This document discusses a proposed variable pricing model for Subway restaurants. It suggests allowing customers to choose the specific quantities of vegetables for their subs and paying based on the total weight. This would address issues like some customers not wanting to pay extra for small amounts of vegetables or for specific vegetable mixes. The proposal describes a process where customers select their bread and vegetables at separate counters before paying at a weighing counter based on the sub's total weight. It provides an example pricing structure and discusses benefits like an improved customer experience through an interactive process and reduced wait times.

1. Group 8
◦ Arjun Yadav -2013PGPM009
◦ Indranil Ganguly -2013PGPM025
◦ Rahoul Datta -2013PGPM043
◦ Virothi Hemanth Kumar-2013PGPM058

2. Subway is an American fast food restaurant franchise that
primarily sells submarine sandwiches and salads.
It is owned and operated by Doctor's Associates, Inc. Subway
is one of the fastest growing franchises in the world, with
42,070 restaurants in 107 countries.
Subway's international headquarters is in Milford,
Connecticut.
Subway's was launched in India in 2001 and has nearly 400
restaurants in over 60 cities.

4. Sandwich making counter
Billing
Counter
Customer
StaffStaff
Customer
Selects Sub (6-inch or
Footlong)
Selects Bread out of 5
existing Variants
Chooses main stuffing of
subway sandwich
Selects mix of vegetables &
sauces
Sub is wrapped & sent to
billing counter
Customer collects sandwich
& pays the bill amount
Pricing
Currently, the customer is charged a fixed price for the
main stuffing which is already provided in the menu.
The customer also has an option to add extra stuffing
by paying an additional amount. The subs are made by
the Subway staff while the customer gives his choices of
vegetables and sauces.
The billing in the existing model is done on the main
stuffing with an additional amount for each add-on.

5. Amount of Vegetables
• There are a lot of people who ask for particular extra vegetables but
don’t like to pay that extra fixed amount as they don’t see a marginal
utility in making that decision
Specificity of Vegetables
• Majority of the customers want specific vegetables to be added in
specified amounts to their subs
• Hence Subway is unable to charge extra price from customers who are
willing to pay extra
Communication Gap
• The staff are sometimes unable to clearly understand the requirements
of the customer which lead to sub optimal sandwiches hence leading to
customer dissatisfaction

6. We propose Subway to implement a variable pricing model based
on the weight of the sub
 Since the amount of ingredients & vegetables desired by the
customers vary, we should charge each customer what he is
willing to pay.
 Every customer has different preferences and different
purchasing power.
 Therefore, to cater to all the customer requirements, we want
to give the customer the option to choose the amount of
vegetables he desires and price him on the weight of his self-
prepared sub.
 The customer will be given the option of choosing his own
bread size, bread variant and the quantity of each vegetable
he wants in his sub.

7. PmaxPmin=100
Demand
Price
At every price the individual customer
purchases at
his Willingness to pay

8. We propose 2 counters as already present in the existing process
where the customer can prepare his own subway sandwich.
 The customer comes in and picks his choice of bread size and
bread variant straight from the oven
 After taking his bread, he goes to the counters where all the
vegetables are displayed, from which he selects the exact
quantity and mix of the vegetables he wants and adds it to
his sub
 The customer now goes to the weighing and billing counter
 The staff at the weighing and billing counter weighs the sub,
forwards the sub to the main stuffing counter and starts
processing the bill according to the customer’s preference for
main stuffing
 The customer pays the bill according to the weight
 Meanwhile 2 staffs pack the stuffing into the sub and wrap it.
 The customer then collects his sub

10. Variable Bread
Pricing
•The cost for Wheat and Multigrain is included in the base price
•The customer can get the Parmesan Oregano and Honey & Oats variants of the breads by
paying an extra Rs.10 for 6-inch and Rs. 20 for Footlong.
Variable
Vegetable
Pricing
•The customer would be charged on amount of vegetables included into the sub.
• Base price set on 100 INR.
• We charge an extra 5 INR for every 5 grams above base price
•The premium will depend on the per 5 gram price of the most expensive vegetable used
Extra Coke on
Threshold
•Exceeding a threshold weight of the sandwich, the customer would be provided with free soft
drink.
•Eg – exceeding 200 grams, the customer gets free coke.
•This is added incentive to the customer
•Our cost of coke is very small but margins achieved on 200 grams are very high

11. Most expensive vegetable Olive @ Rs 900/Kg
Per Gram Rs 0.9
Proposed Increase in Price Rs 5/5 grams
Min Contribution / Gram Rs 0.1
0
50
100
150
200
250
300
150 175 200 225 250 275 300
PriceofSub(inRs)
Weight (in grams)
Price-Weight Curve
Price
The premium will depend on the per 5 gram price of the most expensive
vegetable used.

12. Eliminating the
counter staff who
usually prepare the
sub
The whole
experience of
coming to Subway
is made more
interactive for the
customer
Reducing the
perceived waiting
time for the
customer as he is
always involved in
the process till he
collects his order
Catering to each
customer on the
price-demand
curve