- Karlin Linhardt, the North American senior marketing VP for Subway, has left the quick-service restaurant after only eight months, per a report in Ad Age. Linhardt joined the brand from Accenture in April.
- The departure could be the result of issues between the company and its franchisees over an upcoming promotion. The chain is planning a $4.99 footlong sandwich promotion to compete with McDonald’s dollar menu. However, with sales down company-wide and franchisees already facing razor-thin margins, the strategy caused what the New York Post reported was a “nationwide revolt” by franchise owners concerned about losing profits. More than 400 owners are reported to have signed a petition protesting the discount.
- Linhardt’s departure comes little more than a week after Subway announced a custom team of Dentsu Aegis Network agencies for its North American media and creative business.
The news reflects the struggle that QSRs and merchants more broadly face when trying to move away from price promotions — which can give a short-term boost to sales but typically undermine a brand's value over time. Subway is the only restaurant among the top 10 chains to report a decline in sales last year, falling 1.7% to $11.3 billion, according to Technomic data cited by Ad Age, suggesting the business clearly needs a way to drive customers into its locations.
The news also points to the perils top marketing executives face as the role evolves to include greater responsibility for driving revenue at a company.
With the recent shake-up in its agency partnerships and now losing its top North American marketing executive, Subway's marketing strategy will likely remain in flux, a state it has been in for a couple of years. The Dentsu decision was just the latest of several changes in the chain's marketing strategy and agency relationships. A Subway spokesperson told Ad Age Linhardt’s leaving the company won’t impact the Dentsu deal.
With Linhardt at the helm, there had been signs that the chain would make digital innovation a bigger focus, a strategy has worked for Starbucks and even McDonald's in attracting younger consumers. This July, Subway rolled out its “Fresh Forward” initiative that included a redesign of its restaurants and entire customer experience through adding a number of digital elements to the in-store experience including self-order kiosks in select locations, Apple and Samsung mobile payments options, in-store USB charging stations and Wi-Fi, a new mobile app and a Facebook Messenger bot for taking orders.
However, digital transformation is a long-term strategy and the chain is also likely looking for a way to drive sales in the short term with the pricing promotion. Unfortunately, this approach hasn't proven popular with franchisees.
Time will tell if new leadership and a consolidated and more cohesive agency experience will bring more stability to the brand.