Ever nibbled at a sub at Subway? This submarine-shaped sandwich grows on you. Their INR 75 price for ‘Sub of the Day’ will tempt you to try one.
Subway's founder
Subway’s headquartered in Connecticut, U.S.A. Fred DeLuca co-founded it with a friend in 1965 when he was 17. The company itself has an unlikely choice of name viz. Doctor’s Associates, Subway itself is the brand.
DeLuca is among the 250 wealthiest people in the States.
Bigger than McDonalds in the U.S.
With over 32,000 locations in 90 countries (here’s a live count), it is the world #2 among the QSR (quick service restaurant) chains by number of outlets. It’s the market leader in the U.S., it has 23,000 outlets here. It overtook McDonalds, which currently has about 15,000 numbers in the U.S., in 2002.
The company seems to have been on an aggressive growth path, here is some recent and not-so-recent news.
The India footprint
In India, Subway has 153 restaurants, giving Subway India a ranking of 12th among 90 countries. And among the seven QSR chains being covered in this series, Subways has the newest India footprint : the first outlet – in Saket, Delhi – opened in Dec ‘01.
In 2003 (like for the other fast food brands that entered before), the menu was Indianised and the prices dropped, this had the effect of pushing up sales 20%.
There are 37 outlets in the National Capital Region, 26 in Mumbai, 19 in Hyderabad, 16 in Bangalore, 11 in Chennai, 8 each in Pune and Kolkata.
The company plans to add 100 outlets in the next one year. That will still take it’s coverage up to only 29 cities, from the current 25, well behind the city coverage of the other brands in this series.
The healthiest fast food?
Subway’s the un-McDonalds.
It’s positioned itself on the health (‘less than 6 grams of fat‘) plank, an interesting strategy, given its arch-rival’s perceived vulnerability on this score. The 2009 Zagat Fast-Food Survey has rated Subway as the “#1 overall provider of Healthy Options”.
Jared, the guy who lost 245 lb by eating Subway (and exercising)
A few years ago, a university student Jared Fogle said he lost 245 pounds by eating Subway for a year, the publicity Subway got then and ever since has been immeasurable.
Here’s Jared’s blog.
Advertising
In India, the brand’s mainly used print advertising promoting it’s Sub of the Day. It only appointed a creative agency this year and has had modest spends to date.
Franchising strategy
After 44 years and over $8 billion in sales, the company is still privately held and still led by it’s founder (who still looks full of energy and says he can eat upto six subs a day :-). Despite it’s size and aggressive growth, it boasts a small staff of just 600.
All outlets are franchised. The company signs up multiple small franchisees, unlike McDonalds and most chains, who prefer master franchisees. In India, too, it’s franchisees own just 1-2 outlets each .
The company appears to usually take an aggressive stance towards it’s franchisees e.g. make them do most of the investments and keep training and support to a minimum, a strategy which has led to some dissatisfaction among them, here’s one report.
And here are some employee comments !
The idea of using small mom-and-pop franchisees may not work well in India : it’s leading to subs of ‘varying quality’. I – and others I know – have had ‘suspected hygiene’ issues. A sub’s ingredients are mainly raw and uncooked, and are supplied daily to the outlets from central locations. Ensuring that these are of the right quality, while the franchisees themselves are small and underinvested, will be a challenge in tropical India.
I have also had service issues with the outlets in Mumbai. Each outlet is small, about 500 sq.ft and is unable service the lunch hour rush it gets. Each outlet also has exactly one cash counter. This results in uneven service levels.
Now there could be exceptions, one of the Mumbai franchisees got awarded from among thousands .. wonder which Mumbai outlet this is !
It appears that the company has of late had a rethink; they now have a master franchise for the east.
Here’s a timeline history of the parent company.
{ 2 comments… read them below or add one }
I love Subway simply because anywhere in the world you go, you can get a veg option, which can’t be said for any of the other QSRs you are reviewing bar the pizza guys.
You are right with the hygiene questions of a small franchised operation in India.
Hi Ramesh, I just learnt that Subway has a master franchise for North India too (I already know they recently appointed one for the East). This is run by Amit Burman,the Dabur Foods scion. His Lite Bite Foods is the country’s largest Subway franchisee with 40 outlets. Thus the hygiene issues that I have experienced may be more specific to the West (Mumbai), where there are small franchisees (and where I stay) !