The Mystery of the Footlong Sandwich’s Missing Inch

Sued for a footlong sandwich that was less than 12 inches, Subway said it will use a measuring device.

But there is much more …

Subway

Our Subway story starts in 2013 when an Australian teenager posted on Facebook a picture of his 11-inch Subway Footlong. Feeling cheated (I guess), two New Jersey guys sued, others followed, and we wound up with a class action suit. Subway indicated the problem was frozen bread that had to be consistently stretched.

In their settlement, Subway promised that they would have a measuring device that guaranteed accuracy. They also paid a $520,000 legal tab and $500 to each of the ten people leading the suit. Explaining the small settlement the attorney said, “It was difficult to prove monetary damages, because everybody ate the evidence.”

Subway was not alone.

Another Whopper of a Suit

Now, Hershey has been accused of under-filling its Whoppers and Reese’s Pieces packages. Expecting many more Whoppers, the lead person in the suit said the box was was 49% empty. For Reese’s Pieces, the slack was 29%.

In their papers, the court seemed to agree. They said consumers depended on box size because it took just 13 seconds to make a buying decision.

Hershey responded with what I would call a “rattle” defense. They said, “a reasonable consumer, upon picking up the Reese’s Pieces or Whoppers container, would instantly realize that it is not filled to the brim: with each movement of the package, its contents noticeably and audibly rattle.”

The Court will have to decide if a Missouri law has been violated. Hershey’s motion to dismiss the case was denied.

Our Bottom Line: Competitive Market Structures

With many competitors, Subway is in a monopolistically competitive market. Meanwhile, as an oligopoly, Hershey competes against fewer firms.

Both though want the product differentiation that lets them move to the right on the competitive market structure continuum. Consequently, Subway uses its footlong and Hershey its packaging to gain market power.

Moving to the right, firms increase their size and pricing power. Meanwhile market entry and exit become increasingly difficult.

So, when we solve the mystery of the 11-inch footlong, we are not really talking about length. Instead, it is all about generating market power from a distinctive product.

My sources and more:  The Washington Post was my first stop along Subway’s legal path while Eater was next with the court’s decision. I was amazed though that the court validated the Hershey case.