Everything you need to know about Subway’s rise and fall, including a franchisee revolt, menu overhaul, and more

subway sandwich
A closer look at Subway’s history and its plummeting sales.

  • Subway is the largest chain in the US, having long leapfrogged industry giants such as McDonald’s.
  • But after the death of its cofounder Fred DeLuca in 2015, Subway has taken a turn for the worse.
  • Insider’s on top of the developments, so here’s what you need to know about the ongoing Subway saga.
  • See more stories on Insider’s business page.

After the death of Fred DeLuca, Subway’s cofounder and CEO, in 2015, the sandwich chain went into a tailspin marred by mounting store closures and sinking sales.

With no real succession plan put in place, the company floundered under new leadership, including DeLuca’s sister, Suzanne Greco.

Over the past few months, life at Subway has been further marked by chaos and conspiracy, including the increase in franchise startup fees and the downsizing of staff under the leadership of John Chidsey, the former chief executive of Burger King who became the CEO of Subway in November 2019.

Under Chidsey, Subway has laid off upwards of 500 corporate staffers, closed hundreds of stores, and frustrated franchisees who struggled to turn a profit. Former executives and franchisees believe that Subway overexpanded and struggled to stay relevant, in part because of a muddled vision for the future of the company.

Changes have led to feuds with hundreds of franchisees and some consideration of whether a sale should be in the privately held brand’s future.

Insider is on top of all the developments going on at Subway. The following covers everything you need to know about the latest happenings at the chain.

Rumors are swirling that Chidsey is setting Subway up for a sale

Chidsey’s role in spearheading Burger King’s sale to 3G Capital in 2010 has helped fuel industry chatter that Subway is trying to sell itself. Restaurant Brands International and Inspire Brands – the parent companies of Burger King and Arby’s, respectively – are believed to have sniffed around Subway to weigh the pros and cons of a potential acquisition, an industry expert said. But Subway insists that it’s not for sale.

Subway franchisees criticize major changes from corporate

Subway is the largest chain by location in America.

DeLuca once hooked entrepreneurs, many of them immigrant families, with historically cheap fast-food franchise startup costs. The reasonable fees allowed franchisees to invest in multiple stores.

But after years of declining sales and store closures, franchisees have found themselves at odds with leadership. The chain closed 1,882 stores in the US in 2020.

Franchise disclosure documents for 2021 also said Subway has raised the startup investment costs for new franchisees. Franchisees whose contracts were up for renewal were also presented a new contract forcing them to choose between higher royalty fees or tighter restrictions on how they run their stores.

In July, Subway rolled out a menu overhaul with TV spots featuring sports icons like Serena Williams. Some operators told Insider that pricey ads wouldn’t drive traffic to stores especially after the chain tried and failed to give away 1 million free subs featuring the new ingredients.

Insiders say internal battles have been raging for years

Franchisees and employees have been complaining about Subway’s inability to keep up with trends and its footprint expansion cannibalizing sales for years. Many of these problems, insiders said, can be tied back to DeLuca, who led Subway from its founding in 1965 until 2015.

Those close to DeLuca knew him to be extraordinarily hands-on and dedicated to Subway. But, they told Insider, he made certain strategic mistakes and refused to believe others could do the job as well as he could. Today, the sandwich empire is owned by two secretive billionaires, who insiders said have been unable to turn the chain around.

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Taxpayers spent nearly $650K on Gov. Cuomo’s ‘King One’ state-owned plane, where a former aide said the governor asked her to play strip poker

cuomo airplane travel
New York Gov. Andrew Cuomo on a 2015 flight headed to Puerto Rico for hurricane relief.

  • Gov. Cuomo flew in a state-owned private plane over 460 times in a 5-year span, costing taxpayers nearly $650,000.
  • A former female aide said the governor asked her to play strip poker with him on the plane.
  • Cuomo has denied that allegation.
  • See more stories on Insider’s business page.

New York Gov. Andrew Cuomo frequently uses a state-owned airplane and helicopter to reach the far corners of the state for official business, costing taxpayers nearly $650,000 from 2015 through April 2020, an Insider analysis found.

Cuomo faces multiple ongoing scandals and a months-long impeachment probe spurred by allegations of sexual misconduct from 10 women.

One of the allegations against him involved the governor’s official state airplane, known as King One. Former economic development aide Lindsey Boylan wrote in an essay that during a flight in November 2017, Cuomo asked her to play strip poker. Cuomo has denied that allegation, and his office disputed her claim that she was alone with the governor, a state trooper, and a press staffer.

Boylan, who is currently running for Manhattan borough president, did not return Insider’s request for comment.

The governor also uses a private plane for non-governmental travel that’s paid for by in-kind donations, a former aide familiar with his travel patterns and logistics told Insider.

Insider used a list of state police planes and helicopters from the New York State Trooper’s website and tail wing numbers registered as New York State Police aircraft to identify the passenger aircraft model used by Cuomo.

By reviewing five years of the governor’s monthly public schedules, Insider identified that Cuomo flew in this state plane over 460 times accruing some 400 hours of total flight time over 5 years.

The Cuomo administration has not yet responded to Insider in its Freedom of Information Law request for financial records detailing his air travel expenses. A Cuomo spokesperson referred Insider’s list of questions to New York State Police.

Nel Stubbs, Vice President at Conklin & de Decker, an aircraft market intelligence and consulting company, estimates that this plane model costs $1,616 per hour to operate, according to her company’s database. This figure is calculated using estimated fuel cost, plane maintenance, landing fees, and crew incidental expenses not including salary.

Flight crew salary, insurance, or the cost to maintain the plane in its Albany hangar, however, are not included.

‘It is crazy old. Terrifying to fly on it.’

The twin propeller plane used by Cuomo has had several safety scares, with the governor’s office pushing in recent years for an updated fleet of aircrafts they share with New York State Police.

“It’s crazy old,” the former aide told Insider, recalling dicey flights that left newcomers on King One thoroughly spooked. “Terrifying to fly on it.”

One of the helicopters had to make an emergency landing in 2017 after the cockpit began filling with smoke, according to local news reports at the time.

As a general practice, Cuomo uses the chopper for trips downstate to New York City, Long Island, or the Hudson Valley, according to the former staffer. If an event is outside of those regions or within driving distance in the Capital Region surrounding Albany, the governor takes King One.

However, the flight records obtained by Insider show some flights as short as 15 minutes without a return trip. King One’s return to the hangar from those trips were not factored into Insider’s cost estimate analysis.

The time saving of air travel in a state as big as New York is significant, particularly when it comes to the far flung cities and towns across the Upstate region.

Cuomo’s flights from Albany to New York City were usually around 40 to 45 minutes, while driving a motorcade into the city would take between two and a half to three hours. For a trip west to Buffalo, flying takes a little over an hour, while the one way trip by car would take at least four hours.

The governor’s travel sometimes came in bursts, such as on April 21, 2020, when he flew from Albany to Buffalo, then from Buffalo to Washington D.C., and then back from the nation’s capital to Albany.

If the main chopper known as Sikorsky is undergoing maintenance or repairs, an older helicopter called Bell 430 is used instead, the former aide said.

“I swore never to fly on that helicopter again,” Melissa DeRosa, Cuomo’s top aide who has been implicated in allegedly manipulating data on COVID-19 nursing home deaths, told the Wall Street Journal in 2017 when she was serving as his chief of staff.

“Unfortunately, given the demanding schedule we keep, it’s not really an option.”

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The Trump Organization controlled employees by giving them houses and paying for their kids’ tuition instead of giving raises, the ex-wife of a key employee says

donald trump tower elevator
Donald Trump boards the elevator at Trump Tower in New York City on January 16, 2017.

  • The Trump Org uses unusual financial arrangements to control employees, a cooperating witness said.
  • It paid for apartments and tuition instead of normal salary raises, Jennifer Weisselberg said.
  • The Manhattan DA office hired investigators who have experience studying mob finances.
  • See more stories on Insider’s business page.

The former wife of a key Trump Organization employee scrutinized by prosecutors said the company holds sway over employees through unusual financial arrangements, including paying for her home and tuition for her children.

“They want you to do crimes and not talk about it and don’t leave,” Jennifer Weisselberg said in an interview with Insider. “It’s so controlling.”

Weisselberg is a cooperating witness in investigations into Donald Trump’s finances. Between 2004 and 2018, she was married to Barry Weisselberg, the son of Trump’s loyal longtime CFO Allen Weisselberg. Barry Weisselberg is also a significant employee for the company in his own right, as the manager of the Trump Organization-operated Wollman Rink in Central Park.

Jennifer Weisselberg said she handed over “seven boxes” of documents that came out of her divorce proceedings to prosecutors. Prosecutors in both the Manhattan District Attorney’s and New York Attorney General’s offices are investigating the finances of Trump and the Trump Organization. The Manhattan DA’s office is analyzing whether they violated tax laws by distorting financial information to receive favorable loan terms and pay little in taxes.

The office successfully subpoenaed millions of pages of tax documents from the Trump Organization in February. Prosecutors there are now seeking to “flip” Allen Weisselberg into guiding them through those pages, the Washington Post reported.

Jennifer Weisselberg says the company retains a grip on key employees by withholding raises. In yearly compensation meetings with Barry Weisselberg, she said, Trump or Allen Weisselberg would offer to pay the tuition of their children instead of giving raises. She said her ex-husband’s base salary didn’t change substantially in the roughly 20 years he’s worked there.

“It was like Allen designing a plan,” she said. ‘It was like, ‘Okay, the way we’re going to maestro this is instead of a raise, we’re going to pay my daughter’s tuition. Instead of a raise, we’re going to pay for the apartment.'”

‘If you want to leave, where are you going to live?’

Donald and Melania Trump gave Jennifer and Barry Weisselberg an apartment in their Trump Parc East building by Central Park in Manhattan as a wedding gift, as Bloomberg News first reported. The couple paid only $400 per month in utilities and other fees – far below the market rate for rent. Prosecutors are examining whether the way the arrangement was reported in tax documents violated tax laws, according to Bloomberg News.

These arrangements, while generous on the surface, also served as a way to keep Trump Organization employees in line, Jennifer Weisselberg told Insider.

“Obviously, it’s not a gift when you get the same salary for 20 years,” she said.

“It’s so controlling,” she continued. “Because if you want to leave and make the same money – you live there. If you want to leave, where are you going to live?”

donald trump tower sitting desk smiling smile
Donald Trump at his desk in his office in Trump Tower.

Since Allen Weisselberg handled the finances for both the Trump Organization and her family, gifts like that also served as a way to avoid paying taxes, Jennifer Weisselberg said.

“That’s the compensation. They just pay for everything, instead of paying on the books,” she said. “It was a way Allen decided to [benefit] Donald, or to avoid employee taxes, state taxes, gift taxes. I mean, if you want to get compensated and thank Donald – great. But you got to pay taxes on it.”

In February, Manhattan District Attorney Cyrus Vance Jr. hired Mark Pomerantz, a well-regarded white-collar attorney with experience investigating mob organizations, to join the team looking into the Trump Organization. Jennifer Weisselberg has spoken with Pomerantz several times since, she told Insider. The office also sent a forensic accountant with experience analyzing mob finances to look at her documents, she said.

Representatives for the Trump Organization and for Barry Weisselberg didn’t immediately respond to a request for comment for this story. Representatives for Allen Weisselberg, the Manhattan DA’s office, and the New York Attorney General’s office declined to comment.

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