Subway

What is Subway?

Subway is a global fast-food franchise that's carved out a niche as the healthy alternative to traditional convenience foods. Offering a variety of made-to-order sandwiches and salads, Subway has positioned itself as a quick, easy, and often health-conscious choice in a market saturated with fried food options.

Background

Subway was founded in 1965 when a 17-year-old named Fred DeLuca borrowed $1,000 from family friend Dr. Peter Buck to open a sandwich shop in Bridgeport, Connecticut. While DeLuca had goals of becoming a doctor, he needed a way to pay for college first and Dr. Buck suggested the starting a sub shop to fund that goal.

The first restaurant, originally named “Pete's Super Submarines,” sold over 300 sandwiches the first day, showing the potential of their fresh idea. Following the original success of the sub shop, the two business partners changed the name to “Subway” in 1968.

Growth:

By 1974, DeLuca's aspirations of becoming a doctor were put on the back burner as the company reached the halfway point to their goal of opening 32 stores. The focus had undeniably shifted; the burgeoning sandwich business was commanding their full attention and yielding promising results.

The simplicity and customer-centric nature of the Subway concept were gaining traction, resonating with consumers who appreciated the fresh ingredients, customization options, and the inviting ambience of Subway outlets. The made-to-order sandwiches, emphasized fresh food, and positive customer experiences formed the cornerstone of the Subway brand - a far cry from the stereotypical, over-processed fast food of the era.

The decision to franchise, taken in the same year (1974), emerged as a pivotal turning point for the company. It allowed the business to expand exponentially, broadening its footprint without the accompanying financial burden of owning all the locations.

A man named Larry Feldman became Subway's first franchisee.This happened quite serendipitously, as Feldman, a friend of the owners, was merely interested in opening a Subway in his state. The concept worked spectacularly, the location was a hit, and this marked the beginning of Subway's franchising journey.

Prioritizing consistent quality across locations, rigorously trained franchisees, and a regularly changing menu to keep the offerings exciting and relevant, Subway continued to grew at a rapid rate while also solidifying Subway as a trusted and sought-after brand nationwide.

In 2008, Subway innovated yet again as they released the “$5 footlong” amidst the global economic recession. This not only drove unprecedented traffic into Subway stores but also bolstered the brand's image as a provider of value-for-money, substantial meals. This successful promotion made Subway stand out in the crowded fast-food industry, cementing its status as a brand that understands and responds to its customers' needs.

Where are they now?

Today, Subway has over 37,000 locations in more than 100 countries, continuing to serve its customizable sandwiches to millions of customers daily. Despite recent challenges, including increased competition and the Covid-19 pandemic, Subway continues to remain a dominant player in the fast-food industry.

Key Takeaways

1. Unique Value Proposition: Subway's initial success can be attributed to its unique value proposition of offering a healthier alternative to traditional fast food. This differentiation allowed it to stand out in a crowded market and attract health-conscious customers.

2. Core Values: From the beginning, DeLuca and Dr. Buck focused on three core principles:

1. Always provide exceptional service to valued guests

2. Offer high-quality, flavorful menu options at a great value

3. Never stop evolving to improve the Subway® brand

Thanks to these principles, Subway managed to stay consistent in their quality and customer service despite taking on increasingly rapid growth throughout the 80s and 90s.

3. Strategic Franchising: One of Subway's primary growth catalysts was its strategic decision to adopt a franchising model. This move enabled rapid expansion without significant capital expenditure, paving the way for Subway's presence in multiple markets around the globe. This method of growth not only amplified brand visibility but also cultivated a global community of dedicated franchise owners.