Why is Subway closing over 600 locations? Reasons explained

Subway’s U.S. store count fell below 20,000 for the first time in 20 years, with 631 net closures in 2024. More than 600 locations shut their doors amid a plan to “right-size” its network, shifting toward quality over quantity.

Franchise owners and outside analysts point to market saturation, rising costs, changing tastes and lingering reputation issues. Subway is also growing abroad, adding thousands of restaurants under its “Smart Growth” strategy.

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Subway is reorganizing its locations under a smart growth plan

Subway says it is closing underperforming restaurants to focus on

“using a strategic, data-driven approach to ensure restaurants are in the right location, image and format and operated by the right franchisees.”

In a statement to CNN, the company added, “This includes opening new restaurants as well as relocating or closing locations as needed, to ensure a consistent guest experience.”

Subway first introduced its Fresh Forward 2.0 prototype in late 2023 and has since remodeled over 20,000 global locations with updated décor and layouts.

While U.S. stores decline, Subway’s global footprint grew for a second straight year. The company has nearly 37,000 restaurants overseas and has commitments for over 10,000 new international locations in markets such as Paraguay and Mongolia.

In its own words, “Subway achieved positive global net restaurant growth for the second consecutive year. With nearly 37,000 locations worldwide, our focus remains on ‘Smart Growth.’”

Franchise owners in the U.S. say high costs and low profits are pushing them out

Independent owners report that rising fees and mandatory remodels have strained their budgets. “Why would I choose to stay open if I was only scraping by?” said one California franchisee, speaking on condition of anonymity about lease expirations.

In California alone, shops faced a jump to $20 per hour minimum wage, wiping out tight profit margins where labor accounts for nearly 28% of costs. Fox Business noted that Subway’s royalty fee of 8% applies regardless of profitability, adding to franchisee concerns.

Beyond wage increases, supply-chain pressures and higher utilities have added to store expenses. Restaurant Business Online reports that in 2024, Subway locations faced cost spikes similar to other quick-service chains; forcing some operators to raise prices by 7–10% or reduce hours.

Many customers are choosing competitors that offer fresher or more varied options

Analysts say consumers today expect more customization and fresh ingredients. Chains like Jersey Mike’s and Sweetgreen have capitalized on this shift, drawing customers away from Subway’s traditional menu. An industry report observed that oversaturation, sometimes placing two Subways on the same block, has also diluted customer traffic per store.

Recent controversies have affected the brand’s reputation among consumers

Subway’s image suffered after its longtime spokesperson pled guilty to serious crimes in 2015, and a high-profile tuna lawsuit drew headlines until its dismissal in 2023. More recently, a dispute over drink suppliers and mandatory promotions sparked complaints from franchisees.

“Subway has ignored ‘screams for help’ from shop owners,” said franchisee attorney Robert Zarco

Warning that poor relations risk losing ground to rivals.

The closure of over 600 U.S. Subway locations reflects a combination of strategic realignment, franchisee pressure, evolving customer expectations, reputational hurdles and rising costs, even as the brand pursues expansion abroad.

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