Franchise management

1. SUBWAY

2. Subway is an American multi-national fast food restaurant franchise that primarily sells
submarine sandwiches (subs), wraps, salads, and beverages.
Subway was founded by 17 year old Fred DeLuca and financed by Peter Buck in 1965 as Pete's
Super Submarinesin Bridgeport Connecticut. The restaurant was renamed Subway two years
later, and a franchise operation began in 1974 with a second restaurant in Wallingford,
Connecticut. Since then, it has expanded to become a global franchise.
Subway serves an array of topping choices, allowing the customer to choose which toppings are
included in their sandwich. The longtime Subway slogan, "Eat Fresh", is intended to indicate the
fresh ingredients that are used in their sandwiches.
It was the fastest-growing franchise in the world in 2015 and, as of June 2021, had 37,540
locations in more than 100 countries and territories. More than half its locations (21,796 or
58.1%) are in the United States. It also is the largest single-brand restaurant chain, and the
largest restaurant operator, in the world.Its international headquarters are in Milford,
Connecticut.

4. The SUBWAY history
In 1965, Fred DeLuca borrowed $1,000 from friend Peter Buck to start "Pete's Drive-In: Super Submarines" at 3851 Main Street in Bridgeport,
Connecticut, and in the following year, they formed Doctor's Associates Inc. to oversee operations of the restaurants as the franchise
expanded. The holding company derives its name from DeLuca's goal to earn enough from the business to pay tuition for medical school, as well
as Buck's having a doctorate in physics. In 1968, the sandwich shop was renamed "Subway".
In 1974, a franchise operation began with a restaurant in Wallingford, Connecticut.
The first Subway on the West Coast was opened in Fresno, California, in 1978. The first Subway outside of North America opened in Bahrain in
December 1984. The first Subway in the United Kingdom was opened in Brighton in 1996. In 2004, Subway began opening stores
in Walmart supercenters and surpassed the number of McDonald’s locations inside U.S. Walmart stores in 2007.
Since 2007, Subway has consistently ranked in the Entrepreneur Franchise 500. In 2015, it ranked #3 on the "Top Global Franchises" list, and #1 as
the "Fastest Growing Franchise". At the end of 2010, Subway became the largest fast food chain worldwide, with 33,749 restaurants – 1,012 more
than McDonald's.
In January 2015, Suzanne Greco became president and CEO after her brother Fred DeLuca, the company's first CEO, died of leukemia in
September 2015 after being ill for two years.

5. In 2016, Subway closed hundreds of restaurants in the U.S., experiencing a net loss in locations for the first time. However, with
26,744 locations, it remained the most ubiquitous restaurant chain in the U.S. (with McDonald's in the #2 spot).
In July 2017, Subway unveiled redesigned restaurants, dubbed "Fresh Forward", with a new company logo. Features include self-
order kiosks; USB charging ports at tables; and new menu items, including additional condiments, and bread made without
gluten.
In 2017, the chain closed more than 800 of its U.S. locations. In April 2018, the chain announced it would close about 500 more
that year. According to Abha Bhattarai of The Washington post, this is a result of three consecutive years of falling profits, and
foot traffic in Subway stores reduced by 25 percent since 2012. Franchisees also complained that the company's deep
promotions further ate away at profits. Industry analysts like Bob Phibbs, chief executive of the New York-based consulting firm
Retail Doctor, say changing tastes on the part of consumers, who more frequently prefer locally sourced produce and hormone-
free meat served by regional start-ups like Sweetgreen, especially in metropolitan areas, are the cause of the drop in Subway's
sales, as well as the loss of market share to competitors. These include fast-casual eateries and sandwich shops like Panera
bread, Au Bon Pain and Firehouse subs, as well as food trucks, and grocery stores that offer freshly made meals at competitive
prices. In January 2018, Subway invested $25 million in a re-branding campaign targeted at young consumers in order to
revitalize its image and boost sales. In December 2020, Subway partnered with ezCater to offer a new online catering platform.
Subway logo used from 2002 to 2016 (still used on signage in many locations)

6. Subway SWOT analysis
Strengths Weaknesses
1.Great degree of subs customization
2.Largest fast food restaurant chain in the world by
the number of outlets
3.Marketing and promotional strategies
4.Choice of healthier meals
5.Partnerships with Britain and American Heart
Associations
6.All restaurants are owned by franchisees
7.Low startup costs
1.Interior design of the outlets often looks cheap
2.High employee turnover
3.Services are not consistent from store to store
4.Too much control over franchisees
Opportunities Threats
1.Increasing demand for healthier food
2.Home meal delivery
3.Changing customer habits and new customer
groups
4.Introduction of drive-thru
1.Saturated fast food markets in the developed
economies
2.Trend towards healthy eating
3.Local fast food restaurant chains
4.Currency fluctuations
5.Lawsuits against Subway

7. Strengths
• Great degree of subs customization. Customers always like to choose and the more choices they can make about
their purchase the more satisfied they are with it. Subway is better than any other large fast food chain in
providing the choice of meal customization.
• Largest fast food restaurant chain in the world by the number of outlets. Currently the company operates 38,181
restaurants in 99 countries, more than McDonald’s or any other fast food chain operator.
• Marketing and promotional strategies. Subway employs superior marketing techniques and promotional
strategies to attract and grow their customer base. The most successful Subway’s promotional offer was to offer
foot longs for only $5, which became a new pricing standard of a sub.
• Choice of healthier meals. Subway offers a range of low calorie, fresh and nutritious food, which you can’t find in
other fast food stores, at least not to such an extent. This Subway strength meets current trend of eating healthier
food.
• Partnerships with Britain and American Heart Associations. Subway has received certificates from both
organizations that it serves health meal options, which is a great reward and differentiates the business from
other fast food restaurants.
• All restaurants are owned by franchisees. Subway doesn’t own any restaurants itself so it experiences less risk
and can focus its efforts on marketing and growing the franchise.
• Low startup costs. One of the reasons behind such a high growth rate of Subway stores is the low startup costs.
Subway stores are smaller and require less money for leasehold improvements and equipment.

8. Weaknesses
• Interior design of the outlets often looks cheap. Subway restaurants lack the interior design and quality that
would welcome everyone to stay and feel more comfortable than in the competitor’s restaurants.
• High employee turnover. Subway Sandwich Artists job is a low paid and a low skilled job. It results in low
performance and high employee turnover, which increases training costs and add to overall costs of Subway.
• Services are not consistent from store to store. The business struggles to ensure consistent services’ quality
throughout it stores and so a service in one store may please a customer when another may fail to do that.
• Too much control over franchisees. Despite the fact that Subway fails to ensure consistent quality throughout the
stores it exerts too much control over its franchisees. This is done through the contracts that are more favorable
to the franchisor. An example of such high control is seizing of franchisee restaurants if the later one is struggling
to keep them open.

9. Opportunities
• Increasing demand for healthier food. It’s an opportunity upon which Subway already grows itself and could
further introduce low fat, low salt and more nutritious subs.
• Home meal delivery. Subway could exploit an opportunity of delivering food to home and increase its reach to
customers.
• Changing customer habits and new customer groups. Changing customer habits represent new needs that must
be met by businesses. So far, Subway has only one variation of restaurants, different to its close competitor
McDonald’s, which tries to satisfy and reach previously untapped customer groups by introducing McCafé,
McExpress and McStop.
• Introduction of drive-thru. McDonald’s already offer only drive-thru restaurants, which is a great opportunity for
Subway to jump.

10. Threats
• Saturated fast food markets in the developed economies. The fast food market in the developed countries is
already overcrowded by so many fast food restaurant chains and this already proves to be a threat to Subway as it
finds it hard to grow in the developed economies.
• Trend towards healthy eating. Only part of Subway’s menu offers healthier choices of meals, while the rest menu
is rich in salt, contains many calories and is accompanied by soft drinks. Customers who care about their food and
well-being may opt out for something else rather than Subway.
• Local fast food restaurant chains. Local fast food restaurants can offer healthier food and menu that exactly
represents local tastes.
• Currency fluctuations. Subway receives much of its income from foreign operations. That income has to be
converted into dollars and may affect the company’s profits, especially when the dollar is appreciating against
other currencies.
• Lawsuits against Subway. Subway has been involved and lost a few lawsuits in the past because of the poor
company policies regarding franchisees management. Lawsuits are expensive, time consuming and damages the
firm’s brand.

11. Subway Competitors In 2022
Subway’s primary competitors are McDonald’s, KFC, Burger King, and Wendy’s since they have a loyal customer
base with quality food as of 2022. Submarine shops, including Jersey Mike’s and Jimmy John’s, are competitors to
Subway because these restaurants have comparable menu items and similar earned revenue.
1. McDonald’s currently, there are over 39,000 locations worldwide in more than 120 countries, making it the
biggest competitor to Subway.
2. KFC there are over 25,000 locations worldwide, in 145 countries.
3. Burger King continues expanding, and it now has 18,000 locations worldwide in more than 100 countries.
4. Wendy’s has 6,500 locations throughout 29 countries.
5. Jersey Mike’s has 1,910 locations in the United States.
6. Jimmy John’s has 2,700 locations in the United States.