Subway is in a position many aspirant franchisors wish they could be in. It’s a successful franchise chain that’s clocked up more than 37 200 stores in over 100 countries since it opened its doors in 1965.
In fact, the fresh sandwich chain outnumbers McDonald’s – with
34 000 stores in November 2012.
This may seem like a big-business story at first, but Subway and McDonald’s have made their brand one locally owned franchisee at a time.
The chains are essentially huge conglomerations of mom-and-pop restaurants, so the tale of how Subway overtook the longstanding leader in its sector has many lessons for business owners everywhere.
Here are some of the factors that let Subway move ahead.
Tell a great story
Heard of Subway Jared? When 193kg Jared Fogle took it upon himself to lose weight in 1999, he did it by eating Subway sandwiches.He lost 111kg.
While Fogle’s attempt was completely independent when picked up by media, Subway had the sense to jump on the story and keep it growing.
Subway could have just had a motto along the lines of “Our food is lower fat and healthier than our competitors,” but it wouldn’t have been nearly as compelling as, “Hey, look at me – I ate exclusively at Subway and lost tons of weight!”
This could have been a one-season marketing arc, but instead Subway kept it growing and fed Fogle fans a steady stream of new information for many years about healthy sandwich offerings and lifestyle tips.
The corporate website still has a whole section dedicated to the man himself 14 years later.
Lesson: If you have a great customer story, don’t be afraid to grab it, tell it, and then keep on telling it.
In touch with trends
Subway always had lower-fat offerings, but marketed just as a sub-shop for a while.
Then came the era of ‘eat fresh’ and the emphasis on fresh ingredients boomed. In a world where fast food meant fried food, this appealed to many diners with a growing interest in eating healthier.
Lesson: Are you listening to customers and following trends in your sector? It could be time to change your message. Don’t be afraid to do it.
A flexible brand
In its earlier days, Subway’s brand simply stood for ‘quick-sandwich’, but as tastes changed, Subway was able to morph its brand to stand for healthier food.
McDonald’s, Burger King, and all the other old-time fast food giants wish they could get customers to eat healthy food offerings, but often these don’t find an audience because the brands are so closely associated with fattening burgers and chips.
Lesson: If you’re starting a new company, think carefully about your name. What does it stand for? Could it be easily made to stand for something else if consumer tastes shifted?
We’ve all heard the story that McDonald’s is more than a burger flipping chain, but the owner of some of the best commercial property on the planet.
Where Subway trumps the chain though is thanks to its health-food positioning:
Subway gained entry into locations some of the fried-food biggies couldn’t get a contract with, such as hospitals.
Lesson: Think about all the places your brand could be, and explore some new options.
Subway was one of the early adopters of the restaurant layout where you watch your food being made right in front of you.
Customers love it – it not only reassures diners about what’s in their food, but allows for endless customisation on the fly.
Lesson: Strive for ways to get customers more engaged in your process of creating the product they want.
Great franchisor-franchisee relations
Around the same time Subway got started, another US sub-shop chain, Quiznos, started as well. Subway seems to have treated franchisees fairly well, and relations have been positive.
On the other hand, Quiznos franchisees have been an angry, rebellious bunch over decades, repeatedly suing the company for what was seen as unfair treatment.
While Subway soared in numbers, struggling Quiznos shrank by 1 000 units in 2010. With only around 2 800 stores today, it faces a steep uphill battle to compete with Subway at this point.
Lesson: Relations with stakeholders are important. Think about how you can make vendors, marketing partners, and franchise holders feel supported.