By Josh Kosman
Suzanne Greco, 59, whose official title is still senior vice president, has taken over day-to-day operations for the closely held company with some 40,000 outlets around the world.
DeLuca recently sent a memo to top executives with a new organizational chart that showed all departments now reporting to Greco, a source said.
DeLuca, 67, has declined to discuss succession plans despite chemotherapy and a bone-marrow transplant that sidelined him for months, leaving franchisees to grapple with the question of who will step in for the legendary founder.
Subway, which a teenage DeLuca borrowed $1,000 to start in Bridgeport, Conn., in 1965, has been secretive about its management and doesn’t have to divulge financial details as a private company.
“While Fred DeLuca actively leads our family-owned company, he’s sharing more responsibilities with Senior VP Suzanne Greco,” a Subway spokesman said.
Greco has taken the lead at a tumultuous time for the Milford, Conn.-based company, which will mark its 50th anniversary in August. Like other major fast-food chains, Subway is struggling with sagging sales, changing tastes and cutthroat competition.
In January, Greco took center stage at Subway’s annual franchisee meeting in Miami, where execs acknowledged “there had been problems and they are fixing the problems,” according to one attendee.
DeLuca was also at the meeting but appeared frail, the source added.
The ubiquitous chain has been making some substantive changes, such as distributing refrigerated roast beef instead of frozen, and is planning to roll out free-range chicken in some markets to appeal to more health-conscious consumers.
At least one franchise operator took a dim view of Greco as heir apparent, saying he doubted she would make the wholesale changes needed to reverse slumping sales and profit.
Greco started as a sandwich maker at age 16, and went on to head research. She gets credit for the cold cut combo and sweet onion teriyaki subs.
Keeping it in the family also sends the signal that there won’t be an IPO or sale of the chain in the near term — options DeLuca has long resisted.
While Subway surpassed McDonald’s as the biggest chain in 2011, it has never been as profitable. A Subway restaurant earned, on average, an estimated $40,000 to $55,000 before interest, taxes and depreciation last year, down from $70,000 in 2012.
During the same period, average annual sales fell 4.6 percent to $460,000, according to estimates from John Gordon at Pacific Management Consulting Group.
Subway, which saw explosive growth 17 years ago with Jared Fogle’s now-famous Subway sandwich diet, expanded too much and failed to roll out many new products, Gordon said.
“Like McDonald’s, Subway enjoyed a long run of success but has hit a sustained difficult patch,” he said.