Subway India’s Cheese Conundrum: Tackling Rising Costs

Subway India, part of the global fast-food giant with approximately 800 franchises, has eliminated the free cheese slice from its sandwiches. Instead, customers will be charged an additional 30 rupees ($0.40) for a cheese slice but can opt for a free “cheezy” sauce. This decision reflects the broader challenge fast-food chains face in India due to skyrocketing ingredient costs, particularly dairy.

For context, the price of cheese surged by 40% in the last financial year, forcing brands like Domino’s to offer their pizzas at a mere 60 US cents. Even tomatoes have become a luxury, with a staggering 450% price hike leading to their removal from several Subway and McDonald’s menus.

Customer and Market Reaction

While Subway maintains that introducing the new cheese sauce was qualitative, not all customers are convinced. Some customers voicing their disappointment have claimed the brand lost their loyalty. Market insights reveal that the new cheese sauce costs Rs400 per kilogramme, compared to cheese slices priced around Rs700 per kg.

Karan Taurani from Indias Elara Capital mentions that rising costs of essential ingredients like cheese, grain, and vegetables are compelling restaurants to adopt “innovative” pricing strategies instead of a direct price hike.