|Industry||Food and Beverage|
|CEO||John W. Chidsey III|
|Revenues||$10.2 billion (2019)|
|Profits||*no published data yet|
|Leading Competitors||Arby’s, McDonald’s, Burger King, KFC, Taco Bell, Wendy’s, Domino’s Pizza|
Subway® started as a “submarine sandwich shop” in Bridgeport, Connecticut. It was started by Peter Buck and Fred DeLuca. They later opened 16 more shops all over Connecticut in 1974. Both started to open the business for franchising when they figured out that they won’t grow as fast in due time with their goal of opening 32 stores in total. Currently, the company has more than 44,000 locations. The company basically offers quick and healthy meals for everyone. Subway ® composes 60% of the quick-service sandwich market in the U.S. and was ranked as the 92nd World’s Most Valuable Brands 2017 on Forbes List. Compared to McDonald’s, Subway® is among the most affordable restaurant franchise to open with an initial franchise fee of only $15,000. Startup costs can range from $116,000 to $236,000. This does not include their ongoing fees, however. Now we are going to perform an in-depth SWOT Analysis of the company.
Subway Strengths 2020:
- One of the leading players in the sandwich chain business.
Subway® has been regarded as a sandwich shop giant in the world. It’s also been ranked among other large QSR industry players like Burger King and Starbucks in terms of sales.
- Offers a wide variety of sandwiches and other products.
Aside from their sandwiches, the company also offers snacks, drinks, desserts, and group meals. Customers can also choose their toppings, add-ons, and different bread options. They also offer gluten-free bread and plant-based or vegetarian ingredients. Because of this, customers can customize their sandwiches more depending on their preferences.
- Large global operations due to their more affordable franchise opening costs.
Major locations include the U.S. (22, 258 stores), Canada (2,940 stores), United Kingdom (2,114 stores), Brazil (1,689 stores), and Australia (1,246 stores). This made the brand global, among its other restaurants across the globe.
Subway Weaknesses 2020:
- Sales have been declining.
Over the last five years, the company’s U.S. sales have been decreasing together with the decrease in the number of stores. As of 2019, there were 23,800 stores remaining in the U.S
- Lack of strategic planning in opening up new stores.
The company has more locations compared to McDonald’s and Starbucks. It had been noted that the company is very aggressive when it comes to expanding quickly and some locations were just situated on top of each other and therefore affect its other nearby stores.
- The $5 footlong promotion.
This promotion is just a re-launch. In an interview with David Jones, one of the franchisees, the same promotion from 2007 can’t be the same in 2020. Jones also commented that $5 is just half the price of a sub sandwich and given the adverse effect of COVID on the franchisees, this kind of promotion is not profitable for them. Other franchisees also have the same opinions.
- Leadership issues.
Some franchisees are also concerned about the lack of openness when it comes to feedback. A change in leadership occurred in 2015 when the company’s co-founder died. According to Inc., the existing management had varying opinions on how to run the business and according to Business Insider, no strategic and solid plan was left by the previous co-founder for the succeeding management. This led to more store closures.
- Negative publicity and controversies.
Jared Fogle’s controversy made a big impact on the company. The former spokesman for the company got involved in a child sex and pornography scandal. The company also had a history of bad public relations like for example their 2014 ad which allegedly seemed to give a message to women to go to the Subway® stores to become thin. The company also ran another advertisement against McDonald’s wherein a person was flatlining after mentioning “burger” several times. This was found by some as quite disturbing. The company was also previously accused of selling 11-inch sandwiches to its customers instead of a 12-inch sandwich. This incident also affected the image of the company. A DNA analysis ordered by CBC also claimed that Subway chicken was not 100% meat. It was alleged that half of it was soybeans. The company denied these allegations.
Subway Opportunities 2020:
- Redefining the company’s product quality by opening itself to the feedback of franchisees.
Aside from customer feedback, the franchisees know firsthand what is going on in the day to day business. Getting both good and bad feedback from the franchisees regularly and formulating strategies for improvements to address those feedback may help the company recover. The company’s efforts can be shifted to implementing cultural, management, and operational improvements instead of focusing too much on store expansions which may not add much value to the business.
- Re-examining its competitors and current trends in healthy alternatives.
One of the challenges for the company according to Business Insider is adapting to the changing tastes. By revisiting its competitors’ offerings, the business can easily evaluate where they are at the moment and make changes if necessary.
Subway Threats 2020:
- COVID-19 Pandemic.
Just like other restaurant chains, the company’s stores were also affected. Prior to the pandemic, the company has been experiencing decreases in sales as well. Restrictions and other regulations in different operating locations may affect the reopening of stores and the number of customers.
- More competitors had come in.
The company’s lack of innovation when it comes to its offerings enabled competitors to catch up and offer healthier alternatives. The market has also been very competitive because of social media influencers and more creative and innovative channels to market competitors’ products.
Subway SWOT Analysis Conclusion:
To summarize, Subway had been known as one of the fastest-growing brands of restaurant chains even in comparison to its biggest competitors. Despite the advantage that this strategy had brought in terms of brand recognition, it’s now becoming a challenge for the company given the change in its leadership and the problems that the business had faced in managing the relationships with its franchisees. The company has to do the biggest task of innovating its products and developing new strategies to address its issues and to keep up with its competitors and its changing market.
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