A tell-all about how the founder – Fred DeLuca, grew the brand from its humble beginnings to the world’s largest fast-food chain.
Since its humble beginnings in Bridgeport, Connecticut, Subway has achieved worldwide success. The brand has over 21,000 franchises operating across 100 countries. More outlets than its competitor McDonald’s. And is about as ubiquitous as McDonald’s and KFC.
So, how is Subway so successful?
Let’s take a deeper look into the brand’s story.
Starting From Scratch – Subway’s History
Subway has an inspiring origin story. Fred DeLuca – the founder, originally did not want to become a businessman but a medical doctor. To raise funds for his college tuition he decided to open up a restaurant. With an initial investment of $1000 from Dr. Peter Buck – a family friend, 17-year-old Fred DeLuca opened Pete’s Super Submarines in 1965. The restaurant served freshly-made, customizable, and affordable sandwiches to its customers.
On the first day, the shop sold 312 sandwiches, each of them costing less than $1. The long oblong-shaped bread was a novelty of the shop they’d hoped would be popular among the local customers.
And they formed a Doctor’s Association to oversee the running of their shops too – a tongue-in-cheek reference to Fred’s medical aspirations and Dr. Buck’s doctorate.
The Subway Franchise
The two had an initial goal of opening 32 restaurants in 10 years. But for a fast-growing company, this wasn’t a reasonable goal at the time. By 1974, Fred and Dr. Buck owned and operated 16 submarine sandwich shops in Connecticut. This led the two of them to turn their restaurant into a franchise. Because they knew it would be the only way to get them the rapid growth they wanted.
Fred and Dr. Buck weren’t experts in their fields when it came to expanding their business. But this didn’t stop them from expanding their knowledge and learning how to make their restaurant a success.
The Brand’s Growth
When the company first started franchising in 1974, it had a modest goal of expanding its reach. Eight years later, in the mid-1980s, the company grew from having 16 stores to 200 & from there it quickly expanded to 1,000 stores in 1987 and reached 10,000 in 1995. In 2002, they finally managed to pass McDonald’s store count in the US. And in 2010 they’d surpassed McDonald’s global store count.
At the time McDonald’s had nearly 8,000 franchised stores. And Fred DeLuca, the founder, set a modest goal of reaching 5,000 stores by 1984. By 1995, they had 10,000 stores, not 8,000.
Subway in India
In India, Subway set up its first stores in New Delhi in 200 & today it’s got over 590 franchised stores across 70 Indian cities. Subway’s unique systems and easy-to-follow structures have allowed entrepreneurs of various backgrounds access to the brand.
And over the years Subway has adapted to the numerous regulatory changes and consumer expectations of the Indian market. Making it a great choice among business owners and entrepreneurs.
Subway’s Business Model
“I tell everybody there are only three things that we do. We build sales at the store level, we build profits at the store level, and we build more stores. The first two things go in tandem, of course. It’s pretty tough to build profits without sales.” – Fred DeLuca for Inc. Magazine.
Subway’s Ethos
The company’s slogan – Eat Fresh, calls attention to how all its bread is freshly baked and its sandwiches are made with fresh ingredients. And Subway has been making its signature bread from scratch since the 1980s.
Primary Model
Subway is one of the cheapest brands to the franchise. The company’s business model primarily revolves around franchises and non-traditional units. They operate with a focus on keeping costs down and profits up. And most of its growth comes from its franchise-only model.
The company recognized that a franchise-only model would motivate entrepreneurs to do their best since the store’s success meant their success. Especially when their livelihoods depended on it.
As a result, the company continues to use a 100% franchise model to this day.
Non-Traditional Units
Through the use of proprietary models, the company has been able to explore different strategies and potential growth opportunities in the country. This allowed them to plan store openings in places where they can have a large number of franchised restaurants.
One good example of this would be a franchisee who set up a subway inside a convenience store. An unconventional step that introduced a low cost of entry for the brand and benefited from other convenience stores in the area.
Furthermore, non-traditional outlets (think airports, transportation hubs, and supermarkets) allowed them to access more customers. People who previously, didn’t consider Subway as an option. This helps in increasing brand awareness. By breaking out of the norm and finding new opportunities.
Subway Agreement Forms
Let’s take a brief look into some of the paperwork surrounding the Subway franchise.
Subway Franchise Disclosure Document
What Is A Franchise Disclosure Document?
A franchise Disclosure Document or FDD for short is a legal document that’s drafted by a lawyer and provided by the franchisor to the franchisee. The FDD generally includes 23 sections that detail terms like fees, the franchisor-franchisee legal relationship, and the company’s background.
What Is In The Subway Franchise Disclosure Document?
If you were wondering what a Subway FDD looks like, here’s a brief outline of its table of contents.
Table of Contents
- THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES
- BUSINESS EXPERIENCE
- LITIGATION
- BANKRUPTCY
- INITIAL FEES
- OTHER FEES
- ESTIMATED INITIAL INVESTMENT
- RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
- FRANCHISEE’S OBLIGATIONS
- FINANCING
- FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING.
- TERRITORY
- TRADEMARKS
- PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION
- OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS
- RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
- RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION
- PUBLIC FIGURES
- FINANCIAL PERFORMANCE REPRESENTATIONS
- OUTLETS AND FRANCHISE INFORMATION
- FINANCIAL STATEMENTS
- CONTRACTS
- RECEIPTS
Subway Operations Manual
One of Subway’s big secrets to success lies in its operations manual. And the simplicity of Subway’s operation manual is what makes it ingenious.
What Is An Operations Manual?
It’s the document that allows Subway to run like the well-oiled machine that it is. It includes instructions on day-to-day operations, rules, and regulations for the franchisee and training materials, as its main talking points.
Let’s take a look at the Subway Training Manual,
Table of Contents
- INTRODUCTION
- CHAPTER 1: THE TRAINING PROCESS
- TRAINING: DAY 1
- TRAINING: DAY 2
- TRAINING: DAY 3
- TRAINING: DAY 4
- TRAINING: DAY 5
- CHAPTER 2: RULES AND REGULATIONS
- HANDWASHING
- DRESS CODE
- PUNCTUALITY
- WRITE-UPS
- SUB-WAY
- CLEANING
- CUSTOMER SERVICE
- RESPECTING YOUR FELLOW EMPLOYEES
- CASH.
- SCHEDULE
- CHAPTER 3: MENU ITEMS
- VEGETABLES
- MEATS
- OTHER
- CONCLUSION
- INDEX
By having only three main sections in its training manual, Subway has been able to refine and simplify its training process while streamlining its customer service.
Branding
The Subway Logo
Unlike a lot of brands that revamp their logos with the times, the Subway logo has remained the same since its introduction. The arrows present on the logo refer to the entry and exit of the Subway store. Altogether the brand has managed to create and sustain a logo that’s remained consistent and relevant since its introduction.
New Menu Options
The 6-inch, lunchtime classic was initially called the Snak when it was added to the massive menu in 1977. Aside from sandwiches and foot-longs the menu also offers salads, wraps as well as donuts, muffins, and cookies. And of course, Subway’s signature model – The create your own sub sandwich.
In some countries, the brand has also included flatbreads, English muffins, and breakfast sandwiches in their menus to cater to local customers.
Recently, the company has shifted its focus from the customizable assembly line model to sizing down its menu and offering sandwiches with a broad appeal. So it required minimal decision-making on the customer’s part. This change was made to streamline the production process and improve customer satisfaction. This has been reported to be the brand’s most significant menu update in the last 60 years.
Subway’s Marketing Campaigns
In 2000, Subway introduced Jared Fogle during one of its marketing campaigns. He used to weigh 425 pounds and lost 200 of those pounds when he was on a diet of subway sandwiches. Fogle was often seen in a lot of ads holding up an old pair of his pants to show how much weight he had lost on his Subway-only diet.
This did wonder for the brand’s name, which at the time was promoting itself as a healthier alternative to fast food restaurants. This was in part due to diet fads and changing eating trends of the early 90s and 2000s. Subway released an ad that involved seven low-fat sandwiches and compared them to other fast food options like burgers and tacos. By tapping into customer preferences and the current trends of that time, Subway was able to leverage its success. Making them the largest restaurant chain and even surpassing McDonald’s in 2002 and 2010.
Adapting To Covid-19
With social distancing and stay-at-home regulations in place, a lot of restaurants and on-site businesses were struggling to stay afloat. However, Subway saw an opportunity. They introduced services like allowing customers to purchase ingredients (like fresh produce or packaged meats) and offering curbside pickups or contactless delivery options.
And in honor of National Nurses Week, they donated 6-inch subs to healthcare workers with every Subway order on the post mates app. Subway has launched many programs during the pandemic to help uplift communities. By partnering with Feeding America they donated a free meal with every foot-long purchase. And they also donated food across the US, UK, Ireland, Latin America, and New Zealand.
The Future – Some Brand Updates and Campaigns
Following the death of their previous CEOs, Subway welcomed a new CEO – John Chidsey. Who kickstarted the brand’s transformation journey. Subway launched a new healthy eating program to promote its low-fat sandwiches as a part of its Eat Fresh Refresh campaign. As a call-back to its Refresh tagline, the company has also had a complete relaunch of its menu coupled with a revamped mobile app.
The Subway Series Campaign also did wonders for the brand’s sales. Trevor Haynes, president of Subway North America stated, “The results from the Subway Series launch and the positive reaction from guests and franchisees demonstrates that our transformation strategy is working,” on the launch earlier this year.
And as of 2022, Subway has launched a Subway cares foundation as an independent, non-profit, global organization. To support today’s youth through hunger relief, tuition assistance, mentoring, and leadership programs.
In the future, the company will continue to embrace the digital age, pursue sustainability, and handle any curve balls thrown its way.
Conclusion
Subway is a brand and franchise that’s had its ups and downs like any successful organization. Through consistent efforts to adapt to changing trends, and proper planning, they’ve managed to come out on top every time.
You can be the next franchise successful brand like Subway, connect with sparkle★minds to know more about franchising your business.
