Subway promo policy explained
Becky Hogan | Monday, March 2, 2009
Despite Notre Dame sophomore John Traub’s efforts to initiate a boycott on the Subway located in LaFortune Student Center because it does not offer the “$5 footlong” deal, Notre Dame’s Subway has no plans to offer the promotion since it would attract more business to the franchise, which is already operating at capacity, Notre Dame Food Services Director David Prentkowski said.
Prentkowski said the decision to offer promotions is left to the University since it owns the Subway in LaFortune as a franchise.
“Subway restaurant in LaFortune is an independent franchise owned and operated by Notre Dame,” Prenktowski said. “Notre Dame … has at times participated and at other times has chosen not to participate in promotions. This is not unusual – franchise restaurants everywhere choose to participate or not based on the value assessment of the promotion.”
Prentkowski explained that pricing decisions are the responsibility of the franchisee, and this law also applies to promotions.
“There are other Subway franchise restaurants that have chosen not to participate in this promotion,” Prentkowski said.
Notre Dame Food Services believes that offering the $5 footlong at Notre Dame’s Subway would prevent the franchisee from meeting its financial obligations, Prentkowski said.
“A financial analysis and projection for this promotion concludes that it would have a negative financial impact on the LaFortune Subway, risking the restaurant’s ability to reach its financial obligation,” he said.
Prentkowski said the Notre Dame Subway restaurant “is one of the busiest in the United States serving approximately 6,000 people per week.” It is so busy, in fact, that capacity limits “prohibit our ability to add new business,” he said.
Since the $5 footlong promotion is meant to attract new business, this would ultimately have a detrimental effect to the LaFortune Subway “resulting instead in a negative margin and risk of not meeting financial obligations” since the restaurant is at full capacity, he said.
Because Subway’s business is much slower when classes are not in session, Prentkowski said, profits generated during the school year are needed to support operation costs all year long.
“It is important to understand that while it appears restaurants such as Subway are very busy, this is not the case all year around. When classes are not in session, business is substantially less. As a result, revenues generated during the academic year are required to support ongoing costs during the down times,” he said.
Prentkowski said the University “compensates its staff at a substantially higher pay rate than a typical quick service restaurant.” Not only is compensation higher, but regular Huddle staff members participate in the University health insurance program which also adds “substantial costs” to the operation.
Operating costs include things such as food, labor, supplies, facility costs, renewal costs used for equipment replacement and renovations. Also included in operation costs are the franchise’s responsibility to assist with funding general University support functions such as payroll, human resources, accounting and financial services, Prentkowski said.
The question remains whether the Subway boycott initiated by Traub will affect Subway’s business.
Prentkowski said he has “heard from a few students” about their dissatisfaction with Notre Dame’s Subway for not offering the $5 footlong promotion, but said that Notre Dame Food Services is more worried about students getting the wrong perception of the department, than they are about the boycott taking effect.
“We are concerned that not participating in this promotion has created the wrong perception of our department as we are committed to enhancing the student experience at Notre Dame,” he said.