Has the @SubwayUKIreland special lunch offer made them busy fools?

Walking through St Albans market place at lunch time today I passed Subway. I laughed to myself that their lunch offer “9 subs and a drink for £3” could be mis-read… they of course meant a choice of 9 subs and a drink. I looked in the window and suddenly the most ridiculous promotional pricing hit me…. I wanted to share this so that you don’t make the same error.

Subway’s Promotional Genius: Request a free drink and get a discount on your lunch as well!

Subway offer a non-time-limited lunch deal, a 6″ sub (choice of 9 flavours) and a drink for £3. The subs included are typically £2.79 or £3.49…. can you see some illogic here? Whether I want a drink or not, if I want a £3.49 sub I order the lunch deal, I get a free drink (cost to serve, supply cup, cost of ingredients – must approach at least 15p-20p) AND I get a 49p discount on my food… Insane. This promotion essentially COSTS Subway up to 69p per customer. It’s madness. It must just cover service costs on the lower priced sub. What’s the point?!

Use an EFFECTIVE price ladder to encourage profitable trade-up…

The issue with this pricing is that it doesn’t make sense! It makes customers think “what’s the catch?” If the single item price is greater than the bundle deal then there is NO chance of a trade up. It seems obvious, but clearly needs saying, the bundle deal should be priced to be more attractive than the SUM of the items but never cheaper than the single item…

Essentially it seems that Subway have not developed a sensible price ladder… I’ve explained what that is on a blog sometime ago, if you’re not familiar then refer back to “Why your retail business needs a price ladder…” If they DID have an effective price ladder the lunch deal might be £3.79 for instance – only 30p extra on the higher priced sub for the drink and £1.00 extra on the lower priced sub… so long as the drink price was over £1.00 on the standard menu then at the very least they should make 10p margin, and possibly more, and yet the trade up is sufficiently attractive (especially on the higher priced sub) to encourage more people up the price ladder.

Don’t be busy fools – make sure your pricing and promotions STILL add value to you business!

The problem with the offer at Subway is that it would appear to be less profitable than it could be. Fine on time-limited deals, when some sales, even low margin sales, are better than none… Madness on unrestricted deals. When designing promotions you need to consider the impact they will have on sales of other items in your range (see blog on “The benefit of understanding price elasticity…”) as well as the impact on your cost to serve, your positioning, your credibility in the eyes of the customer (my immediate response to the Subway deal was to laugh at it…) and on your profitability.

Selling in volume and making little margin creates busy fools of us all. There is no sense in creating promotions that end up in more work for less money. If you take one tip away from this blog it’s ALWAYS ensure that your promotions add value, don’t give away so much as to end up working harder for less.

About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
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