Subway`s Bread Loses `Staple Food` Status in Ireland
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Case Code: CLMM167 Case Length: 6 Pages Period: 2006-2020 Pub Date: 2022 Teaching Note: Available |
Price: Rs.300 Organization: Subway Industry: Food & Beverage Countries: United States,Ireland Themes: International Marketing , Business Environment |
Abstract
The case is about the legal dilemma Subway faced on the status of its bread in Ireland. The Supreme Court of Ireland had passed the judgement that Subway’s bread could not be categorized as staple food because of its high sugar content and, so, it would not be eligible for VAT tax exemption. The case deals with the legal battle between the tax authorities of Ireland and the Subway franchise which had filed the case for tax exemption.
A brief history of the company along with details of its operations in Ireland are put forth in the case. The case next discusses the court verdict and the opinions of the experts and dieticians on the sugar content in Subway’s breads. The case ends with the future plans of Subway to deal with the verdict of the court and to continue with its recipe for the baking of its signature breads. It remains to be seen whether consumers will continue to flock to Subway’s stores to indulge in its sandwiches despite the court ruling.
Issues
- Understand the concepts of product decisions for international markets.
- Understand the concepts of product standardization vs. adaptation in international markets
- Understand the importance of the legal environment in international business.
Introduction
In October 2020, Ireland’s Supreme Court ruled that the bread served at Subway – a leading fast food restaurant franchise of the US – could not be defined as bread because of its high sugar content. The verdict came in response to an appeal made in 2011 by Bookfinders Ltd (Bookfinders), Subway’s Irish franchisee, to consider Subway sandwiches as a staple food and exempt it from Value Added Tax (VAT) .
The court had ruled that bread sold by Subway had too much sugar in it and so could not be legally defined as bread . Following the rules of Ireland’s Value-Added Tax Act of 1972, the court defined that staple foods were bread, tea, coffee, cocoa, milk, and extracts of meat or eggs, and these were different from other baked goods made from dough and discretionary indulgences like ice-creams, chocolate, pastries, crisps, popcorn and roasted nuts.
Keywords
Cultural and Legal environment of Business; Subway Bread Issue; Jaffa Cakes; Bookfinders
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