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Subway (restaurant)
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Subway Restaurants, commonly known as Subway, is a restaurant franchise that primarily sells Hoagies and salads. It is owned by Doctor's Associates, Inc. (DAI). There are over 30,643 franchised units in 87 countries as of January 2009. Subway is the fastest growing franchise in the world.
Currently, Subway is the third largest restaurant operator globally after Yum! Brands (35,000 locations) and McDonald's (31,000 locations).
Subway's main operations office is in Milford, Connecticut, and five regional centers support Subway's growing international operations.
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Subway Restaurants, commonly known as Subway, is a restaurant franchise that primarily sells Hoagies and salads. It is owned by Doctor's Associates, Inc. (DAI). There are over 30,643 franchised units in 87 countries as of January 2009. Subway is the fastest growing franchise in the world.
Currently, Subway is the third largest restaurant operator globally after Yum! Brands (35,000 locations) and McDonald's (31,000 locations).
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.
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. Fogle has emerged as a spokesman 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, 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 are affiliated with, nor endorsed by, any medical organizations or doctors.
History
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 December 30, 2008, the company has 30,310 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.
Products
Subway's main product is the submarine sandwich, or "Sub".
In 2001, 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 a 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) 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 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.
One of the chain's best-known sandwiches is the BMT, originally named after the Brooklyn-Manhattan Transit Corporation (the initials now stand for "Biggest, Meatiest, Tastiest"). The sandwich contains salami, pepperoni and ham. As of 2004, it was Subway's most popular cold sandwich in the United Kingdom.
In 2006, the first kosher Subway restaurant in the United States opened in a suburb of Cleveland, Ohio. Subway spokesman Jared Fogle 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." . Since then, kosher Subways have opened in New York, Los Angeles, Kansas City, and Baltimore and plans have been announced for Milwaukee, Boston, and one inside the JCC in West Bloomfield, Michigan, a suburb of Detroit. 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.
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. Most stores offer additional toppings upon request.
Advertising
Subway uses the advertising slogan "Eat Fresh" to explain how every sandwich is made on freshly baked bread, using fresh ingredients, in front of the customer to their exact specification, by employees who Subway terms "Subway Sandwich Artists".
In 2008, Subway began to offer "Five Dollar Foot-long" submarine sandwiches in the United States as a limited time only promotion. Customer response 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) a permanent menu item. The jingle from the commercials advertising Five Dollar Foot-longs has gained some popularity.
Beginning in November 2007, Subway's US commercials feature the Peter Griffin character from Family Guy in which he extols the virtues of its new Subway Feast sandwich. Subway has also used instant win competitions based on the game Scrabble as promotional tools.
Sub Club
For many years, Subway restaurants offered a customer rewards program called the "Sub Club". Customers would receive special stamps with the purchase of a sandwich, earning one stamp for a six-inch sandwich and two for a foot-long; small cards called "Sub Club Cards" were also provided for customers to paste the stamps onto and keep them collected in an orderly fashion. Originally, stamps were redeemable for a free standard sandwich (charges for extras such as double meat or extra cheese still applied) with no other purchase required—twelve stamps for a free six-inch, and twenty-four stamps for a free foot-long. A Sub Club for kids was also established, with one stamp earned for every children's Value Meal purchased, ultimately earning a free children's meal for eight stamps. Later, the regular Sub Club was altered to eight stamps earning a free six-inch, and sixteen stamps for a free foot-long, with the added condition that a 21 ounce or larger drink must be purchased to redeem the stamps.
In early June 2005, Subway announced that the popular customer rewards program would be phased out due to counterfeiting. Another reason, which was not stated by the company, for the discontinuation of the program was that there was a large amount of internal theft of stamps by Subway employees and affiliates, including the sale of rolls of the stamps online at places such as eBay. Officially the Sub Club program has been discontinued in the US and Canada by Doctor's Associates and most additional markets have also made local decisions to discontinue the program. The Sub Club program can, however still be found in a small number of developing markets.
Sponsorship
Subway is the corporate sponsor for two NASCAR Sprint Cup series stock car races: the Subway Fresh Fit 500, held at Phoenix International Raceway; and the Subway 500, held at Martinsville Speedway. In addition, Subway has been the primary sponsor of the NASCAR Sprint Cup number 16 car, driven by Greg Biffle. Biffle has appeared in advertising for Subway along with his Crew Chief Doug Richert. In 2007, Tony Stewart has appeared with Jared Fogel in ads, and he has driven his #20 Home Depot Toyota with Subway primary sponsorship in the 2008 Subway Fresh Fit 500. Previously, Subway had sponsored Jeff Purvis' #51 car in at least one race in 2001. For the 2009 season Subway will sponser Carl Edwards for some races. They also sponsor a pro-cycling team, and had their name on the shirts of Gretna F.C. before the club went bust in 2008. In the 1996 film Happy Gilmore, Subway was also the sponsor of the titular character.
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 long, were only , , and long. The maximum variance in length allowed in that state is 3%, which on a 3-foot sub is . Upon further study, the report showed that the box designed to store Subway's 3-foot sandwiches were only 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.
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 franchisors, 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.
A percentage of net sales is also collected for the Franchisee Advertising Fund, commonly referred to by the abbreviation FAF. The most common rate is currently 4.5% of net sales, but in some markets the rate can range from 3 to 5%. In the United States, Canada and Australia, the Subway Franchisee Advertising Fund Trust, also known as SFAFT controls the use of this fund for advertising, while in other markets it is controlled by the International Franchisee Advertising Fund, also known as iFAF. SFAFT is a independent private trust which is operated by a board of directors voted on by Subway Franchisees, while iFAF is operated by DAI. Local markets also elect a local board of franchisees to decide on advertising specific to their market. Contrary to other major franchisers, Subway's parent company does not make any contribution towards advertising the chain.
DAI is in legal battles with SFAFT over claims of excessive spending of advertising funds on things other than advertising. As a result of this dispute, a new organization, the International Franchisee Advertising Fund was created for markets outside of the United States, Canada, and Australia. As of January 1, 2009 SFAFT is no longer involved in advertising in those markets.
Slogans
- "My Way" (1985–1990)
- "The Place Where Fresh is the Taste" (1990–1995)
- "What a Sandwich" (1994–1995)
- "Right Before Your Eyes" (1995-96)
- "The Way A Sandwich Should Be" (1996–2000)
- "Eat Fresh" (2000–present)
- "Choose Well." (2004–present)
- "Think Fresh. Eat Fresh." (2008–present in Canada)
- "Fresh is best" (2006)
- "I feel good" (2009-present in Australia)
Global locations
Subway is present in 87 countries and territories.
(open 2009)
(only on NATO military bases)
Cuba (Guantanamo Bay Naval Base)
(Recently reopened)
(all but one are located inside military bases)
(only on coalition military bases)
Countries formerly with Subway restaurants
- There were over 20 Subway restaurants from the early 1990s-2001. Reopened in 2009
- opened in 1978, closed in 1980
External links
- - Nutritional information for Subway's menu items
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