How Jared Fogle’s Sex Scandal Could Come Back to Bite Subway

“This could really damage their business side of things,” a crisis-management expert tells TheWrap

LOS ANGELES, CA - FEBRUARY 12: Jared Fogle (L) and Russell Westbrook make free sandwiches for the public as Russell Westbrook Joins Subway's Famous Fan Roster at Subway Restaurant on February 12, 2014 in Los Angeles, California. (Photo by Gabriel Olsen/Getty Images)
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With his decision to plead guilty to child pornography charges and having sex with minors, former Subway spokesman Jared Fogle has brought a new wave of negative publicity to the sandwich chain.

Subway is now getting skewered in the media, particularly in the wake of accusations by former franchisee Cindy Mills, who claimed that she alerted then-CEO of the Subway Franchisee Advertising Fund Trust in 2008 that Fogle told her he’d paid for sex with minors. With new questions surrounding what the company knew, TheWrap spoke with several experts about what kinds of repercussions Subway could face.

Michael Bilello, founder of PR, marketing and crisis management firm Centurion Strategies, believes that if Subway doesn’t handle the situation properly, it could hurt the company in the long run.

“They need to work very hard right now to maintain a family-friendly brand reputation, because with competition from Chipotle and Chick-Fil-A, this could really damage their business,” Bilello said.

Bilello noted that Subway is in a particularly delicate situation. In addition to navigating a potential PR disaster, the fast-food giant is especially vulnerable from a financial perspective, thanks to increased competition from rival chains.

According to reports, even prior to the Fogle scandal, Subway shed 3.3 percent of its sales in 2014 compared to the previous year, the biggest loss across the chain-restaurant industry last year.

Comforting a public that’s hungry for reassurance on the matter will require a multi-pronged effort on Subway’s part, Bilello cautioned. First, he said, “They need to issue a statement detailing an actual plan” to deal with the situation.

Bilello suggested that the company conduct corporate training to assure that future external and internal complaints of sexual abuse and harassment are handled seriously, and to detail to the public what that plan is.

Bilello also suggested that the company take steps to support sexual abuse victims.

“I would suggest that they make a donation to a charity that supports sexually abused children,” he said.

But not everyone believes that Subway has as steep a climb to survive the scandal.

“I don’t think that it’s a close enough association with the brand and the image of the brand that it will have a significant impact on their business,” Marlene Morris Towns, professor of marketing at Georgetown University’s McDonough School of Business told TheWrap.

Towns noted that Fogle’s association with Subway had been lessened since 2008, when the company introduced its $5 Footlong campaign, and that “I don’t know that the same responsibility is there as if he were a Subway employee.”

Subway ended its 15-year relationship with Fogle after police and the FBI raided his home in July. On August 18, the company posted a statement on its Twitter feed saying it was done with Fogle. “We no longer have a relationship with Jared and have no further comment.”

However, former franchisee Mills’ most recent accusations, Towns said, are a problem. “I think that it probably does leave somewhat of a bad taste in people’s mouths with regard to Subway, no pun intended,” she added

Crisis communications expert Jeff Eller told TheWrap that Subway acted quickly and decisively enough in severing ties with Fogle to put the company in the clear.

“They moved quickly, they moved with decisiveness, which you need to do in one of these types of situations, and now they’ve turned the page and moved on to the next chapter,” Eller asserted.

Eller added that the fact that Subway hasn’t put all of its marketing eggs in the Jared Fogle basket in recent years is a bonus.

“They’ve broadened. Over the past couple of years in particular, they’ve broadened their appeal,” Eller said.

Still, Eller noted, Subway will need to monitor coverage of the scandals and sales, and react quickly if necessary.

“There’s a short game and a long game. The long game is to continue to make quality products, which they do,” Eller said. “The short game is that you continue to monitor your metrics pretty closely here over the next quarter and adjust both your marketing campaign and how you deal with reporters accordingly… If nothing else happens, I personally think they’ll be fine.”