Why Is Subway Closing So Many Stores?

By Jahanzaib · Updated October 11, 2026 · 8 min read

The headline numbers look alarming on their own, so it is worth laying out what actually happened and in what order.

The numbers

That is roughly 3,400 fewer restaurants since the start of 2021 and around eight thousand fewer than at the peak. The closures have run for nine consecutive years in the United States.

One detail gets missed in most coverage. Subway did not stop opening restaurants. It opened 499 in 2025. More than half of those were previously closed units being brought back, and a further 792 locations were sitting temporarily closed at the end of the year with the company expecting many to reopen. The store count is churning as much as it is shrinking.

The real reason: the stores are too small

This is the part that explains everything else.

The average American Subway takes about 500,000 dollars a year. For comparison, Circana puts Jersey Mike’s at roughly 1.4 million. A Subway franchisee is running a business with under half the revenue of a direct competitor while paying rent, wages, food cost, an 8 percent royalty and an advertising levy out of it.

At that volume there is very little left. A store does not have to fail to become not worth keeping open. It just has to stop clearing enough for the operator to justify the hours, and a lease renewal or a rent increase is enough to tip it.

Oversaturation is the word the company uses

For years Subway locations were placed within a few blocks of each other, sometimes in the same shopping center, often owned by different franchisees. Each new store took sales from the one down the road rather than bringing in new customers.

Closing those stores does not necessarily lose the chain money. The customers largely move to the nearest remaining location, which then performs better. That is why the company frames the closures as finding the right locations rather than as retreat, and in narrow financial terms it has a point.

It is also why the closures hit franchisees harder than headquarters. Corporate revenue is a percentage of sales that mostly relocates. The person who bought the closing store is the one who absorbed the loss.

What else went wrong

The discount habit. The five dollar footlong was brilliant marketing and a long term problem. It trained customers to see Subway as a cheap sandwich, and franchisees spent a decade arguing that national price promotions were forced on stores that could not afford them. The chain still leans on this lever, running a 6.99 dollar digital footlong offer in 2025.

The competition changed. When Subway grew, the alternative was a burger. Now there are far better sandwiches at Jersey Mike’s, Firehouse and Potbelly, plus fast casual chains that took the healthier lunch position Subway used to own on its own. Compare the lineups on the Jersey Mike’s menu and the Firehouse Subs menu.

The product stood still. The core offer barely changed for years while rivals moved to fresh sliced meats, better bread and hotter sandwiches. Subway has since responded with the Subway Series lineup, fresh slicing in stores and new store designs, but it was catching up rather than leading.

Who owns it now, and does that change anything

Subway agreed to sell itself to the private equity firm Roark Capital in August 2023 in a deal reported at around 9.55 billion dollars, and the sale completed in 2024. Roark also owns Arby’s, Dunkin, Jimmy John’s, Buffalo Wild Wings and others through Inspire Brands.

Private equity ownership usually means the store count matters less than the profit per store. The 2025 accounts fit that pattern. The company reported 688 million dollars of net income while franchise revenue fell more than 6 percent to 767 million. Fewer, stronger restaurants is the strategy, and the closures are that strategy working as intended.

Is Subway going out of business?

No, and the gap between that question and the facts is large. Subway is still one of the biggest restaurant chains on earth by store count and remains solidly profitable. What is happening is a company that grew far past the number of locations its sales could support, unwinding that over several years.

The practical effect for customers is that your nearest Subway may close and the next one may be a mile further. Current prices and the full lineup are on the Subway menu.

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