Jared who? How Subway will reposition its brand after child porn scandal

For 15 years, Jared Fogle was Subway’s greatest success story.

Now, Subway would rather customers forget it ever had anything to do with him.

On Wednesday morning, federal documents said the now-former company spokesman planned to plead guilty to charges of distributing and receiving child pornography and engaging in sex acts with minors.

It’s a nightmare situation for any company, and Subway’s link to Fogle was tighter than many business-pitchman relationships. The company heavily relied on Fogle -- who is married with children -- for years, correctly guessing that his regular-guy demeanor and do-it-yourself diet plan of cheap fast food sandwiches would resonate with its customers.

Fogle was an instant success.

After his first national commercial, Subway’s sales increased by 20%, according to the New York Daily News. In 1998, two years before Fogle signed on as a Subway spokesman, U.S. sales for the sandwich chain totaled $3 billion, according to Nation’s Restaurant News, a food service industry publication.

By 2012, after the sandwich chain expanded its locations, moved into the breakfast sector and started the $5 foot-long promotion, sales were $12.1 billion.

According to Ad Age, same-store sales dropped 10% in 2005 after Fogle’s advertising contract expired and his ads stopped airing.

SIGN UP for the free California Inc. business newsletter >>

The charges against the one-time face of the sandwich chain will have an effect on the brand, but not in the long term, said Ira Kalb, assistant professor of clinical marketing at the USC Marshall School of Business.

“Subway didn’t do anything wrong,” he said. “It’s somebody associated with Subway that did something wrong.”

He added: “I think people have short memories, and they’re probably going to forget this pretty quickly.”

The Milford, Conn., company has distanced itself from Fogle in recent months.

In July, Subway said it and Fogle had “mutually agreed to suspend their relationship” after federal agents seized documents and electronics from his Indiana home.

On Tuesday, Subway tweeted that the company no longer had a relationship with Fogle and that it had no further comment.

This quick action by the company to address the issue and end the relationship with Fogle was a good way to handle the situation, said James S. O’Rourke, professor of management at the University of Notre Dame.

“You’re never going to see him again,” O’Rourke said. “Every one of these spokesmen comes with a liability clause. You do your best to manage that.”

Subway’s advertising has already moved away from telling the story of Fogle’s weight loss to focusing on their franchises and the notion that a local business is making lunch for its neighbors, he said.

“They’re trying to position themselves not as a large multinational brand,” O’Rourke said. “They’ve moved in a very different direction with the advertising.”

Kalb said the situation with Fogle highlights the dangers of relying on company spokespeople to represent a brand. A mascot, like the Charmin bear, is a safer choice.

See the most-read stories this hour >>

“When spokespeople get into trouble, or things come out about them, it’s definitely going to have some spillover to your brand,” he said. Mascots “don’t get into trouble.”

According to the official story, Fogle once weighed 425 pounds and was unable to walk across the campus of Indiana University.

After switching to a diet that included two Subway sandwiches a day, as well as increasing his exercise, Fogle lost more than half his body weight in less than a year.

Subway might want to distance itself from its ex-frontman, but on Fogle’s Twitter account, he still lists himself as a company spokesman. As recently as a month ago, he tweeted about Subway promotions.

For more business news, follow @smasunaga on Twitter.