California’s $20 Minimum Wage Hike Could Shrink The Subway Sandwich Shain 

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California’s minimum wage law, which went into effect on April 1, could shrink the Subway sandwich chain to its smallest in decades. This prediction comes after the popular fast-food chain closed 443 locations across the US. 

$20 minimum wage hike


California’s fast food wage hike increased minimum wages by 25 percent, from $16 to $20 per hour. The hike aims to improve the quality of life for fast food workers, though restaurant owners were less than thrilled. The new law might be a significant burden for the Miami-based sandwich giant. 

Subway’s closures 


The famous fast-food chain closed 571 locations in 2022. That number dropped in 2023 and ended the year with 20,133, the smallest number of restaurants since 2005. At its highest, in 2015, Subway had around 27,000 locations. Still, it remains one of the biggest chains in the States.

The rise and fall of Subway in the Golden State


California had 2,719 Subways in 2017, but the number declined to 1,934 by the end of the same year. Subway still has the most locations in the state, with only Starbucks being more widespread. The numbers could be declining due to California’s wage law. 

Increased labor and questionable profitability

Image by vampy1/Depositphotos

Many franchisees raised concerns regarding the minimum wage hike in California. One California franchisee told the Post that people would choose to leave once their leases expire. The same franchisee said they would have no reason to stay since they were barely hanging on. 

The fast food chain has been increasing prices 


The price increase began in November 2023. Subway locations in California raised prices by 7% to 10%, similar to many other chains. Others are considering reducing hours and rolling out self-service kiosks.  

Cutting hours 


Some Subway franchisees asked to cut back their mandatory 91 hours, or 13 per day, the Post reported. It added that this was mainly because Subway has fewer customers in the late evenings and early mornings compared to lunch rush hour and early dinners.  

The future of Subway 


The sandwich giant closed 2023 with continued improvement following the Covid pandemic. Still, its unit volumes in 2023 were among the lowest of any restaurant chain in the Technomic Top 500 Chain Restaurant Report. California Subway area managers are finding ways to help franchisees stay afloat.

Subway’s improvements 

Darya Kaufman /

The company is not fighting internally alone, but it also faces numerous challenges, from competition to the perception of fast food chains. In recent years, Subway revamped its menu with freshly sliced meat, store renovations, and a more considerable emphasis on global growth. 

Subway vs. the competition 

John Hanson Pye /

Despite the healthier menu, Subway is also struggling with competition from Chipotle, Jimmy John’s, and Firehouse Subs. This situation might be the biggest challenge for Subway since its inception in 1965. Chipotle, for example, is committed to ethically and naturally produced meat. 

The sandwich chain was sold in 2023


In August 2023, the Wall Street Journal reported that Subway entered into an agreement to be acquired by affiliates of Roark Capital for $9.6 billion. However, the Federal Trade Commission seems to be still investigating the merger. 

The investigation


FEC is reportedly looking into whether Subway could directly threaten Roark Capital’s other chains, mainly Arby’s. Senator Elizabeth Warren said in December that this private equity deal could lead to an increase in prices. 

The new owner 

shake hand business
Illustration. Image credit: Shutterstock

Roark Capital, an Atlanta-based private equity firm, backs Arby’s, Dunkin’ Baskin Robbins, Buffalo Wild Wings, and Jimmy John’s, among others. John Chidsey, CEO of Subway, commented on the merger, saying that it reflected the company’s growth and positive approach to customers, employees, and franchisees. 

Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.