A Subway sandwich shop logo is pictured in Vienna, Austria, December 27, 2016. REUTERS/Leonhard Foeger

(Reuters) - U.S. sandwich chain Subway Restaurants said on Thursday it shut 359 restaurants in the United States last year, amid stiff competition in a highly fragmented fast-food industry.

Subway, owned by Doctor’s Associates Inc, is the world’s largest fast-food chain by number of restaurants. It had 26,744 locations operating in the United States at the end of 2016.

“We will continue to relocate some shops to better locations and look for new sites — both traditional and non-traditional,” the company said in an e-mailed statement.

Subway said its U.S. sales fell 1.7 percent to $11.3 billion last year, while international sales climbed 3.7 percent to $5.8 billion, reflecting a focus on overseas growth.

Subway rival McDonald’s has also reduced the number of its U.S. locations in recent years, as it seeks to cut costs by franchising out more restaurants.

Milford, Connecticut-based Subway is 100 percent franchised.

Subway on Wednesday named former McDonald's Corp MCD.N executive Karlin Linhardt senior vice president of marketing in the U.S. and Canada.

U.S. restaurants have faced lackluster demand in recent months as more people choose to cook at home amid lower grocery prices.

Minimum wage increases have also hit restaurant chains, forcing them to hike menu prices in response.