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More consumers are purchasing sandwiches today, which meant that the Subway sandwich chain was able to open 872 new stores in 2011. It also means that the market has expanded, and other restaurant chains are hoping to grab a slice of the pie.

And speaking of pies … Pizza Hut is the top challenger to Subway’s sandwich dominance. In a recent advertising campaign, it takes on Subway’s $5 foot-long campaign directly with the launch of its P’Zolo, a new $3 sandwich. It focuses directly on the $5 foot-long promise by featuring a person who can buy two P’Zolos for nearly the same price. Tag lines emphasize the comparison, noting “Say so long to the footlong” and “More bang for your 5 bucks.” In addition to the televised spots, Pizza Hut plans to place advertisements on subway trains and even hand out free P’Zolos to hungry commuters at certain stops.

The fast-food industry lost 4,500 restaurants last year. Pizza Hut is currently the largest pizza chain, ahead of Domino’s, Little Caesar’s, and Papa John’s, but it also recognizes how tenuous this position can be. Subway ranks second in fast-food sales overall, behind only McDonald’s.

In addition, Pizza Hut plans to target the sandwich market, which features a large proportion of its existing target audience: young adult men. It has updated its brand theme to “Make it great.” Furthermore, its P’Zolo campaign includes a game on Pizza Hut’s Facebook page that should appeal to these connected consumers. But the $5 Foot-long at Subway is a $4 billion brand, ranking ninth on a list of top fast-food items. The P’Zolo campaign, as well as the sandwich itself, is going to need to be pretty great to give Subway a run for its money.

Discussion Questions

  1. What are the risks for Pizza Hut of expanding into the sandwich market?
  2. How should Subway respond to Pizza Hut?

source: Stuart Elliott, “Pizza Hut Tries the Sandwich Market Again,” The New York Times, May 31, 2012.

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