Subway Analysis

Founded in 1965, Subway is the largest single brand fast food restaurant in the world
with over 44,000 stores (Subway, 2018). Its main competitors are McDonald’s, Burger King,
and Wendy’s. Since its founding its main menu has been salad and submarine sandwiches
(Khan, 2014).

Mission

Old mission of Subway was “Delight every customer, so they want to tell their friends – with
great value through fresh, delicious, made-to-order sandwiches, and an exceptional
experience.” (Subway, 2018). The new mission will be “Offer our customers the healthiest
and tastiest foods possible, at the lowest price possible, and in the most efficient manner
possible.”

Vision

The old vision was “Be the Quick Service Restaurant (QSR) franchise in the world, while
delivering fresh, delicious sandwiches and an exceptional experience.” (Subway, 2018). The
new vision will be “To be the world’s top restaurant for healthiest and tastiest fast foods.”

Goals and Objectives

 To remove all artificial ingredients from our menus by 2020.
 To increase traffic to our restaurants by 10% every year.
 To introduce 2 food items on our menu annually.
 To have all our supplies locally sourced by 2020.
Industry Analysis

Fast food industry is characterized by restaurants that have a simple and consistent
look for a given chain. Their menu is also simple and the meals inexpensive. On average they
cost less than $6 (Khan, 2014). The restaurants focus on affordability, experience, and speedy
service. Customers, on the other hand, focus primarily on taste of food and price. Recently
they have also placed emphasis on quality. Hamburger restaurants are still dominant but
Mexican menus are gaining ground (Khan, 2014).
Starting in western countries the fast food industry has grown over the years to
become a global multi-billion dollar industry. Its global revenues in 2016 were around $600

billion (Sena, 2016). $200 billion of those revenues come from the U.S. This represents a
massive growth from the 1970s when U.S. fast food restaurants recorded only $6 billion in
revenues (Sena, 2016). It has also grown in popularity with an average of 50m Americans
using them daily. The large number of fast food restaurants has made the industry one of the
biggest employers in the U.S with more than 4 million people employed in various
restaurants across the country (Sena, 2016).
Despite its size and importance as an employer of millions of people, the industry has
faced numerous challenges in recent times. These challenges include the rise of fast casual
restaurants which are a little more expensive but healthier. Other challenges include
widespread public perception that they are unhealthy and low wages and poor working
conditions of employees (Sena, 2016)..
The industry is responding to these challenges through various measures. They
include adding healthier options to their menus, using more locally sourced, fresher, and
healthier ingredients, and offering their employees wage increases (Sena, 2016). Naturally
these changes have led to an increase in price of some fast food menus.
Perhaps because of these response measures, the industry is slowly picking up after
the slump of recent years. Industry analysts expect the industry to grow by around 2.5% for
the next decade (Sena, 2016). While this figure may seem to be low, it is much more than the
average growth of recent years.
Some trends that may have an impact on future growth of the industry include
increasing franchise diversity with chains offering menus as varied as Hawaiian and Chinese
(Sena, 2016). The restaurants are also establishing non-traditional locations. For instance,
there are some that do deliveries for customers.

SWOTT Analysis of Subway

Strengths
 Customization
Subway offers perhaps the greatest choice of meal for customers. The restaurant believes that
the most satisfied customers are those that the restaurant has been able to meet their specific
needs. That is why the chain places a lot of emphasis on customizing its food as much as
possible to the requirements of customers.
 Size
Subway is the largest single brand restaurant chain in the world with over 44,000 restaurants.
Such large numbers allow it to not only reach more customers than other restaurant chains
but also get more revenues from fees paid by franchisees.
 Marketing
All franchises market and promote their products and services but Subway’s strategies are
superior. For instance, its $5 footlong was so successful that other restaurants picked it up
and it became the industry’s standard.
 Healthier choice

Not all Subway’s food is healthy but it offers customers the choice of a healthier menu at
higher prices (Niemann, 2010). Foods on this menu are characterized by fresh and nutritious
ingredients and low calories.
 Start-up costs
Compared to its main rivals such as McDonald’s, Subway requires relatively less starting
resources. Apart from charging less fees the cost of equipment and leasehold improvement is
also less (Niemann, 2010).
Weaknesses
 High employee turnover
Poor wages and working conditions have led to massive employee turnover at Subway. Even
though the problem is experienced in other franchises, it is particularly pronounced at
Subway (Niemann, 2010). Such turnover is costly because the company is forced to
frequently train its employees which uses up financial resources that could have been used
elsewhere.
 Over-control of franchisees
In a bid to have consistent look, services, and products across its different restaurants Subway
exercises too much control over its franchisees. Such level of control leads to poor relations
between franchise owners and the brand’s central management. For instance, there have been
instances when the company’s central management seized stores that failed to open
(Niemann, 2010). However, despite high level of control, the goal of the brand’s central
management does not seem to have been attained as there is still inconsistency in service
across the different stores. Customers do not like such inconsistency because they expect
familiar experience from Subway regardless of its location.
 Poor interior design
Customer’s are usually attracted to stores whose interior is visually appealing. Subway’s
interior look cheaply done (it is part of the reason why its start up costs are low). Their lack
of appeal may lead some customers to choose its rivals whose interior design is more expertly
done.
Opportunities
Some of the opportunities for Subway include increasing consumer demand for
healthier foods. As a franchise with option for healthy foods, Subway stands a chance of
significantly increasing its sales. Additionally, the franchise’s introduction of home deliveries
has the potential of increasing customer convenience and, therefore, sales.
Threats
 Saturated markets
Saturated markets in the developed world has made it hard for chains like Subway to expand.
The only option that they have is to expand into emerging markets such as the Middle East,
East Asia, and some Latin American countries.

 Currency fluctuations
A huge portion of Subway’s revenues comes from foreign markets (Niemann, 2010.
Dependence on foreign revenues means that the chain is greatly exposed to risks of foreign
exchange fluctuations. For instance, if the Turkish lira falls significantly relative to the dollar,
revenues coming from Turkey-based Subway chains will be much less when converted to
dollars.
Trends
The main trend affecting Subway and other fast foods restaurants is movement
towards healthier food menus. With its strategy of offering healthy menu options, Subway
may benefit from this trend. However, it is also likely to face increasing competition from
casual food stores that have a reputation for healthier menus.
Perceptual Map

The criteria for the perceptual map will be quality of food and quality of customer
service. On the x-axis is quality of customer service and on y-axis is food quality. The two
have been chosen because they are the two factors that most customers care about and they
also happen to be areas where Subway is particularly strong.
References

Khan, M. A. (2014). Restaurant franchising: Concepts, regulations and practices. Apple
Academic Press.
Niemann, C. (2010). Subway. Greenwillow Books.
Sena, M. (2016). Fast Food Industry Analysis 2016—Cost & Trends. Fast Food Industry
Analysis.
Subway (2018). About us. Available at: http://www.subway.co.uk/aboutus/