A Cut Above

It was a creative concept no sane QSR marketer would have ever attempted on his own. But sometimes, if you’re lucky, you get some help from your customers.

In the case of Subway Restaurants, the assist came from Jared Fogle, a 425-pound Indiana University student who, as fate would have it, lived above a Subway restaurant in Bloomington. Fogle bought into the sandwich chain’s Seven Under Six low-fat menu in a big way – both literally and figuratively – by embarking on a bizarre weight-reduction program that exclusively entailed a six-inch turkey sub for lunch and a foot-long veggie sub for dinner every day for a year.

Two hundred and forty-five pounds later, Fogle had accomplished his mission, and Subway had itself an unexpected poster boy. Local newspaper stories about Fogle’s remarkable success sparked coverage in Men’s Health last fall, and “Hal Riney & Partners decided we ought to make an ad out of it,” says Chris Carroll, director of marketing for the Subway Franchisee Advertising Fund Trust (FAFT).

Fogle’s dramatic makeover came at a good time for Subway, which for years has been positioning itself as a healthy alternative to the grease-addled fare served at rival QSRs. (What else would you expect from a chain owned by a company called Doctor’s Associates?) The company’s new marketing team is taking that mission in a slightly different direction this month, when Subway rolls out a fancier menu, a more appetizing service plan, and a $75 million advertising campaign designed to let the world know that, when it comes to fast food, bigger is decidedly not better.

With nearly 15,000 restaurants worldwide and $3.2 billion in sales last year, Milford, CT-based Subway isn’t exactly small. But executives freely acknowledge the chain can’t compete with McDonald’s, Burger King, or Taco Bell from a marketing standpoint, since it doesn’t have the budget to match. In fact, the company itself doesn’t have a budget at all: it’s FAFT that funds and directs all marketing initiatives.

The new folks in Milford are fairly confident they can compete with the big boys when it comes to offering healthier food and better service – old marketing points that will be refreshed this month through the most dramatic menu revamp in the company’s 35-year history.

The Seven Under Six program has expanded beyond low-fat with a Fresh Value Meal theme that adds quality issues to the pitch. In January, the chain broke a campaign from New York City-based Riney featuring Tae Bo fitness-fad inventor Billy Blanks as the chain’s first celebrity endorser. The effort included cross-couponing of Blanks’ workout videos with Subway sandwiches.

Blanks and Fogle gave Subway a one-two kick, so to speak, with Blanks appealing to the already health-conscious and Fogle inspiring those who want to be health-conscious, says William Schettini, who was named Subway’s first chief marketing officer in May after holding the post on an interim basis in 1999. (Schettini has actually been in the corporate fold since ’97, when he began working on the chain’s strategic plan as managing director of Clarion Marketing & Communications, Greenwich, CT.)

“We never really talked about the taste of our food before, and that was one of the areas where we had the greatest opportunity to improve,” says Schettini. “So [marketing has] been working with R&D to enhance the flavor profile.” The first step in that direction was a new bread-making formula unveiled in March through national TV spots.

FRESH APPROACH

The marketing focus shifts to the other side of the counter this month, when Subway drops the four-year-old tagline, “The Way a Sandwich Should Be.” Customers said the slogan “was about us, not about them,” says Carroll, a QSR veteran (He was Burger King’s vp-advertising and promotions in the early ’90s.) hired last fall to head up FAFT’s $150 million marketing program. “At the end of the day, all your communications have to be about consumer benefits.”

In its place will be the consumer-centric phrase, “Eat Fresh,” which will be introduced through a new ad campaign from Messner Vetere Berger McNamee Schmetterer/Euro RSCG. The New York City shop was tapped as creative agency of record in March after Subway ended a nine-year relationship with Riney in December. In February, media-buying duties were handed to MediaCom, also New York City, which handles the $60 million national end and coordinates planning with local FAFT chapters (which have their own agencies).

Really big changes roll out this month, when restaurants begin offering four new gourmet breads (including Parmesan oregano and hearty Italian) and a quartet of zesty sauces (Caesar, horseradish, honey mustard, and Pancho Chili Southwest). The sauces will first be positioned for use on four new sandwiches (the horseradish with roast beef, of course), but will later be advertised as perfect for the chain’s classic offerings as well. All will be highlighted on new menus and signage developed with assistance from retail design shop King-Casey, South Norwalk, CT.

Other changes include serving better-quality ham and turkey and the elimination of bologna from the classic Subway BMT. And brace yourself, Subway fans: The company’s signature wedge-cut bread style will be replaced by a more standard hinge slice. “Tests showed consumers preferred that, because it brings out the flavor more,” says Schettini.

The “entire system is pumped” for potential growth, says Carroll, since sales rose seven percent in the first quarter and 17 percent in the second quarter with only a few tweaks to the program. Carroll credits the success to “three different pieces of relevant advertising and a real change in our media approach.”

The former includes the Blanks and Fogle spots, which helped the company fly the health flag while continuing comparative jabs at burger joints, and the bread-focused ads. “We told consumers that our bread tastes better, and people are believing it,” he says.

On the media side, “We used to try and be on air 52 weeks a year,” he explains. “With a finite amount of dollars ($62 million in national buys and another $70 million in cable and local spots, according to Competitive Media Reporting, New York City), you end up being on in low weight levels. We’ve changed the strategy to spike the media and really break through, and it’s had a huge impact.”

Messner’s first spots break this month and feature a new “spokescharacter,” a talking hand shadow that looks not unlike the Pets.com sock puppet. Boasting a celebrity voiceover (the contract hadn’t been signed at press time), the character will spend his time pulling burgers out of people’s hands and fixing them a replacement sandwich. It will be used in “three windows of constant advertising” through the end of the year, says Carroll. Preliminary tests suggest the spots produce strong recall and purchase intent.

On the promotional end, restaurant employees will sport hats and T-shirts bearing the character and the “Eat Fresh” tagline for six weeks. Local franchisee groups around the nation have “agreed that, as they get comfortable [with the changes], they’ll want to do sampling in stores.” (Subway’s policy is to offer a menu of promotions for franchisees to use at their discretion, but to never mandate participation.)

But Subway doesn’t want to simply give away the new store, or dilute the product message. “A lot of QSRs have become reliant on borrowed interest, whether it’s their own internal games or a tie-in with some third-party property,” says Carroll. “And you do that because it’s getting consumers’ attention, it’s giving them cause to come in.

“What we’ve decided to do, at least over the next 12 to 18 months, is to have our promotional message be about our products,” he explains. “Every piece of creative will have a promotional theme to it, [but] in our case, we’ve got these new sauces, we’ve got these new breads, and that becomes the promotional message, the incentive to try us out.”

That doesn’t rule out co-promotions with related brands, Schettini says. (Historic efforts include a 1994 venture that put Nabisco’s A-1 steak sauce and Grey Poupon mustard on sandwiches.) The company is always interested in working with beverage and snack vendor PepsiCo, Purchase, NY, with which it has a contract through 2008.

Next spring, the chain will leverage Pepsi’s Major League Baseball sponsorship with baseball-flavored Twist `n Go plastic cups (which Subway and Pepsi introduced last October), a Kids Pak giveaway, and a sweepstakes offering trips to the World Series. Pepsi agency of record TLP, Inc., Dallas, handles.

“We’ll execute at the local level, but it won’t be the major promotional thrust within our advertising,” says Carroll. “So it doesn’t overwhelm the idea that it’s all about the product.”

LITTLE HEROES

Of course, great-tasting bread and gourmet sauces don’t do much to win over the kid constituency, which is why promotions targeted to children will stay on the menu. “We still have to take care of the `kid’s veto’ issue,” says Schettini.

The chain isn’t among the first tier of QSRs entertainment properties call when seeking tie-in partners. (If you see it in Subway, chances are McD’s, BK, and Taco Bell passed on it.) But it has made some smart moves in recent years by avoiding big-budget film properties in favor of more stable TV tie-ins, and by identifying emerging favorites before they hit the radar screen in Oak Brook or Miami.

“They’ve had good vision in recognizing what new properties will be big,” says Phyllis Ehrlich, vp-promotion marketing at Atlanta-based Cartoon Network. “And we’ve been very pleased with their interpretations of our properties.”

The Powerpuff Girls was a little-known entity when Subway signed a deal with Cartoon Network for a Kids Pak effort more than a year ago. Now, as the program is breaking, the Emmy-nominated series is one of the hottest kids’ series around.

The six-week campaign breaks Aug. 21 and features four million premiums to be distributed through 13,491 outlets in the U.S. and Canada. Support includes three weeks worth of national TV spots and such P-O-P as toy merchandisers and sneeze-guard clings. Messner handles advertising, while New York City promo shop b. little & Co. handles the premiums.

In the October-November window, the chain will undertake its fourth tie-in with Nickelodeon’s Blue Clues, this time hooking into a direct-to-video release from the popular pre-school series. This time, Minneapolis-based Johnson-Grossfield handles premiums. It will then “take a break at Christmas to clean out our excess inventory,” Carroll admits.

Eight Kids Pak flights are scheduled for 2001, most of which hadn’t been finalized by early July. Carroll recently fielded ideas from b.little & Co. and Johnson-Grossfield. (It might soon take work from Dallas-based Tic Toc, too.) “Now we’re out meeting with kids . . . to find out what they think,” Carroll says.

“We’re taking a real strong position with the properties we look at,” says Carroll. “We have over 14,000 outlets with over 1,000 customers a week. We think we represent a great medium [through which] to expose their brands. Rather than just trying to go out and get licenses,” Subway is speaking with toy manufacturers in addition to entertainment properties to discuss premiums that could serve as “sampling opportunities,” he says.

BREAD WINNERS

Everyone in Milford is excited about the next few months, and the spirit of teamwork between corporate, FAFT, and the company’s other operational partners that has led to it. “In the past, we would roll out a new sandwich and it wouldn’t get advertised because we didn’t have that cohesive, strategic-planning relationship,” says director of research and development Suzanne Greco, a long-time Subway employee. “If you’re not planning together and linked with your thinking, a perfectly good product could fail.”

“This is probably the most significant change that’s ever been introduced into the system,” adds Schettini. “Teamwork is critical to make everything come together.”

All that’s left is for consumers to play along.