Business model: franchise-only system
Subway is an American privately held fast food restaurant franchise that primarily sells submarine sandwiches (subs) and salads. The concept seems very simple, however this simplicity brought billions of dollars to its founders.
When Fred Deluca was 17 years old, he opened the first kiosk to sell sandwiches. A family’s friend gave this idea and invested $1,000. However, Fred didn’t earn anything on the project: they chose a wrong place for selling.
Nevertheless, guys didn’t give up. They opened a new restaurant nearby, though it didn’t live up expectations either. Finally, Fred opened the 3-d place and renamed it as ‘Subway’. This time, they did succeed and earned $7,000 in the first year. After this success, Fred was determined about his willingness to develop business in the food industry.
Fred came up with the principles which the restaurant had to follow. A high quality, fresh products, and meeting customer’s needs — the business basis. The menu depends on the country. In Muslim countries there are no meals with pork. However, the main ingredients are the same for all the chain restaurants. Subway shows in its advertising campaigns the safety of their products. The restaurant positions itself as a healthy food company.
Subway provides a healthy alternative to the food that other restaurants offer. The slogan ‘Eat fresh’ attracts buyers, as today there’s a tendency towards healthy lifestyle.
Besides, the company adapts the menu to the way local people live. For example, if the restaurant is located among the people who eat more fish, there will be a bigger range of sandwiches with fish.
Subway also has relatively low expenses for opening a restaurant. As there is no need for a separate kitchen, everything is cooked in front of the clients. Additionally, the company is into innovations. Fred DeLuca supports new ways of attracting customers.
Meanwhile, Subway is the largest single-brand fast food chain in the world. The chain comprises 43,000 restaurants in 109 countries. Today the company doesn’t have their own restaurant. They sell franchises instead. Subway collects recurring royalty fees and an upfront franchise fee from independent store operators Such a system helps not only develop a restaurant chain, but also start your own business.
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