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Subway has ignored “screams for help” from its struggling franchisees for years — and is now at risk of being “gobbled up” by a fast-growing rival, a lawyer representing thousands of sub shop owners warned.

Subway last week said CEO John Chidsey will “retire” at the end of the year — five years after he became the first executive outside the founding family to lead the chain. That’s despite the fact that Chidsey had said he planned to stay after the company was sold in May for $9.5 billion to Roark Capital.

As Subway announced the CEO exit, it also revealed it was scrapping its $6.99 footlong deal a month early after admitting to franchisees the deal is not driving anticipated results, Restaurant Business Magazine reported.

Subway’s downbeat headlines came in stark contrast to recent news from a much smaller competitor, Jersey Mike’s. The latter now operates just 3,000 US locations versus Subway’s 20,000 — yet sold itself to buyout firm Blackstone Group for $8 billion, not far off what Subway fetched six months earlier.

Subway’s $6.99 footlong promotion was the latest in a series of punishing moves under Chidsey for Subway franchisees, who are forced to pay an 8% royalty fee on gross revenue regardless of their profitability.

Chidsey has likewise forced franchisees to remodel restaurants despite uncertainty on returns and pay undisclosed technology fees, according to Robert Zarco, who provides counsel for the North American Association of Subway Franchisees, which represents about half of Subway’s 20,000 US restaurants.

If Subway keeps treating its franchisees the way it has over the last five years where it is ignoring their screams for help, Jersey Mikes will have an easy task of gobbling up the Subway brand,” Zarco told The Post.

I hope its the reason for the change because it should have been,” Zarco added, referring to Chidsey’s exit. Because of the tensions that are prevalent, it is a good move for Roark to come in and wipe the slate clean and establish a better working relationship with the franchisees.”

Chidsey had not made any notable overtures to NAASF, Zarco said.

Roark — which owns dozens of major fast-food chains including Dunkin’, Arby’s, Sonic, Baskin-Robbins and Buffalo Wild Wings — didn’t respond to requests for comment.

At a hastily assembled meeting in August, Subway President Douglas Fry admitted that sales were down 5% to 10% year-to-date in many regions. Meanwhile, he estimated that Jersey Mike’s same-store sales, or sales at stores open at least a year, had risen 1%, sources told The Post.

Were doing worse than the rest of the industry, Fry admitted at the time, according to the sources.

But the $6.99 footlong deal prescribed by CEO Chidsey — a former Burger King CEO — only made things worse, according to franchisees.

This is the first time I havent honored a promotion, a franchisee with more than 10 Subway restaurants in the US Northeast told The Post.

That store owner was one of the lucky ones: While most Subway franchisees who signed contracts before 2021 can opt out of promotions, newer franchisees were forced into the money-losing deal.

The last 20 days have been kind of hellish, a Subway employee wrote Wednesday on Reddit about the value meal. It might have gone better if the higher-ups actually worked in the store and saw why the owners didnt want it to be for any sub.

The franchisee griped that under the promotion, a single customer could order four Monster Subs, which have steak, pepper, cheese and onion, for less than $30. As a result, the $6.99 footlong deal failed to improve his gross sales, even as his costs skyrocketed.

Subway is making Carrie Walsh, President of its Europe, Middle East and Asian regions, its interim CEO. Zarco said she is liked by some of the Subway franchisees who know her.

Subway has shrunk by 15% over the past four years, from 23,799 US restaurants on Jan. 1, 2020 — shortly after Chidsey took the helm — to 20,133 on Jan. 1, 2024, according to public filings. The chain is believed to have gotten a bit smaller this year, sources said.

Meanwhile, the average Jersey Mikes, whose CEO Peter Cancro has become a billionaire off the Blackstone deal, makes about three times as much money as the average Subway, according to public filings.

Blackstone buying Jersey Mikes tells me its time for me to run, the Northeast-based Subway franchisee with more than 10 restaurants said, adding that he could easily see Jersey Mikes more than doubling in size soon to 8,000 US restaurants. 

Blackstone Senior Managing Director Peter Wallace on Nov. 19 said his firm had deep experience helping accelerate the expansion of high-growth franchise businesses like Jersey Mikes.

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Business

Inflation jumps to 3.6% on fuel and food price pressures

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Inflation jumps to 3.6% on fuel and food price pressures

The rate of inflation has risen by more than expected on the back of fuel and food price pressures, according to official figures which have prompted accusations of an own goal for the chancellor.

The Office for National Statistics (ONS) reported a 3.6% level for the 12 months to June – a pace not seen since January last year.

That was up from the 3.4% rate seen the previous month. Economists had expected no change.

Money latest: What do inflation figures mean for rate cut prospects?

ONS acting chief economist Richard Heys said: “Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year.

“Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. However, it remains well below the peak seen in early 2023.”

A key driver of food inflation has been meat prices.

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Beef, in particular, has shot up in cost – by more than 30% over the past year – according to Association of Independent Meat Suppliers data reported by FarmingUK.

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Beef has seen the biggest percentage increase in meat costs. Pic: PA

High global demand alongside raised production costs have been blamed.

But Kris Hamer, director of insight at the British Retail Consortium, said: “While inflation has risen steadily over the last year, food inflation has seen a much more pronounced increase.

“Despite fierce competition between retailers, the ongoing impact of the last budget and poor harvests caused by the extreme weather have resulted in prices for consumers rising.”

It marked a clear claim that tax rises imposed on employers by Rachel Reeves from April have helped stoke inflation.

Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation, said: “The pressure on food and drink manufacturers continues to build. With many key ingredients like chocolate, butter, coffee, beef, and lamb, climbing in price – alongside high energy and labour expenses – these rising costs are gradually making their way into the prices shoppers pay at the tills.”

Chancellor Rachel Reeves said of the data: “I know working people are still struggling with the cost of living. That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus fare cap.

“But there is more to do and I’m determined we deliver on our Plan for Change to put more money into people’s pockets.”

The wider ONS data is a timely reminder of the squeeze on living standards still being felt by many households – largely since the end of the COVID pandemic and subsequent energy-driven cost of living crisis.

Record rental costs alongside elevated borrowing costs – the latter a result of the Bank of England’s action to help keep a lid on inflation – have added to the burden on family budgets.

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Is the cost of living crisis over?

Most are still reeling from the effects of high energy bills.

The cost of gas and electricity is among the reasons why the pace of price growth for many goods and services remains above a level the Bank would ideally like to see.

Added to that is the toll placed on finances by wider hikes to bills. April saw those for water, council tax and many other essentials rise at an inflation-busting rate.

The inflation figures, along with employment data due tomorrow, are the last before the Bank of England is due to make its next interest rate decision on 7 August.

The vast majority of financial market participants, and many economists, expect a quarter point cut to 4%.

That forecast is largely based on the fact that wider economic data is suggesting a slowdown in both economic growth and the labour market – twin headaches for a chancellor gunning for growth and juggling hugely squeezed public finances.

Read more from Sky News:
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Most important part of Reeves’s speech was what wasn’t said
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Professor Joe Nellis, economic adviser at the advisory firm MHA, said of the ONS data: “This is a reminder that while price rises have slowed from the highs of 2021-23, the battle against inflation is far from over and there is no return to normality yet – especially for many households who are still feeling the squeeze on essentials such as food, energy, and services.

“However, while the Bank of England is expected to take a cautious approach to interest rate policy, we still expect a cut in interest rates when the Monetary Policy Committee next votes on 7th August.

“Despite inflation at 3.6% remaining above the official 2% target, a softening labour market – slowing wage growth and decreasing job vacancies – means that the MPC will predict inflation to begin falling as we head into the new year, justifying the lowering of interest rates.”

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Politics

Who will take the fall for the Afghan cover-up?

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Who will take the fall for the Afghan cover-up?

👉Listen to Politics at Sam and Anne’s on your podcast app👈 

Now details of the enormous accidental data breach by a British soldier that put thousands of Afghans’ lives at risk can be discussed publicly – Sam and Anne try to address some of the biggest questions on this episode.

They include:

Why did the government break the glass on using a superinjunction?

Has anyone been sacked?

Why did the Labour government keep the superinjunction in place for so long?

There’s still a bit of time to go over Rachel Reeves’ Mansion House speech. Did it reassure financiers and investors?

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World

‘My family is finished’: Afghan man in UK military data breach says he feels betrayed

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'My family is finished': Afghan man in UK military data breach says he feels betrayed

An Afghan man who worked for the British military has told Sky News he feels betrayed and has “completely lost (his) mind” after his identity was part of a massive data breach.

He told The World with Yalda Hakim about the moment he discovered he was among thousands of Afghans whose personal details were revealed, putting him at risk of reprisals from the Taliban.

The man, who spoke anonymously to Sky News from Afghanistan, says he worked with British forces for more than 10 years.

But now, he regrets working alongside those troops, who were first deployed to Afghanistan in 2001.

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Afghans being relocated after data breach

“I have done everything for the British forces … I regret that – why (did) I put my family in danger because of that? Is this is justice?

“We work for them, for [the] British, we help them. So now we are left behind, right now. And from today, I don’t know about my future.”

He described receiving an email warning him that his details had been revealed.

He said: “When I saw this one story… I completely lost my mind. I just thought… about my future… my family’s.

“I’ve got two kids. All my family are… in danger. Right now… I’m just completely lost.”

👉 Listen to Sky News Daily on your podcast app 👈

The mistake by the Ministry of Defence in early 2022 ranks among the worst security breaches in modern British history because of the cost and risk posed to the lives of thousands of Afghans.

On Tuesday, a court order – preventing the media reporting details of a secret relocation programme – was lifted.

Read more from Sky News:
Minister defends handling of breach
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Afghan women throw babies to troops

British soldiers wait to be transported to a base in the provincial capital Lashkar Gar in Camp Bastion, Helmand, February 5, 2010. REUTERS/Baris Atayman (AFGHANISTAN - Tags: MILITARY POLITICS CONFLICT)
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Reuters file pic

Defence Secretary John Healey said about 6,900 Afghans and their family members have been relocated or were on their way to the UK under the previously secret scheme.

He said no one else from Afghanistan would be offered asylum, after a government review found little evidence of intent from the Taliban to seek retribution.

But the anonymous Afghan man who spoke to Sky News disputed this. He claimed the Taliban, who returned to power in 2021, were actively seeking people who worked with British forces.

“My family is finished,” he said. “I request… kindly request from the British government… the King… please evacuate us.

“Maybe tomorrow we will not be anymore. Please, please help us.”

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