Subway’s PR woes could spill into HR

About 25 years ago, I interviewed the co-founder and president of Subway in a story published by Employee Benefit News. The story was about his restaurant chain’s efforts to recognize, reward and motivate its employees – a precursor to what Starbucks has done with baristas or similar campaigns in the service sector. I was particularly struck by how humble and down to earth Fred DeLuca was, and we briefly chatted off the record about southern Connecticut, the birthplace of his sandwich empire and yours truly.

Fast forward to 2015 – the 50th year of operation for Subway, whose more than 44,000 franchises are now scattered across 110 countries. DeLuca’s net worth is $2.5 billion, but he’s battling leukemia and recently handed the reins of the company over to his sister while he focuses on medical treatments.

Perhaps the most jarring news of all for this ailing business mogul is the public relations nightmare that Subway must now manage following shocking and disturbing revelations about its longtime pitchman, Jared Fogle. His pedophilia admission was made as part of a plea bargain to reduce what could have been a very stiff prison sentence.

The Huffington Post noted that a carefully worded statement by the company “left open the possibility” that people involved with the restaurant chain had expressed concern before the story broke. This is where the current state of affairs starts to get tricky. Subway has denied any prior knowledge of these crimes and said it’s still investigating the matter. But the damage is done and outrage is mounting.

One could argue that this PR problem also may turn into a human resources challenge with wide-ranging implications for employee and franchisee morale, loyalty, recruitment, retention and beyond. I can only image what sort of meetings have taken place behind closed doors to allay concern or outrage among employees and franchisees, particularly among those who are easily offended by moral breaches. I can’t help but notice the potential for irony, given the topic of my story about Subway more than two decades ago.

Jillian Barberi, the co-host of a local afternoon talk-radio show I was listening to the other day in Los Angeles while running errands, suggested with fury in her voice that if it’s proven that Subway’s management team knew about Fogle’s activities before the public did that she would never eat there again.

Suddenly a narrow story about one individual’s depravity mushroomed into a much larger outcry about business ethics – or lack thereof.

Barberi lamented that it would be difficult to boycott Subway for essentially two reasons. One is that she considered it a healthy alternative to greasy fast-food chains for her children and went there on a regular basis, while a second is that it’s not nearly as convenient to find competitors given how fast Subway has grown over the years. I certainly can relate to her thinking, having been a somewhat regular patron of Subway and preferring ready-made sandwiches over burgers and fries for my two young children.

Some people may believe it’s not worth giving up a good product or service because of a scandal involving disturbing or poor judgments made by a few individuals. Others like Barberi, who ironically was a shill for NutriSystem, are so deeply offended by the notion that a large corporation would cover up such heinous criminal activity that they’re willing to sever those ties forever.

Either way, I think the Subway scandal provides some interesting food for thought (pardon the pun) surrounding the larger issues of business ethics and personal choice. It sort of reminds me of a spirited conversation I witnessed around the same time I interviewed Subway’s chief executive. My former brother in-law asked a dear friend of our family, a Holocaust survivor, why he drives Mercedes Benz automobiles after all the unspeakable crimes the Nazis committed. His reply was simple and soft-spoken: “Because they make good cars.”