SG4001 – Report on the franchise Subway. 2018
This assignment provides brief understanding about sandwich industry and what are the innovation and the SWOT analysis within the organisation. Subway sandwich was established is 1965, and has remained franchised all around the places. This healthy sandwich shop stood the fantasy of a high school former student Fred DeLuca. Subway Restaurants is one of the top fast food restaurant chains in North America. Subway falls under the customer service sector, in the fast food service industry. They provide a healthy alternative to burgers and pizza for people who are looking to pick up food on the run. Subway goal is “To offer a quality product that is made specific to each individual customers taste”. There is some stiff competition in this industry, but I will be discussing how subway got its start, and how they stand up against these competitors. The first Subway Restaurant was opened in 1995 in Bridgeport, Connecticut. The founder, Fred DeLuca, was a 17 year old who borrowed $1000 from a family friend to open a sandwich shop. Today they have more than 37,00 restaurants in over 100 countries. There are more SUBWAY stores in the world than any other restaurant chain, making us a leader in the global development of the quick service restaurant industry.
Report on franchise Subway
The fast food landscape continues to evolve, and one of the most dynamic demand within the quick serve restaurants market continues to be sandwiches, subs and wraps. Driven by consumer interest in healthier food choices and a growing demand for premium ingredients, sandwich chains are expanding locations as well as variety. In real terms, the sandwich, subs and wraps market has grown 70% since 1999m or from $ 9.9 billion to an estimated $ 16.8 billion in 1999-2004. Primarily subway, Quiznos and Panera bread have fuelled growth and momentum. Regional chains have also seen significant revenue growth , contribution further momentum to the market place. Growth is driven through a combination of aggressive franchise strategy with tactical marketing campaigns and innovative menu concepts that appeal from demographic, as well as a health standpoint (Mintel Intel 2005 )As mentioned in the introduction part in midyear summer 1965, Subway began its humble start in the quick service restaurant industry.
With a target audience of adults aged from ages 18 to 34, Subway is now targeting those individuals who are looking for fast food that is healthy. Subways fast food varies from other fast food chains in that it is a more healthy option that is made to each person’s specifications. Subway has been carefully not to alienate any consumers preferences by offering options, Atkins friendly wraps, salads, snacks and deserts. Subway is happy to advertise that with all their sandwich features, there are over 2 million different sandwich options that are available to their consumers (www.subway.com)
I will be using the PESTLE analysis to analyse and monitor the macro – environmental (external marketing environment) Factors that have an impact on Subway. From the past decade, success in sandwich business has been increased double comparative than any other fast other business. Subway is offering very easy entrance in market. Many other food restaurants are also seeking the opportunities to start subs in their menus. The Subway example represents marketing and product strategies that are classic examples of focusing on market demand, consumer trends, product leveraging, and innovation. The marketing strategies of creating clear brand recognition, brand and product association, and market demands, have strategically positioned Subway to advance market share into the near future. Subway has the colours white, green ad yellow in their brand. They have arrows on the letter “S” and “Y”. The colour green refers to it that it is healthy. The colour yellow is referred to as neutral. They have a slogan as “eat fresh”, as they always have fresh ingredients to make their “subs”. It means they are committed to selling their healthy and nutritious products to all genders, dietary needs, all abilities to all ages. They are passionate about their products and stores, they also want to increase the number of stores they have by franchising so they can become more popular. A picture of Subways and slogan is below.
We can analysis Subways market position through the SWOT analysis strategy. SWOT analysis is a planning strategy, where we can evaluate a business from its internal and external factors. SWOT can be categorised in two parts, which are the internal factors where we can evaluate a business within its internal factors, we compare its strengths against its weakness. External factors The global economy is one of the biggest external factors that will, at some time, affect your business. Market fluctuations based on politics, terrorism attacks, wars and currency devaluation eventually trickle down to most commercial enterprises. Subway is giving the best growing opportunities to enter into food business. According to franchise analysis, with a less amount of investment can give to start in the market comparative others like Mc Donald’s, Burger King, Dominos etc. In 2010, Subway ranked 1st as global growing franchise in Entrepreneur magazine. Subway offers fresh and healthy food in different types of subs, even some doctor advice to eat its nutrition food. Subway is very popular for lunch users customers. Subway is popular to serve its customers at very fast pace with friendly staff. A customised sub takes only one minute to make. Fast service helps to attract more customers in a business. Although Subway is a fast growing franchise chain in food business, but employees turnover is very high rate in the company. Subway is offering eat-in service to its customers, ignoring delivery segment. Subway is also offering only subs in market, other business are getting profits from different kind of food varieties. New entrance of sandwich making business is the biggest threat to Subway. It creates high level of competition in the market.
Subway is famous for its fresh bread. Company is more focussing to maintain its standard to its fresh product (bread) .Product strategy is playing a vital role for any business, Subway products its fresh bread is making its brand name strong in the market. They introduce and sell its product according to its customer requirements. There are many other steps to running a restaurant not directly related to producing the meal that the customer buys, but that contributes to the restaurant functioning and allow for it to remain in business. For example, the restaurant needs to be clean and maintained. Preparation goes into getting the food ready to be served so quickly before, after and during store hours the veggies need to be washed, diced , sliced and stored. Cheese and meat are packaged in the right amount for each sandwich so that it doesn’t need to be counted or weighed every time. All of this preparation contributed to the productivity of the store, without these steps, the restaurant would not run efficiently. Subway company’s price strategy is helping to maintain all prices according to competition. Competitive price also attract more customers in market and also contribution to create more profitability to business. The price of a Subway sub seems to art by location, and also by the type of sub you buy. With 6″ subs starting at £2.99 and good long subs as high as £6.69 in the UK, which are very affordable. Subway also offers salads from £3.99 to £5.49. At the individual restaurant level, some of the Subways fixed costs would be rent/mortgage on the building, insurance and the cost of certain supplies, such as cleaning supplies of which the quantity needed, would be relatively consistent. Also, the salary for the owner and/or the manager would be fixed as these need to be paid.
Some of their valuable costs would include the cost of meat and produce, as they would need more at certain times of the year and during certain promotions. Utilities can vary during different months of the year, as well as price fluctuations for oil, etc.This would be a variable cost. Labour is also a variable cost as employees come and go, more staff is needed for busy times of the year (Summer, holidays etc. ), increases in minimum wage and raises can all affect the cost. New promotions often affect supply and demand. For example , when the £5 foot long promotion began, it “was so popular, so fast that it caused inventory shortages throughout the company”. Even though they were making less money per sandwiches, the volume customers demanded of the items increased. The company was able to modify the amount supplied to meet the demand, and this was so successful that it went from being a local promotion in Florida to a companywide promotion. Subway is adapting lots of activities to promote its business. Subway 99 percent advertisement on coming on televisions, radios etc. Company is spending huge amount on advertisement, according to its surveys they are spending $38.7 billion. Subways profit would be difficult to state on any individual restaurant for several reasons. That information is not necessarily accessible for the general public. It would vary greatly from store to store because the number of sales would vary. A location in a busy, highly populated areas would show more profit than a location in a small town. However, the company’s profit as a whole is available for review. In 2011 “Subway generated revenue of $16.6 billion and added 24,000 jobs”.
Success factors for fast food franchisees will include products and marketing targeted to healthier menu selections, brand consistency, low start-up costs, franchisee support, and consumer convenience. Subway ® represents a poignant example of a fast food franchisee ready for success in the future fast food market. Their strategies transcend the fast food market and apply to many other markets and products.
Subway sandwich shops are well positioned to leverage their strengths and address reasonable threats, weaknesses, and opportunities.
There is always a giant competitor market for every business. Competition is increasing day by day, sandwich places are not only the competitor of Subway, but there are also bigger industries in fast food chain. Burger King and McDonald’s are the main competitors of Subway. There are some competitors in market who has competition with Subway. Miami Subs, Jerry’s Subs and pizza, steak and fry etc. Making sandwich business is getting popular in fast food chain, east to prepare within less time. You need a very small amount of investment to start business in making sandwich and you can generate a big amount of profit. In today’s society, people are busy with work, school and family activities and often don’t have time to prepare home cooked food meals every day. Fast food restaurants provide meals for people on the run, which describes a lot of us today. The advantage that Subway has over these other restaurants is that, while still providing meals quickly, they offer a healthy alternative to burgers and fries or pizza. With promotions such as subs with 6 grams of fat or less.
Subway is the leader in selling sandwich market, offering to eat healthy food. They provide quality , fresh and fast food on the go. Subway is competing in high competitive market with its strategic market plans. Subway restaurants are effiencent to build, and request less footage than any other average fast food restaurants. As a result Subway is becoming famous for its healthy food as Subway Diet, they are making new strategies to expand its business and more focusing on product strategy to create market competition. Subways fresh bread (product) is making itself strong position in global competition. Subway as a company does quite well, They have shown steady growth throughout the years and are now the number one fast food restaurant in the United States. One weakness that may prevent from them from gaining more customers is the lack of a drive through. When people are really in a hurry they will sometimes bypass Subway because they have to park, get out and go inside to stand in the line, making it a little less speedy and convenient than Dairy Queen or Wendy’s. Currently , that doesn’t sheen to be hindering them at all as they are still ranked over these speedier restaurants. Subway has come a long way from its beginnings. Fred DeLuca, a 17 year old boy with $1,000 loan, has built an empire.
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2058 without refference.