With its new design, app-based ordering, global repositioning and a renewed focus on new product and nutrition, few brands are embracing the future like Subway, says Don Fertman, the company’s Chief Development Officer
Subway would not be where it is today without our franchisees (says Don Fertman, the company’s Chief Development Officer). We have the best entrepreneurial network in the world. They are the backbone and strength of our business, and we are deeply committed to their success. Together, these extraordinary entrepreneurs have built the world’s largest restaurant chain, and they are excited about the changes, too. The Subway® franchise concept – a low investment, low overhead, simple operation alternative to what other quick service restaurants are offering – is just as valid and just as powerful today as it was when Subway began franchising in 1974.
A brand for entrepreneurs
And making it work are the more than 21,000 Subway franchisees around the globe; the entrepreneur owner-operators in their shops with their sleeves rolled up, making custom sandwiches one at a time, interacting with customers, and building their business in the community. Subway has grown from one sub shop in Bridgeport, Conn., U.S.A. to nearly 44,000 shops in more than 100 countries. We’re completely franchised, so the business stays local and the impact is local.
Franchises serve as an economic engine for their local communities. They sponsor local sports teams, schools and charities. Most importantly, they create jobs and provide livelihoods to millions of people.
We know consumers really want to be associated with a brand that cares about its communities. Subway franchisees are models of community giving, and we strive to help them. For example, in response to last year’s many devastating natural disasters, we supported our franchisees so they could get back up and running as well as donate hundreds of thousands of sandwiches to first responders and displaced residents in Texas, Louisiana, California, Mexico, Puerto Rico and Florida. On World Sandwich Day, we donated millions of meals to hunger-relief charities in 60 countries.
Of course, we all know that the landscape we operate in is changing faster than ever before. In the fast food business, there has been an explosion in competition. Technology is also changing every business at lightning speed, and customer needs are changing, too. We are embracing that change.
Subway Digital
One of the most groundbreaking changes at Subway has been the creation of Subway Digital. Last year, the team launched the new Subway app putting customization and remote ordering in the hands of our customers in North America. We are looking to extend that across the globe soon. Our 2018 plans include expanding delivery options. We want to make ordering our food as easy as possible.
You should know, we source our food locally wherever possible. Not only is this great for getting fresh food to our customers, it also supports local farms. Subway is an iconic company that stands for affordable, nutritious, delicious, convenient food. We have scale, we have customer loyalty, we have some of the best franchisees, and we have one of the most recognized brands on the planet.
When I joined Subway in 1981, we had 166 shops. Back then, franchising wasn’t common. You could count on one hand the number of franchisors. People couldn’t see the possibilities of franchising.
At the time, you needed a lot of money to buy a franchise. But opening a Subway shop was different. Anyone could do it. It was affordable, it was a way to become your own boss, and you could grow. When we had 200 restaurants, our founder Fred DeLuca announced he had a goal: 5,000 shops by 1994. I said, “I think you’re crazy.” And here we are today with nearly 44,000 restaurants. Now that was a guy with a vision.
Our strategy
But, like any mature company, we are going through a stage of transition. It’s no secret that we’ve seen a small percentage of restaurant closures. The closures are strategic: a number of our restaurants will be relocated, others will be consolidated. But they will be in better locations. Looking out at the next five or 10 years, we will likely have fewer restaurants in the U.S. than we have today. Simultaneously, outside of North America we expect to open more than 1,000 new restaurants this year. Looking out over the next decade, we anticipate having a slightly smaller, but more profitable footprint in North America and a significantly larger footprint in the rest of the world. But they will be in better locations, they will have better technology, and they’ll be better positioned to meet – and exceed – the expectations of their customers.
Subway will be a stronger brand because of these changes. But most importantly, we are positioning our franchisees for success. We are measuring our success by the profitability of each restaurant and by the customer experience. Seven million customers around the world count on us every day for a great meal. We have expanded our menu offerings, and we are bringing new items to market much more quickly. We recently rolled out a Signature Wrap collection —among the fastest-growing food items in quick service restaurants. And we are still laser focused on nutrition, offering more grains and vegetables than any of our competitors. Wholesome food has been our trademark for over 50 years, and we will NEVER lose sight of that.
New design
We’ve also taken a look at our restaurants through the eyes of today’s customer, and created a new design from the ground up. We call it Subway Fresh Forward, and it’s far more than what’s visible to the eye. It gives customers new ways of experiencing Subway. Subway Fresh Forward restaurant remodelling plans were extensively tested, and our franchisees were a big part of that design process, helping to select the designer and the final design.
In our Fresh Forward shops, fresh vegetables are prominently on display before they are sliced, and our freshly baked bread is beautifully displayed. Our guests can view all our fresh ingredients before customizing their sandwiches. Customers who have ordered online or through our app can grab their orders and never have to wait in line. We are also testing kiosks to let customers quickly create and order their meals.
While it’s still early, most of the remodelled shops have seen double-digit sales increases. One of our shops in Washington state wasn’t doing well – sales were low. The franchisee moved it to a free-standing building about a “9 iron away.” He used the Subway Fresh Forward design and was able to negotiate a lower rent. It has been open one year now and sales are very high – last 13 weeks they were up 70%!
We have spent the past few years developing a strategy for this new world we live in. The strategy is built upon two principles – that the bar is constantly rising and that we will continue to strengthen the fine foundations of every aspect of our business. But it all starts with the franchisees. Subway has entrepreneurial spirit in its DNA. It’s important that we continue to be the best in the business.
AT A GLANCE
Name of franchise: Subway
(Franchise World Headquarters, LLC)
Established: 1965
Number of franchised outlets: 44,267
Location of units: 112 countries
Investment range: $147,050 – $320,700+
Minimum required capital: one half of the total investment in cash
URL: www.subway.com
Contact: Ralph Piselli, Franchise Sales Manager email: Piselli_R@subway.com
