Subway takes away free cheese slice offer

NEW DELHI (Reuters): Subway sandwiches in India will no longer come with the option of a free cheese slice following revisions to its menu that analysts regarded as being more about cost-cutting than just a matter of taste.

American chain Subway is one of largest restaurant franchisers in India, with around 800 outlets. They now charge 30 rupees ($0.40) extra for the cheese slice in most sandwiches, but are offering a free “cheezy” sauce instead.

Rising prices for ingredients, including dairy products, have put global fast food chains in India under pressure to trim costs while keeping customers satisfied.

Domino’s promotion price for its cheapest pizza is just 60 U.S. cents in India, where its franchisee has publicly flagged concerns over a 40% surge in the price of cheese during the financial year that ended in March.

Many Subway and McDonald’s outlets in India have also removed tomatoes from their menus in recent weeks citing quality issues after prices surged around 450% to record highs.

India has resorted to importing tomatoes from Nepal to ease the shortage.

The cheese sauce now available for free at Subway India was “developed for qualitative reasons alone”, said Everstone Group’s Culinary Brands, which manages the supply chain for all 800 outlets and is the master franchisee for around 200.

The qualitative change clearly isn’t to everyone’s taste.

Subway has “replaced the cheese slice with liquid cheese blend … You just lost a loyal customer,” one unimpressed customer, Sumit Arora, wrote on X, the social media platform formerly known as Twitter.

A Subway store manager in New Delhi told Reuters the new cheese sauce costs 400 rupees/kilogram. Market prices show cheese slices typically cost around 700 rupees/kilogram.

A cheese slice, said Culinary Brands’ marketing head Mayur Hola, “can be added on at a small cost”. “Ingredient costs are not something we comment on … this is simply an upgrade to make our subs better.”

Asked about the Subway move, Karan Taurani, a consumer discretionary analyst at India’s Elara Capital, said elevated cheese, grain and vegetable prices have pushed restaurants to come up with “innovative” strategies.

“It is a way of putting inflationary pressure on the customer rather than going for a blanket price hike,” he said.

A Subway sandwich costs around 200-300 rupees ($2.4 to $3.6) in India, and if a customer adds the cheese slice – which was once free – will now cost up to 15% higher.

Spokespersons for Subway didn’t respond to a request for comment.

India’s central bank this week raised its inflation forecast for the current fiscal year to 5.4%, citing pressures from food prices.