In An Open Letter, Freshii Inc. Proposes Select Subway Restaurants Convert To Freshii Restaurants

Written by Solomon Israel CBC.ca

Tuesday, in a friendly open letter to the parent company of Subway restaurants - published in Toronto's Globe and Mail - Canadian fast casual restaurant Freshii Inc. (TSE:FRII) founder and CEO Matthew Corrin proposed "a partnership in which we together convert select Subway stores to Freshii restaurants in a quick, low-cost way."

From files from The Canadian Press, and in an interview with CBC News, Corrin said his company has received "dozens and dozens" of inquiries from Subway franchise owners interested in opening Freshii locations, either selling their Subway stores to open Freshii stores, opening Freshii stores in addition to their Subways, or converting their Subway stores to Freshii.

"The spirit of this open letter below is saying, 'Look, this is already happening, and it's going to probably accelerate, we believe,'" said Corrin.

Any such partnership would bring together two businesses of disparate size, however.

• Freshii, which went public on the Toronto Stock Exchange at the end of January, currently operates 286 restaurants in 15 countries (mostly in Canada and the U.S., but... also in Europe, the Caribbean, Central and South America, and the Middle East) and aims to have between 810 and 840 franchise locations by the end of its fiscal year 2019, according to regulatory documents filed before its initial public offering.
• Subway, privately owned by Milford, Conn.-based Doctor's Associates Inc., has 44,600 franchised locations in 112 countries. It reported $1.1 billion US of revenues in its fiscal year 2015, down almost 4.3% from 2014. Subway's expansion also slowed dramatically from 2014 to 2015...opening just 34 franchises in fiscal year 2015, down from 313 in 2014.

Corrin has written open letters to its larger competitors before. In May 2015, he published an open letter to McDonald's CEO Steve Easterbrook in USA Today. The letter called for McDonald's to allow a co-branded Freshii outlet in "just one" U.S. McDonald's restaurant stating "My promise: If after one year Freshii in McDonald's has not improved your sales and profits, I will refund you the difference."

McDonald's didn't take Freshii up on its offer. Neither will Subway, believes Robert Carter, who studies the restaurant industry as an executive director with NPD Group but, even if Subway ignores Freshii's overture, Corrin's letter may have served a purpose. "He understands the power of publicity, and in the restaurant industry it's really important to have awareness of your brand," said Carter...

That being said, Corrin reminded BNN that “It’s not a stunt, it’s real ideas. It’s thoughtful....and the CEO of Subway reached out to me yesterday,” Matt Corrin told BNN on Wednesday. “I plan on returning her call today and we will start the dialogue.”

Toronto-based Freshii will deliver its first quarterly report and year-end financial results Wednesday morning (read: Freshii Inc. (TSE:FRII) Reports 2016 Revenue Up 45% & Plans To Increase Number Of Restaurants By +50% In 2017).