Subway Case Study - Analyzing the Growth of the Popular American Fast Food Franchise
subway
Probably the only growing food company with over 44,000 restaurants spread out in over 111 countries is Subway and it is also one of the fastest-growing franchises in the world. Subway, a food chain specializing in submarine sandwiches. It became the largest fast-food chain in the US in 2002.
About Subway
The founder of Subway, Fred DeLuca was out to fulfill his dream of becoming a medical doctor. He was in the need of money and searched if someone could help pay for his education, a family friend suggested he should open up a submarine sandwich shop. Dr. Peter Buck, Ph.D. in Physics, lent him a loan of $1,000 to become DeLuca's business partner. They opened up a restaurant called Pete’s Super Submarines as submarine sandwiches were the only specialty. They even planned and set a goal of opening 32 stores in just 10 years.
Rishabh Rathi
History of Subway
The story of Subway started in 1965 when Fred DeLuca borrowed $1,000 from Peter Buck and opened his first restaurant in Bridgeport, Connecticut. In a passage of one year, they formed another company to oversee the expansion of their restaurant named Doctor’s Associates, a name derived from DeLuca’s desire to make enough from the restaurant to fund his medical tuition. Over the course of time, the two changed the name of their restaurant chain to Subway in 1968. The Headquarters are in Milford, Connecticut.
After Subway's establishment, it didn’t take much time for it to grow and anticipate incredible success. The first Subway was opened in California in 1978, and by the year 1984, it went international by opening up a franchise in Bahrain.
Fred served as the company’s CEO till 2015. He suffered from an illness for two years, DeLuca finally turned his position over to a person called Suzanne Greco before passing away a few months later. Despite the death of the founder of Subway, it continued to see unprecedented success.
There are 26,744 Subway locations in the US and it actually surpasses the number of McDonald’s locations in the country, making Subway having the leading number of restaurants in the United States. Since then from 2007, Subway has continued to rank high in Entrepreneur’s Top 500 Franchises list.
Ashwini
The Subway Logo
The popularity of the Subway logo is majorly high because of the logo’s staying power and consistency. Unlike many companies who are unfaithful to the logos they started out with and changed it completely, Subway’s logo has remained mostly the same from the very start.
Subway had created a monogram out of those arrows present in the logo and continues to use that in much of the marketing material. The Subway logo represents the entry and exit of Subway. Customers can see the monogram everywhere from Subway’s commercials to the paper in which they wrap their sandwiches.
Altogether, it has managed to establish a widely recognizable logo that conveys all of the messages to its customers. Subway has managed to get it right, which says they have put a lot of thought and effort into the logo so they are able to keep it throughout the lifetime of the company.
Amazing facts about Subway
- After opening the food chain, Pete sold just over 310 submarine sandwiches and charged no more than 70 cents for them.
- Rather than going with a less time-consuming process of machine-picking the black olives that other brands use, Subway hand-picks every single black olive to use in their sandwich,
- The yummy 6-inch, lunchtime classic was initially called the Snak when it was added to the massive menu in 1977.
- There is a combined total of 4,500 Subway stores across the globe. It had stores in over 110 countries in 2017, with the most stores being in the U.K. and Brazil.
- Every Subway store uses on an average 16 acres of the leafy green lettuce that we love in our sandwiches every year.
- An American decided to rob a Subway store and then thought to best use the stolen money was to buy a Potbelly sandwich at the same place. Later, he was arrested.
- According to a former employee, when it comes to the customer's choice of filling, the meatballs or roast beef are the worst items you could pick due to the amount of time they have been laying around.
- During the construction of the first World Trade Center, a Subway store decided to open up a store elevated high above the New York Skyline to feed hungry construction workers.
Growth of Subway
Over the years, Subway had struggled to maintain its position in the sandwich arena and retain its establishment in the food market.
In 1974, Subway had started its business through a franchise business model. Exact eight years later, the company with a lot of developments and experience had grown from 16 stores up to 200 stores. Later by 1990 Subway was at around 5,144 locations, with a goal to reach 8,000 stores by 1995. Growing faith of customers in Subway strengthened the company to reach 10,000 stores by 1995.
Subway competed with McDonald's and surpassed it in the year 2002, becoming the highest number of outlets. In the year 2013, there was an annual revenue of $9 billion from the outlets around the countries. Apparently, the Subway brand has more than 44800 outlets now in more than 114 countries.
Subway in India
After the initial introduction and evolution of this food chain, the focus shifts on India operations. Indian market is a large, younger population that has a high liking towards anything that is 'made in foreign' which symbolizes being modern.
Subway is strengthening its delivery network in India by partnering with prominent food aggregators. They are also looking forward to facilitating the customer and introducing mobile ordering for the Indian market.
The popular American restaurant chain, Subway, which has successfully let itself spread across the globe, is also making its place in India. Global sandwich restaurant, food chain Subway has launched its 600th franchise restaurant in India at Bharuch, Gujarat.
The Subway franchise is easy and cheap to set up in a country like India and there is a huge number of Subway stores too. Currently, the American food chain has about 660 restaurants in India, which is the eighth largest market for it in terms of the number of restaurants globally.
Subway's Indian subsidiary is to be acquired by Reliance Retail, as of August 4, 2021. The company reportedly holds the third-largest share with 6% of the Indian QSR market that is valued presently at Rs 18,800 crore, with Domino’s and McDonald’s, being the current market leaders with 21% and 11% shares respectively.
Mukesh Ambani-led Reliance Industries Limited is looking like it is on an acquisition spree. The company now seems to target the QSR market after tapping in on several sectors including grocery, e-pharmacy, edtech, music, furnishings, and more.
The acquisition deal of Subway India is alleged to be within $200-250 million.
The Bottom Line
Subway is a delicious combination of fresh and healthy menu items, which includes sandwiches and other bakery products, with the speed and convenience of fast food. The restaurant chain Subway has exploded into an international success, and its Indian subsidiary had also been quite revered across the nation. However, the current acquisition deal with Reliance Retail might be putting a stop to the search of Subway Inc for collaboration with a single partner for expanding the business operations but the deal might also usher a bright future ahead.
FAQ
How many subways are there in India?
As of now, there were 660 Subway restaurants in India.
Who is the CEO of Subway?
John Chidsey, since Nov 2019.
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