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Subway (restaurant)

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Doctor's Associates, Inc.
Company typePrivate
IndustryFast Food
FoundedBridgeport, Connecticut, USA (1965)
FounderFred De Luca and Peter Buck, Ph.D.
HeadquartersMilford, Connecticut, USA
Key people
Fred De Luca (President)
Millie Shinn (EVP)
David Worroll (Controller)
ProductsSandwiches
Salads
Pizza
Other food products
RevenueIncrease $9.05 billion USD (2006)
Number of employees
167,823 (2003)[citation needed]
WebsiteSubway.com

Subway is a fast food restaurant franchise that primarily sells sandwiches and salads. It is owned by Doctor's Associates, Inc. (DAI), and has over 29,752 franchised units in 87 countries as of July 2008 and is the fastest growing franchise in the world.[1] Currently, Subway is the third largest fast food operator globally after Yum! Brands (34,000 locations) and McDonald's (31,000 locations).[1][2][3]

Subway's main operations office is in Milford, Connecticut, and five regional centers support Subway's growing international operations. The regional offices for the European stores is located in Amsterdam, Netherlands. Australia and New Zealand are supported from Brisbane, Australia, the Middle Eastern locations are supported from offices located in Beirut, Lebanon, the Asian locations from Singapore, and the Latin America support center is in Miami, Florida. In the UK and Ireland the company hopes to expand to 2,010 restaurants by the year 2010.[4]

Many restaurant analysts attribute Subway's fast growth to the growing concern on health by restaurant customers, a trend that Subway has taken advantage of in its marketing. In 1999, an Indiana University student named Jared Fogle lost 245 pounds (110 kg) with a diet made up mostly of Subway sandwiches combined with exercise. The story is used by Subway as a large part of their marketing campaign to this day. Jared has emerged as a spokesperson for Subway, furthering their image as a health-conscious restaurant chain.

Doctor's Associates

Doctor's Associates was founded by Fred De Luca and Peter Buck, Ph.D. in 1965,[5] with the sole purpose of overseeing the Subway chain of restaurants. The term "Doctor's Associates" was chosen due to Peter Buck having a Ph.D. Neither Subway nor Doctor's Associates has anything to do with, nor is it endorsed by, any medical organziations or doctors.

History

File:Alternative subway logo.PNG
Logo used from 1986 to November 2002. It is still seen at many Subway locations.

Fred De Luca borrowed $1,000 from family friend Peter Buck to start his first sandwich shop in 1965, when he was only 17 years old. He was trying to raise money to pay for college. He chose a mediocre location for his shop, but by noon on the first day of the opening, customers were pouring in. On the radio advertisement they had promoted the name as "Pete's Submarines", which sounded like Pizza Marines, so they changed the name to "Pete's Subway"; eventually it was shortened to "Subway", as it is known to this day. As of June 2nd, 2008, the company has 29,546 franchised locations in 87 countries and produces US$9.05 billion sales every year. In 2007, Forbes magazine named De Luca number 242 of the 400 richest Americans with a net worth of $1.5 billion.

In addition to traditional restaurants, Subway operates in many non-traditional locations. For instance, there are over 900 Subway locations inside of Wal-Mart stores and 200 on military bases, including several in Iraq, in addition to three located inside The Pentagon - as well as an increasing number on college and university campuses.

Subway restaurants has been consistently ranked in Entrepreneur Magazine's Top 500 Franchises, and was selected as the #2 overall franchise in 2008. Additionally, it was ranked as the #3 "Fastest Growing Franchise", and the #1 "Global Franchise" as well.[6][7][8]

Products

In 2000, Subway added seasoned breads and a line of specialty items to its menu and in 2003, most Subway markets switched their beverage contracts to supply Coca-Cola products exclusively, having previously left it up to the individual market to decide whether to serve Coke or Pepsi.

In order to ink the current deal with Coca-Cola, Coca-Cola helped pay for the initial rollout of toaster ovens to all existing restaurants in North America. Subway gave customers the option to have their sandwiches toasted in response to increased competition from rival sandwich chain Quiznos Sub, which popularized toasted submarine sandwiches. In Australia, the introduction of Fresh Toasting enabled the Subway Franchise to prevent Quiznos from gaining market share. The TurboChef and Merrychef toaster ovens are a microwave and convection oven hybrid. The deal with Coca-Cola led to Quiznos switching to Pepsi chain wide, except in Canada.

Subway menus vary by store, by country and by market. These are considered COP (country optional program), SOP (store optional program), MOP (market only program) — in Muslim countries omitting ham and other pork cold cuts — but retain core items which are included at every store. The main food sold by the store is Submarine sandwiches, sold in "Six-inch", "Footlong", and the new four inch "MiniSub" sizes. All Subway stores offer customers lettuce, tomato, onions, bell peppers, cucumbers, olives, jalapeños and pickles, as well as market selected options such as carrot, corn, radish and avocado. Like other fast-food restaurants they offer limited time offers or LTO from time to time. In addition to their standard menu, Subway also offers catering for all types of occasions. They offer "Giant Subs", which are a minimum of three feet long, and also offer a sandwich platter. These giant sandwiches can be ordered in bulk and to nearly any specification, something which Subway has promoted as a part of their campaign to tailor every sandwich to the individual customer's taste.

In 2006, the first kosher Subway restaurant in the United States opened in a suburb of Cleveland, Ohio. Fogle, who is Jewish, was in attendance at the opening. "With slight modifications, such as no pork-based products, and the use of soy-based cheese, the menu is virtually identical to that of any other Subway restaurant." [9]. Since then, kosher Subways have opened in New York, Los Angeles, Kansas City, and Baltimore[10] and plans have been announced for Milwaukee, Boston, and one inside the JCC in West Bloomfield, Michigan, a suburb of Detroit.[11] Some of these locations serve soy cheese, but most don't serve any form of cheese at all.

All Subway restaurants in Muslim countries serve a halal menu. There are also at least two Subway restaurants in the United States that do the same, and a growing number in the United Kingdom. The success of these stores has been mixed, but the company will open more halal stores anyway.[12]

Subway also offers items other than sandwiches; breakfast items include such baked goods as bagels, egg & sausage sandwiches, and as of July and August 2006, "personal pizzas" are available in select markets to their menu. The personal pizzas are made upon order (as with their sandwiches) and heated "in less than 90 seconds" (cooking for 85 seconds) as advertised on televised commercials. Breakfast and pizza items are only available in some stores.

In 2008, Subway began to offer Five Dollar Foot-long submarine sandwiches in the United States as a limited time only promotion. The fanatical response however, prompted Subway to make A Five Dollar Foot-long Everyday Value Menu that includes 8 footlong sandwiches; Spicy Italian, Cold Cut Combo, Tuna, BLT, Black Forest Ham, Meatball, Veggie Delite, & Oven Roasted Chicken as a permanent menu item.

Controversies

Criticism

The 2001 book Fast Food Nation by Eric Schlosser criticizes Subway's franchising policies. It claims that in the 1990s, Subway was involved in many legal disputes with franchisees, usually over encroachment (overly aggressive expansion, in which two restaurants are so close in location that they end up competing with one another).

The book blames the "Development Agents" who are given the task of growing the company regionally. They retain a percentage of the franchise fee for their local area, and so it is in their best interest to saturate markets with Subway restaurants in a region, despite the effect it will have on that region's Subway locations. Although this may lead to lower profits per Subway location, it leads to overall higher profits in the region, and therefore higher profits for the entire chain and the Development Agent.

On February 2, 2007 KNXV-TV with the help of the Arizona Department of Weights and Measures, reported that three Subway sandwiches, nominally each 3-foot (91 cm) long, were only 2 feet 8 inches (81 cm), 2 feet 8+1⁄4 inches (81.9 cm), and 2 feet 8+1⁄2 inches (82.6 cm) long. The maximum variance in length allowed in that state is 3%, which on a 3-foot sub is 1.08 inches (2.7 cm). Upon further study, the report showed that the box designed to store Subway's 3-foot sandwiches were only 2 feet 10+3⁄4 inches (88.3 cm) in length; shorter than the maximum allowable variance. In response to the report, Subway stated that they are currently in the process of reevaluating their advertising, promotional, training and packaging materials with regard to the specific or implied length of Giant Subs and are taking steps to advise their franchisees to only discuss with customers the approximate number of expected servings and not a specific length of measurement.[13]

Franchise relations

In addition to its corporate positioning as a more health-conscious restaurant, much of Subway's rapid growth can be attributed to its uncommon business model. Unlike most franchisers, the parent company does not operate any restaurants. Local franchisees operate the stores, and in most markets Subway enters into a contract with a franchisee to be its Development Agent for that market. The Development Agent is then responsible for developing new locations, evaluating stores on at least a monthly basis, and assisting franchisees with whatever needs they may have. DAI takes an 8% royalty on all net sales from each store, while between 3 and 5% (depending on market) of net sales go into a fund, the Subway Franchisee Advertising Fund Trust, also known as SFAFT which is operated by a board of directors voted on by Subway Franchisees. Contrary to other major franchisers, Subway's parent company does not make any contribution towards advertising the chain.

SFAFT is in legal battles with Subway over their excessive spending of advertising funds on things other than advertising.

Slogans

  • My Way (1986-1990)
  • What a Sandwich (1994-2000)
  • Eat Fresh (2000-present)

Global locations

Countries formerly with Subway restaurants
  •  Denmark - Subway operated over 20 restaurants from the early 1990s-2001

References

  1. ^ a b Subway publication (2007). "SUBWAY® Chain Facts". Subway Restaurants. Retrieved 2007-09-23.
  2. ^ Joe Bramhall. "McDonald's Corporation". Hoovers.com. Retrieved 2007-08-23.
  3. ^ Joe Bramhall. "YUM! Brands, Inc". Hoovers.com. Retrieved 2007-08-23.
  4. ^ Subway UK publication. "About Us". Doctor's Associates. Retrieved 2007-09-21.
  5. ^ Doctor's Associates Inc. - Company Profile, Information, Business Description, History, Background Information
  6. ^ "2008 Franchise 500". Entrepreneur Magazine. Retrieved 2008-02-24. If there were an international language of business, it would be franchising. Customers worldwide have proven franchising has universal appeal.
  7. ^ "2008 Fastest Growing Franchises". Entrepreneur Magazine. Retrieved 2008-02-24.
  8. ^ "2008 Fastest Growing Global Franchises". Entrepreneur Magazine. Retrieved 2008-02-24.
  9. ^ First Kosher Subway® Restaurant Opens in Cleveland - PR.com
  10. ^ "Kosher Subway opens to rave reviews". Kansas City Jewish Chronicle.
  11. ^ "Glatt kosher Subway list". TiyulTalk. Retrieved 2008-03-02.
  12. ^ "Subway goes halal". the Manchester Evening News (Manchester, England). 2007-03-08. Retrieved 2008-02-24. SANDWICH chain Subway is to open two Halal-only stores in Manchester. {{cite web}}: Check date values in: |date= (help)
  13. ^ Joe Ducey (2007-06-26). "Sub-Standard". KNXV-TV (Phoenix, Arizona). Retrieved 2008-04-08. His [Dennis Ehrhard] office [Phoenix Dept. of Weights and Measures] recently warned Subway, for shorting a customer and the ABC 15 Investigators found Subway was the biggest offender in our test. {{cite web}}: Check date values in: |date= (help) Video
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