I look at some of our super fans who are, you know, are, are part of our loyalty program, our MVP rewards.

Uh and those are also the folks that are, you know, putting us out on tiktok or putting us on Instagram and they're talking about snacking.

They're talking about, you know, great products that taste great, that have good flavor that they can grab and go.

They're also talking about our six inch subs.

They're also talking about the footlongs, uh, and certainly the sidekicks because they've been a massive hit at the, uh as we launch them in January.

Um, and I'd say that's where folks are talking, they're talking about our food, they're talking about the quality of their food.

Uh and they're talking about the, the value of it for the price.

How does this impact prices long term?

I mean, if consumers become really, um, you know, annexed to some of these value deals, what does that mean for the normalization of prices on a go forward basis too?

Yeah, I look, I look at what we offer and we've got everyday, everyday pricing, we've got promotions, we have loyalty.

Uh, and I think as you look at the food service industry, let's talk about loyalty for a second here.

I think loyalty is a really important aspect of this industry.

And for Subway, ours is called MVP Rewards.

We relaunched it about nine months ago and it really is about, you know, our super fans would tell you that's the place to get the best deals, the best perks, they get, you know, free Chip Fridays, they get birthday gifts and they get cash back.

In fact, in that nine months since we've launched.

It's about, I think, uh, gosh, it's about 60 million or more dollars in cash back to those super fans, those loyal users through loyalty.

And I think that that's where consumers are starting to really look is, you know, how do I get, you know, the bigger bang for my buck and how do I, you know, really get the value out of that?

And that's certainly loyalty programs are where you're gonna start to see.

I think folks, um, you know, take more advantage of that as a consumer.

I know.

I certainly do.

Yeah, same here.

Doug Fry Subway, North America President.

Thanks so much for taking the time here.

Thank you.

Appreciate it.

Absolutely.