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Aug, 01 2007

Subway - Learn from the masters

THE first Subway restaurant was opened in Bridgeport, Connecticut, USA on August 28, 1965, by Fred DeLuca and Dr. Peter Buck and was called Pete\'s Super Submarines.

THE first Subway restaurant was opened in Bridgeport, Connecticut, USA on August 28, 1965, by Fred DeLuca and Dr. Peter Buck and was called Pete's Super Submarines. By 1973, there were 20 Subways across the US.

In the year 1974, the duo, particularly DeLuca, wanted to expand this business outside the US. They decided to opt for franchising, but big companies dismissed the idea. Now, already lagging behind the scheduled time for opening more than 50 outlets in other countries, they started taking the matter more seriously. Initially, they thought of hiring consultants who could encourage investors in investing their money to open and run Subway restaurants in other countries. But, later DeLuca decided that rather than hiring consultants, he would himself go out in search of potential franchisees.

That is when he spoke to his friend Brian Dixon. DeLuca made him an offer that he could not refuse. He told him about their franchising plans and offered him loan for buying their restaurant located in Wallingford. DeLuca even said that if he did not like the business, he could return it to them, owing them nothing. Initially, Dixon refused the offer because he did not want to take any sort of risk by entering into this whole new concept of business, but later he changed his mind and joined hands with DeLuca to become the first international franchisee of Subway.

And that was the first small step of company's expansion and since then, company never looked backward. Today Subway has become the world's largest submarine chain store. Studies show that the Subway chain operates more restaurants in the US, Canada and Australia than McDonald's. Countless awards and accolades have been bestowed upon the Subway chain over the past 40 years. Its name and products have even appeared in numerous television and motion picture productions.

International presence

Today, Subway has 27,881 restaurants in 86 countries and still growing. All these restaurants are run by local businessmen. Subway's main office (Operations) is in Milford, Connecticut, and its expanding international operations are supported by five regional centres. The company has its regional office in Amsterdam, Netherlands and other two centres in Australia and New Zealand. However, Beirut and Lebanon offices are looking after its Middle Eastern locations. Singapore supports the Asian locations and the Miami office supports operations across Latin American countries.

A lower cost restaurant requires fewer leasehold improvements, less seating and less equipment expenditures. Moderate and higher cost restaurants may require extensive interior renovations, extensive seating and additional equipment. If you are purchasing a franchise for another location opportunity, such as a non-traditional, satellite or school lunch programme location, the above listed capital requirements may vary and could be substantially lower depending upon the necessary equipment you must acquire or changes in leasehold improvements you must make. The above figures do not include extensive exterior renovations. Costs do not include stamp duty.

Franchise facts: India

Space requirement: 200 to 600 sq.ft

Investments: Rs 20 to 30 lakh

Locations: Both in malls and high streets with high footfalls

Franchisee responsibility:

Initial franchise fee

Finding locations

Leasehold improvements

Leasing or purchasing equipment

Hiring employees and operating the restaurant

Paying 8 per cent royalty

Paying 3.5 per cent advertising fee into the advertising fund

Training and support: Franchisee is required to attend two-week training course. The course teaches business concepts, methods of operation and basic management skills. The training is imparted in the classroom and on-site at local Subway restaurants for hands-on experience. At the end of the two weeks, each attendee must pass a comprehensive exam in order to become a Subway franchisee. There are also courses for managers, multi-unit owners, field consultants and development agents.

Site selection: Assists in selecting location

Restaurant design: Assists in designing interior and exterior

Equipment ordering: Ensures timely delivery of equipments.

Operation manual: Provides all technical know-how, and various aspects of running a business successfully.Field support: Assists in market research.

Franchisee services: Coordinator assigned to every franchisee, who serves as main contact person, just a phone call or e-mail away.

Research and development: Subway's executive chef, baking specialist, staff nutritionist and product development team continuously strive to make the products better. The Subway staff regularly visits franchise outlets in various locations across the world, so that the franchisees can maintain the standards set by Subway.

Behind the success

An official from Subway attribute their tremendous success to their franchisees around the globe, whose energy and enthusiasm have brought Subway restaurants to 86 countries. Now boasting close to 28,000 locations, the Subway chain has recently been cited by Global Finance magazine as one of the world's best companies. Apart from a sound franchising system, Subway restaurants offer a delicious variety of footlongs and 6-inch sandwiches, salads and wraps that are made with a wide assortment of meats, cheese, vegetables and toppings. Fresh food is prepared daily and temperatures are monitored regularly. Subway takes extra care in every minute detail so that their patrons can be served with the best meals. It provides its partners with detailed information on proper food handling that includes proper hand washing procedures, glove-use procedures and food rotation.

The Subway Restaurants have involved themselves in many social activities. They are actively involved with many social organisations all over the world, like habitat for humanity and the Red Cross society. To ensure that its patrons can expect to enjoy the same great-tasting sandwiches, no matter where they are, the Subway chain tries to keep the same menu in all its outlets. However, Subway is also very conscious of the different religious and cultural dietary needs of the consumers and hence takes steps to adapt its menu accordingly. All these factors make Subway a successful brand all over the world.

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