Volkswagen and Subway have both run into their share of problems in the last year. But, while one is focusing harder on its brand, the other is ignoring it for the time being.
Subway, which sometimes seems to have a location every few blocks, actually has about 27,000 of them, the largest restaurant chain in the U.S. in terms of unit count. But their growth has stalled as that count fell by 145 locations last year, with hundreds more expected to close this year. National Restaurant News reports that sales per unit have decreased by at least 4.5 percent each of the past two years, and are now about $425,000.
Subway’s problems may have been masked by the long-running success of its $5 footlong promotion, which drove significant traffic to their stores, but which also had franchise owners complaining about its impact on their profits. They took away that great deal, and sales began to slump.
So Subway has responded by doubling down on its core brand position, which is “fresh.” In early August, just in time for the Olympics, they introduced a new logo along with a TV spot that compared athletic improvement to their own quest to get better as a maker of sandwiches. They deliver their central brand message in this commercial with the line, “Every day we’re finding new ways to serve fresh, locally-sourced produce and food free of artificial preservatives, whenever and wherever possible.” The new logo is still green and yellow, but the green is brighter (like vegetables) and the yellow is more gold (like wheat), presumably to emphasize their renewed commitment to freshness and good health.
The management at Volkswagen likely wishes their brand problems were only as tough as Subway’s. With a diesel emissions scandal that is costing them billions of dollars, their tagline, “The Power of German Engineering,” has taken on a whole new meaning. After all, it was their engineers who developed a software trick to pass emissions tests.
While their principle branding language is essentially held hostage by their own transgressions, VW still has to sell cars. Their solution is relatively predictable—have a clearance sale and throw in a little humor. Thus, we have the VW “Clarence” event, the premise of which is a VW salesman who has named a clearance event after himself and is making great deals for everyone who comes in the showroom. The offers are classic new car sales fodder with zero percent financing and $1,000 rebates. The TV spots are funny enough; the offers are pretty good. Please pay no attention to the sneaky engineer behind the curtain.
Of the two, Subway’s approach has a long-term view. They can continually build on their freshness position, and have recently introduced antibiotic-free chicken and carved turkey as products that prove this brand promise. Chipotle and others have been touting their locally-sourced intentions as well, so Subway is just keeping up with that claim. But credit Subway for sticking with what got them to their spot at the top of the (fast) food chain, and for finding new ways to express fresh.
VW, on the other hand, can call their sales events whatever they want to, but they will be begging for business with a long line of discounts and promotions until they can find a brand message that their customers can trust again. Their road to recovery will be a long one, and right now they may be headed in the wrong direction.
As published in the Central Penn Business Journal.