Who owns the Subway franchise?
One of the fastest growing franchises in the world, Subway has gone from being a local neighbourhood sandwich shop to a global food giant in just 50 years. Today, the franchise has a staggering 44,000 branches around the world, significantly more than Burger King (13,000), Pizza Hut (11,000), KFC (20,500) and even McDonalds (36,000). These impressive figures show just how meteoric and unstoppable Subway’s rise has been and also demonstrates just how much the general public enjoy a great-tasting sandwich.
Although Subway’s expansion has been rapid, it’s also been relatively low key and many people are surprised to learn the true extent of the company’s global reach and market dominance. Its story is far less well known than those of other franchises, with few people able to name its founders or even the location of its birth. To help put that right, we decided to take a closer look at Subway, the sandwich franchise and its founders and how it’s used franchising to transform into the global food phenomenon it is today.
What is the history of the Subway sandwich franchise?
Fred DeLuca, founder of Subway, has to be one of the youngest people ever to launch an international food empire. Aged just 17 when he opened his first sandwich shop, DeLuca used a $1,000 loan from close family friend Peter Buck to open his first branch of Pete’s Super Submarines in Bridgeport, Connecticut in 1965. The young DeLuca hoped that the venture would earn him enough to pay for his college tuition. Instead of selling standard sandwiches, the entrepreneurs decided to use new ‘submarine’-shaped loaves to increase the novelty and appeal of their eatery.
In the first few months after opening sales were less than impressive, and by the end of the summer DeLuca has just $6 dollars left. Despite this minimal capital, Buck decided to press ahead with the opening of a second restaurant in order to create the image of success. This bold approach led the company to become slightly more successful; however, it wasn’t until the third branch opened, and the name of the eatery was changed to Subway, that the brand really started to thrive. By the end of their first full year of trading, Peter Buck and Fred DeLuca had managed to make a respectable profit of $7,000.
Buoyed by their success, DeLuca and Buck planned to open a further 30 eateries within ten years. Although they didn’t quite achieve their lofty goal, by 1974 the pair did have 16 restaurants across the state. Running the business originally as a more traditional company, DeLuca and Buck struggled to ensure the same standards and values were met across all of their branches. The duo decided that the best way to expand and to maintain a high level of quality was to franchise. Like many entrepreneurs before them, they realised that franchising offered the perfect way to grow a business rapidly without having to compromise on standards.
The first Subway franchise was opened by Brian Dixon, a friend of DeLuca’s, in Wallingford, New Haven. The same year that the New Haven branch opened, DeLuca and Buck were able to launch a further 14 branches using the franchise model. All of these eateries had to follow the core Subway principles of quality, freshness and customer satisfaction. These values helped Subway to attract increasing numbers of customers and up its turnover considerably in the process.
Subway global expansion
In 1978, Subway was able to open its 100th sandwich shop. By this point the founders had insisted that all of the bread used to make Subway sandwiches had to be baked in the restaurant itself, a move that not only helped to cement the business’ reputation for freshness, but also led to irresistible baking smells wafting out into towns and cities around the world.
In the 1980s Subway went global, opening an eatery in the small Middle Eastern nation of Bahrain in 1984. Just three years later, in 1987, Subway opened its 1000th branch, and in 1998 the 10,000th Subway was launched. By 2013, Subways were opening at a staggering rate of 50 per week, leaving virtually no major town or city in the western world without its own sandwich eatery.
By 2020, Subway hopes to open a further 500 branches across the UK. While in America the brand has even more ambitious plans to up its current tally of 27,000 branches by a further 8,000. This would make it one of the most prolific franchises in the world and earn it a seemingly insurmountable position at the top of the sandwich pile.
This meteoric growth over the past half century has helped Subway to become a household name in countries around the world. Seen to be a healthier alternative to other well-known fast food brands, it attracts customers looking for fresh, tasty food on the go. The main reason behind this healthy image was a 2000 advertising campaign led by Jared Fogle.
In the campaign, Jared claimed he’d lost 111kg by only eating Subway sandwiches. Originally weighing in at a hefty 193kg Jared said he lost more than half his body weight in just eleven months by eating two subs per day. The campaign was incredibly successful and before long dieters around the world were turning to Subway for their daily sustenance. Even though some of the company’s health claims have since been disproven or disputed, Subway still markets its food as fresh and healthy and continues to clearly label the number of calories and fat in all of its sandwiches to this day.
Why are Subway franchises so successful?
There are a number of factors that have contributed to Subway’s incredible success and its rise to becoming one of the world’s top franchises. For a start, their branches are often found in train stations, shopping centres and other areas where fast, tasty and healthy food is hard to find. Secondly, customers are able to customise the sandwiches they order. Unlike other fast food restaurants, Subway lets hungry consumers choose the items they like and the ones they don’t, adding a certain element of personalisation to the Subway experience. Customers appreciate this extra touch and it’s something that has helped to boost customer loyalty and product development over the years.
For franchisees, probably the most important factor in the brand’s recipe for success is its affordability. Its simple franchise model has helped Subway to become one of the most affordable franchises around, making it easy for entrepreneurs to invest in a business of their own.
Those wanting to open a Subway will need to have liquid assets of around $30,000 and a net worth of around $80,000– $310,000. This compares very favourably when you look at the start-up costs for a McDonalds franchise, which can be anywhere up to $2.5 million. This affordability has tempted thousands of entrepreneurs to open Subways of their own and helped the brand to expand rapidly in the process.
Enabling success and making it easier for entrepreneurs to achieve their business goals, the franchise model has helped to turn countless start-ups into success stories. If you’re interested in investing in a franchise of your own, you’ll find lots of information and advice on our site, so take a look around today to find out more.
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Source: Franchise UK