Subway signs licensing deal with Atkins

By Bruce Horovitz, USA Today

December 27, 2003

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Subway -- the sandwich chain that brought the world the Jared Fogle diet -- has become the latest fast-food chain to embrace the Atkins diet.

Subway announced plans Friday to sell two Atkins-Friendly Wraps at all 16,500 Subway stores nationwide starting Monday. The wraps are made from special wheat and soy grains that are high in fiber and protein, but carry one-third the carbohydrates as Subway's conventional 6-inch subs.

Consumers will pay about 50 cents more for them than regular Subway sandwiches.

Behind it all is a nation of heavy consumers who want to eat hearty but still lose weight as did Fogle -- the now-famous Indianapolis resident who lost 245 pounds on a strict diet of Subway sandwiches and diet soda.

The popularity of the Atkins diet appears to be near its zenith, and is potentially threatened by new concerns about mad cow disease in the United States. Nearly one in four Americans has at least tried the Atkins diet, which encourages consumption of meats, vegetables and some fruits but discourages carbohydrate-laden bread, pasta and cereals.

"Next, we'll have Slim-Fast shakes at Dairy Queen," joked Janet Lowder, president of Restaurant Management Services, a consulting firm. "Any restaurant that doesn't offer alternatives isn't paying attention," said Lowder.

Last week, Hardee's and Carl's Jr. announced new bunless burgers wrapped in lettuce to meet Atkins dieters' needs. Last month, Blimpie Subs & Salads launched a menu of low-carb products in its 20 Indianapolis-area stores, one of just four markets nationwide to test the concept -- joining Long Island, N.Y., Connecticut and New Jersey. Blimpie plans to offer its low-carb menu in all 1,700 stores by March 2004, according to the Blimpie Web site.

Other Indianapolis-area sub shops such as Jimmy John's also offer limited low-carb items.

For Subway, the deal is a strategic move to protect its franchise of better-for-you fast food.

Not only has the popularity of the low-fat, low-calorie Jared Fogle diet begun to fade, but same-store sales at Subway have dipped about 2 percent over the past year even as rivals such as McDonald's and Wendy's are enjoying double-digit sales gains.

For Atkins, the move is a major public relations coup as the company continues to reach out to strike licensing deals with some of the most familiar names in foods. A partnership with T.G.I. Friday's was announced earlier this month. And several others deals are said to be under negotiation.

Subway also has plans to introduce in April an entree salad line with three Atkins-friendly salad dressings.

"We're making the changes to stay on top of consumer trends," says Fred DeLuca, president and founder of Subway. He said he thinks the Atkins tie-in could boost sales by up to 10 percent over the next year.

Early ads for the new Atkins tie-in will not feature Fogle, but yet-to-be-created ads will feature the famous dieter, DeLuca says.