Does each Subway $5 Footlong cost the franchisee more than $5? Subway, the fast food restaurant franchise,
Question:
Does each Subway $5 Footlong cost the franchisee more than $5? Subway, the fast food restaurant franchise, recently announced it is bringing back the “$5 Footlong” promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following:
1. Identify each of the listed costs of one footlong sub sandwich as either variable, fixed, or mixed.
2. What costs and factors do you think should be relevant to the footlong sub sandwich pricing decision? Explain.
3. What is the contribution margin of each $5 footlong sub sandwich?
4. Do you agree that a Subway franchisee would lose money for each footlong sold for $5? Why or why not?
Global Marketing management
ISBN: 978-0470505748
5th edition
Authors: Masaaki Kotabe, Kristiaan Helsen