Subway Angus Melts Target Burger Category

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Itself the target of a territory invasion by Pizza Hut’s P’Zolo, Subway is breaking down restaurant category barriers, too, with its take on burgers.

A three-item line of Angus Melt sandwiches is being offered this month in 1,236 Subway restaurants in Atlanta, Detroit, Nashville and Macon and Northeast Georgia. The line includes Classic Angus Melt, Monterey Cheddar Ranch Angus and Spicy Chipotle Angus Melt sandwiches.

A Subway spokesman said the Angus Melts have been tested previously but now have been elevated to “local promotion item” status. Subway markets can choose the promotions they want to run and Angus Melts now are one of the options. Subway says the Angus Melts have been well received so far, which suggests that other Subway franchisee groups will try the products, too.

Subway has used Angus beef before, notably in the Absolute Angus sandwich line in 2009. But the Angus Melts are more burger than steak sandwich.

Subway is the second largest quick-service restaurant brand in the U.S., according to data from Technomic. Its $11.4 billion in U.S. sales in 2011 outpaced all but McDonald’s $34.2 billion.

As covered on this site last week, NPD/CREST data shows that the “sweet spot” for QSR burger pricing is between $3 and $4.99, where 32% of burger chain checks land. Subway is right on target, pricing its Angus Melts at $3.50 (in the Nashville test at least). Pizza Hut sought to undercut Subway’s signature “$5 Footlong” pricing by introducing its P’Zolo sandwich at just $3, or two for $5.

Subway’s Angus Melts are just the latest example of how the once-strict borders between burger, chicken, pizza and other QSR categories have disappeared. McDonald’s, for example, never talks about itself in terms of just the burger market; it talks about its share (about 12%) of the U.S. Informal Eating Out market, which includes all types of food and all operator channels, from QSRs to food trucks to vending. McDonald’s itself has taken a stab at menuing pizza, but never found a way to make it work.

Pizza Hut’s P’Zolo effort was notable not just for its jump from pizza to sandwiches but also for its pointed jabs at Subway. “It’s time to say goodbye to the footlong, man,” decreed one TV commercial. Pizza Hut even staged a “Subway Takeover” event at a Chicago “L” train station.

Other crossovers include fish-taco chain Rubio’s 2009 All-American Taco, which it described as a “burger with Beach Mex twist.” KFC recently introduced Original Recipe Bites in response to a similar product from McDonald’s, not from a chicken-category competitor. KFC, meanwhile, is menuing chicken burgers overseas, and is expected to do so here soon.

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