Subway Pushes Wendy's Out Of The Big Three In QSRs

The Big ThreeSubway Restaurant has broken into the Big Three of quick-service restaurants, pushing Wendy's aside for the first time.

In its most recent issue, QSR magazine ranked the Top 50 QSRs by 2007 sales, segment and percentage of sales change, among other permutations. Overall, the Top 5 were McDonald's, Burger King, Subway, Wendy's and Starbucks.

What was the restaurant chain's secret? "Subway finally built enough stores to break up The Big Three," the magazine reported. It quoted the Milford, Conn.-based company as planning 2,800 new locations this year, half of them international.

Robert Passikoff, who as president of Brand Keys studies the restaurant industry intensely and annually issues the much-respected Consumer Loyalty Engagement Index, was not surprised to see Subway push Wendy's aside.

"Subway has been No. 1 in [our index] for a number of years," he tells Marketing Daily. "And Wendy's has been losing position for a lot of years." The most recent index listed McDonald's and Subway tied for No. 1, Quiznos and Burger King tied for No. 2 and Wendy's at No. 3.

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"If you understand what drives the category, you can see why Wendy's doesn't do as well," Passikoff says. "The No. 1 driver is menu variety, and variety is what Subway's got." Conversely, he notes that Wendy's used to be known for introducing new products when founder Dave Thomas was alive, but in the past several years, he says, it has focused on choice. "And choice is not a major player" in customer loyalty measurement.

The chain's "Eat Fresh" marketing slogan hammers home another important criterion in customer loyalty: health, quality and value. Now that Subway has made its limited-time $5 foot-long sub promotion a menu addition, he sees no question that it beats Wendy's $1 sides. And although Wendy's had once banked its reputation on having "fresh, not frozen" beef, that has disappeared, as Passikoff points out.

Relatedly, Subway was graded A- by the authors of the newly published Eat This, Not That! "A menu based on lean protein and vegetables is always going to score well in our book," they wrote. "With more than half a dozen sandwiches under 300 calories, plus a slew of soups and healthy sides to boot, Subway can satisfy even the pickiest eater without breaking the caloric bank."

While the chain fails to stand out from the perspective of good customer service ("they all have the process down now," says Passikoff), its "fun factor" beats Wendy's. "These are the ingredients by which you'll engender loyalty that leads to profitability," he says.

Still, QSR says McDonald's and Burger King probably have nothing to worry about. "Both Subway and Starbucks will probably stay put for now," it said.

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