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The Subway $5 footlong promotion is an ongoing promotion by the fast food restaurant chain Subway, which was launched in the United States in 2008 by offering footlong subs for US$5. Coinciding with the late-2000s recession, the promotion has been very successful for the chain, having spawned competitors to make similar moves to cut prices to attract customers. The promotion also helped start an ongoing trend of round price points on consumer goods.
In 2004, Stuart Frankel, an owner of two Subway franchises inside Jackson Memorial Hospital in Miami, Florida, noticed that sales were slower at his stores on the weekends. In order to help boost sales, Frankel decided to lower the prices on the footlong subs for the weekends only. A fan of round numbers, Frankel decided to make every footlong sub $5 each. At the time, Subway had various prices for its subs.
Sales shot up immediately. Two local Palm Beach/Broward County franchisees took notice and started to implement $5 footlongs in 50 of their stores, also noticing sales increases. The move couldn't have come at a better time: the United States housing bubble was about to go bust, which hit Florida especially hard. Unlike most such promotions, the Subway franchises didn't see a decline in profit margins, nor did it sell each sub at a loss.
Meanwhile, Subway executives at the company's headquarters in Milford, Connecticut were getting tired of the company's longtime ads featuring Jared Fogle, and wanted something to compete with the various dollar menu's at McDonald's, Burger King, Wendy's, and Taco Bell. Although several stores were skeptical of offering $5 footlongs, stores in Chicago and Washington, D.C. followed in the Miami stores' footsteps and saw instant sales increases. Some stores in blue-collar neighborhoods (notably East Cleveland, OH locations) were seen offering steeper discounts at the height of the promotion, such as 5 dollar footlong combos with (Sub plus chips/cookie and a drink).
Although Subway didn't require its franchises to implement $5 footlongs, it rolled out the promotion nationally on a limited time basis in March 2008. Sales shot up immediately for the company. To go with the promotion would be the "$5 footlong song" which was deliberately designed to be campy and has in itself spawned a life on its own, including singing contests and as an internet meme.
Subway has continued with a limited $5 promotion since the initial one ended in May 2008, having a list of eight subs that are $5 footlongs on a regular basis. It has also led the company to have $5 meals, with buying a six-inch sub with a drink and a side for $5. The program remains franchise-optional. In 2009 alone, the various $5 footlong promotions spawned $3.5 billion in sales for Subway.
Every year in February since the original promotion, Subway has brought back the "any regular footlong for $5" promotion on a limited time basis, excluding subs that have extra meat or require them to be sold at a significant loss. After the 2011 promotion ended, Subway began the "monthly $5 footlong", offering an additional sub for $5 for only one month alongside the regular eight "$5 footlongs".
Although the $5 price point is inevitably expected to end at some point in the future due to inflation, Subway plans to keep having some sort of value menu for the foreseeable future. Except for trial runs in some British Commonwealth nations, the promotion has only been run in the United States and Canada. As of August 10, 2012, there are only 4 lunch-dinner sandwiches (Black Forest Ham, BLT, Cold Cut Combo, and Veggie Delite) and 1 breakfast sandwich (Egg and Cheese) still at $5.
The UK now has their own value menu range where a 6 inch sub (from a limited menu) and a drink costs £3 (just under $5, inc taxes) or a footlong on its own (again, from a limited menu) will also cost just £3.
In Australian stores a similar campaign runs for it cheapest subs at $7 instead of $5. This is the same pricing as in New Zealand stores.
In India, Subway ran a similar value campaign called 'Sub of the Day'. Each day of the week had a different 'Sub of the Day' and that 6-inch sandwich would be sold for 80 (US$1.46) on that day.
Although the Subway Franchisee Advertising Fund and Trust still employs Jared Fogle in its ads, both Fogle's health-conscious ads and any "$5 footlong" ads are run concurrently as separate ads.
Several competitors ended up following Subway's success with the $5 footlongs, including Pizza Hut, Arby's, and KFC, which have introduced similar round price points. Many consumer goods outside of the restaurant industry have also adopted round price points as well. Togo's Sandwiches also has a similar offering, where consumers can purchase a "$5 Daily Special Deal", consisting of that day's sandwich, a drink, and chips, with also the choice of purchasing the sandwich separately for $3.99.
While Subway has allowed the "$5 footlongs" to remain franchise-optional, Burger King took the opposite route, requiring all locations in 2009, both franchised and corporate-owned-and-operated, to sell the double cheeseburger for $1. The move led to over 80% of their franchisees suing the parent chain, claiming that they were losing money on the items selling for $1, and that Burger King couldn't dictate maximum prices. Although Burger King later won the lawsuit, it raised the price of its double cheeseburger to $1.19 in response to the lawsuit.