Kosher Subway hits roadblock

Last stop

By Michael Orbach

Issue of May 14, 2010/ 1 Sivan 5770

Some latter-day Biblical critics have suggested that Jews and deli may have been the 11th Commandment. Broad generalities aside, given the Jewish fondness for pastrami on club and its sandwich siblings, who would think that a kosher Subway franchise in a heavily Jewish neighborhood could be a bad idea?

Alas, reality is bitter. Two kosher versions of the national restaurant chain have failed in this region. A Subway on Ave. J in Midwood, blocks from the real subway, closed months ago; the other, on Central Avenue in Cedarhurst, shut last month.

“A lot of that is related to our inability to take advantage of the economies of scale,” explained Les Winograd, a spokesman for Subway. Each restaurant is individually owned but franchisees tap into the collective buying power of 23,000 stores in the U.S., said Winograd. That is of limited value to kosher stores.

“With kosher locations we have to source kosher products from suppliers that are in the region, and so they only might be providing food for a very small number of locations,” he said. “Also, for a kosher store to be operating, it has to follow local rabbinical supervision and go to a different supplier than one in another area.”

Israeli-born Avi Paner, who bought the Subway franchise on Central Avenue in November and closed it in April, learned the hard way. For his troubles, Paner blamed the Vaad HaKashrus of the Five Towns and Far Rockaway.

“They destroyed my place,” he lamented, claiming that the Vaad didn’t like the idea of a kosher Subway and spread rumors that the store was not kosher.

“The store needs to have a minimum 120-140 [customers] a day and they didn’t come in because they were told in the schools to not come,” Paner alleged. He could not name specific schools but said some of his customers told him about a smear campaign.

Rabbi Yosef Eisen, the rabbinic coordinator of the Vaad of the Five Towns, flatly denied Paner’s account. “The most recent owner was struggling for business like anyone,” Rabbi Eisen explained. “His business was doing extremely poorly. The original owners, who initially did well, [with] the economicdownturn they were not able to churn out business.”

Paner’s claims were false, said Rabbi Eisen, pointing to the fact that the Vaad hechsher was on the store to the end.

Mitch Krevat, who owns Burgers Bar, a high-end fast food restaurant next door to the failed Subway, said he didn’t believe that the Vaad was to blame.

“I think it was a fad,” Krevat said of a kosher Subway. “When we landed in Israel the first place my daughter wanted to go was Burger King. It’s a forbidden fruit. That will get you trial but unless you can deliver a fair product at a fair price, it isn’t going to last.”

As it happens, Orgad Holdings, which owns the Burger King franchise rights in Israel, announced this week that its 55 locations would become Burger Ranch restaurants this summer.

Krevat, a former advertising executive who recently opened another Burgers Bar in Teaneck, N.J., pointed to a number of failings in the failed Subway.

Advertising, part of the lure of owning a franchise, was done on a national level and didn’t take into consideration price limitations and kosher products.

“All their advertising was for traife,” explained Krevat. “A $5 foot long was $12. People are willing to pay 10 percent more for kosher, but 100 percent for kosher food?”

The Subway on Central Avenue was also hurt by the small space it occupied, Krevat felt. “They didn’t have a place for families to sit on Sunday.”

Subway franchises tend to succeed, according to Winograd; fewer than one percent of new stores fail. Of the 23,000 Subways in the United States, only eight are kosher, including restaurants in Queens, Baltimore and Los Angeles.

“We have also found during troubled economic times, that customers who are not committed to a strictly kosher diet may tend to migrate away to our non-kosher stores that participate in nationally advertising promotions,” said Winograd.

A Subway franchise costs between $115,000 and $260,000 and restaurant owners are required to pay the parent company a percentage of the weekly profits. Subway has been selling franchises since 1965.

“We’ve basically taken what we’ve learned by adapting in international markets to local dietary customs, especially operating in the Middle East,” said the spokesman. “We’ve taken what we learned and tried to adapt it to the kosher consumers, and some will be successful and some may not. Overall, we’re still very enthusiastic about it and I feel that the kosher consumer is a vast untapped market that is under-served by most mainstream brands.”

Another kosher Subway, in New Jersey, closed due to zoning issues, Winograd added.

Critics were not as kind about Subway’s foray into the kosher market.

“It was really not such a big deal,” said David Sax, author of Saving the Deli, a history of the Jewish delicatessen. “It may be officially kosher but it’s spiritually traife.” A call he received several days ago about a kosher Subway soon to open in another state left him unimpressed, Sax said.

“If Chipotle would be kosher it would be a big deal,” said Sax, referring to a popular Mexican food chain. “It’s a sub. There are a million other subs.”

Given the economic climate it isn’t too surprising that Subway failed in Cedarhurst and in Brooklyn, Sax maintained. “The delicatessen is a very difficult business to be in. Margins are really tight and there are small amount of producers. When you add kosher on top it’s definitely difficult. You have fewer things to pick from [and] a reduced number of vendors.”

Zechariah Mehler, a writer at Kosher Today, and a restaurant reviewer for The Jewish Star, tried the kosher Subway in Brooklyn and was dissatisfied. When it closed he was not surprised.

Deli was what Jews were “traditionally best at before the invention of Jewish Chinese food,” Mehler said. The kosher Subways are “not doing it the way that Jewish deli does deli, they’re doing it the way non-kosher does. They’re not living up to the standards of Subway or the standards of kosher deli.” In Yiddish, Mehler said, it was, “Nisht ahin, nisht aher.” Neither here nor there.

Kosher Subways located in Jewish Community Centers and in areas with few other kosher restaurants, have “additional resonance with their customer base,” Winograd noted.

In Cleveland, at the first kosher Subway, Joe Faddoul, a Lebanese Christian who manages the store for his uncle, one of the owners, said business was good.

“You can definitely tell the difference,” he told The Jewish Star. “The vegetables are the same but our meats come from the butcher. There’s definitely a taste difference. The biggest negative is the price. They’re used to a $5 footlong and here we average about nine.”

Liron Shamsiav, who manages the kosher Subway in Queens, now the only one in New York, was philosophical.

“It’s like every restaurant on Main Street,” he said, referring to where most kosher restaurants are in Queens. “It’s a Jewish deli with a little bit of [an]Americanized way... It makes good food and that’s it. Everyone knows where it is. In the beginning they wanted to know what it’s all about. [Now] they need to choose: pizza, schwarma, or Subway. It’s the same thing as a regular restaurant.”