Updated on September 15, 2015 — 9:38 AM PDT
Leslie Patton
The death of Subway Restaurants Chief Executive Officer Fred DeLuca puts management of the sandwich chain in the hands of sister Suzanne Greco, who was already running day-to-day operations during a turbulent period.
Greco was named to the role of president in June, while DeLuca struggled with terminal leukemia. While he retained the CEO title, she has gradually expanded her responsibilities at Subway, the world’s largest fast-food chain by number of locations.
The company will be planning its next steps — either under Greco or a newly appointed CEO — during a time of sluggish growth and a scandal involving its former spokesman. Jared Fogle, the longtime face of Subway, agreed in August to plead guilty to federal child-pornography charges.
“It has certainly been a tumultuous time,” said John Gordon, a principal and restaurant analyst at Pacific Management Consulting Group in San Diego. The challenge now is finding new leadership, he said.
“Nobody can ever replace Fred,” but the company is going to have to recruit outside people for its headquarters in Milford, Connecticut, he said.
Subway declined to say whether Greco will be taking the CEO title.
Fewer Openings
The company’s once-furious U.S. expansion has slowed during the past two years. It added 313 net restaurants last year, down from 638 in 2013 and 804 in 2012. The chain has said that it isn’t currently focused on adding locations; rather, it wants to boost sales at its existing ones.
The chain also faces mounting competition from newer fast-casual chains, such as Panera Bread Co. and Jimmy John’s Gourmet Sandwiches. Subway’s U.S. sales fell 3.3 percent last year to $11.9 billion, compared with an increase for sandwich shops in total, according to research firm Technomic.
Subway, which has more than 44,000 locations globally, has recently advertised footlong steak-and-cheese subs, along with $6 meals, aiming to bring in more customers. But it will take something more dramatic than that, Gordon said. “The problem is Subway has competitors and the Subway store volumes aren’t that high,” he said. “It could be a four- or five-year process to get things fixed.”