Market Overview

Subway: Where Bread Isn't Really Bread?

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Subway: Where Bread Isn't Really Bread?

Fast food sandwich chain Subway was on the receiving end of an awkward ruling from Ireland's top court, which said that Subway's bread doesn't fit the legal definition of bread, The Wall Street Journal reported.

What Happened: Irish law states that the sugar content in bread can not make up more than 2% of the weight of the flour.

If the sugar content exceeds 2%, then it does not need to be taxed under the 1972 Value Added Tax Act, according to the Journal. 

The Irish court found that sugar was 10% of the weight of Subway's flour.

Normally a headline of this sort is insignificant, but the definition of bread has legal ramifications as part of a tax case involving one of Subways's franchisees.

An Irish franchisee operator named Chris Talbot pushed for a refund on taxes he paid from 2004-2006.

"If one ingredient exceeds the limitation, the resulting product falls outside the definition of ‘bread' for the purposes of the act," Supreme Court of Ireland Justice O'Donnell wrote as part of a judgment.

Talbot said he is "exploring our options with the verdict," according to WSJ.

Subway Responds: Subway told WSJ in a statement that it disagrees with the ruling.

"We have been baking fresh bread in our stores for more than three decades and our guests return each day for sandwiches made on bread that smells as good as it tastes," the statement said. 

What's Next: Subway's turnaround plan has been in the works since early 2020, but it'is unclear what impact, if any, the Irish ruling will have on its business.

Related Links:

Subway's Turnaround Plan Is In The Works

Subway Franchisees Reportedly Hate New CEO's Promotional Stance

Photo by Ian Poellet via Wikimedia

 

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Posted-In: bread Subway The Wall Street JournalNews Eurozone Legal Markets Media Best of Benzinga

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