Dive Brief:

• Karlin Linhardt, the North American senior marketing VP for Subway, has left the quick-service restaurant after only eight months, per a report in Ad Age. Linhardt joined the brand from Accenture in April.
• The departure could be the result of issues between the company and its franchisees over an upcoming promotion. The chain is planning a $4.99 footlong sandwich promotion to compete with McDonald’s dollar menu. However, with sales down company-wide and franchisees already facing razor-thin margins, the strategy caused what the New York Post reported was a “nationwide revolt” by franchise owners concerned about losing profits. More than 400 owners are reported to have signed a petition protesting the discount. 
• Linhardt’s departure comes little more than a week after Subway announced a custom team of Dentsu Aegis Network agencies for its North American media and creative business.

Dive Insight:

The news reflects the struggle that QSRs and merchants more broadly face when trying to move away from price promotions — which can give a short-term boost to sales but typically undermine a brand's value over time. Subway is the only restaurant among the top 10 chains to report a decline in sales last year, falling 1.7% to $11.3 billion, according to Technomic data cited by Ad Age, suggesting the business clearly needs a way to drive customers into its locations. 

The news also points to the perils top marketing executives face as the role evolves to include greater responsibility for driving revenue at a company. 

With the recent shake-up in its agency partnerships and now losing its top North American marketing executive, Subway's marketing strategy will likely remain in flux, a state it has been in for a couple of years. The Dentsu decision was just the latest of several changes in the chain's marketing strategy and agency relationships. A Subway spokesperson told Ad Age Linhardt’s leaving the company won’t impact the Dentsu deal. 

With Linhardt at the helm, there had been signs that the chain would make digital innovation a bigger focus, a strategy has worked for Starbucks and even McDonald's in attracting younger consumers. This July, Subway rolled out its “Fresh Forward” initiative that included a redesign of its restaurants and entire customer experience through adding a number of digital elements to the in-store experience including self-order kiosks in select locations, Apple and Samsung mobile payments options, in-store USB charging stations and Wi-Fi, a new mobile app and a Facebook Messenger bot for taking orders.

However, digital transformation is a long-term strategy and the chain is also likely looking for a way to drive sales in the short term with the pricing promotion. Unfortunately, this approach hasn't proven popular with franchisees. 

Time will tell if new leadership and a consolidated and more cohesive agency experience will bring more stability to the brand.