Subway Sandwiches

The sub shops Industry

• Gives easy entry into the fast food chain industry

which is growing rapidly.

• Intensifying competition with hamburgers chain like

Hardees and Burger King introducing sub sandwiches
in their menu.

• McDonalds, KFC also getting into competition with

the subs.
 SUBWAY
• First Shop was opened in Bridgeport in 1965.

• Primary aim was to avoid bankruptcy.

• In 1982, planned to open 5000 subs by 1994.

• Expansion was fast and steady.

• Topped the list of Franchises in Entrepreneur in 1991.

• Undisputed market leader with 10 times more location than

other competitors.
• Operated 7825 units by mid 1993 with 7750 units in North America
alone.

• No.2 fast food chain in the United States.

• Sales grew from $360m to $2.2b by 1992.

• In terms of sales, it was ranked 12th with only 15% sales of

McDonalds.

• Expansion was done in Non Traditional sites.

• Steps taken to improve business during dinner and late night sales,
and marketing to children.
The competitors
 Blimpie
• 2nd among sub operators both in units and total sales.

• Used the main vulnerability of quality of subway to

take on them.
 Quizno

• Rather remaining a stripped down version of the sub,

Quizno stores were designed as casual deli
restaurants.

• Menu offered a wide variety including salads, pasta

dinners, soups and desserts.

• Boosted evening sales from 10% to 30% of volume,

substantially increased week end sales.
 The problem

• Units lacked in variety and hence even heavy users

were not visiting the stores on regular basis.

• And they were not able to increase unit sales

• Higher Operation cost and low unit sales lead to low

ROI and decreased profits.

• Decreasing market share hence forth.

 Customer Analysis
• 78.7% of adults were patronized to fast food of which 31%
went 14+ times in the last 30 days.

• Heavy users are usually male, young adults, and single.

• Subway is more skewed towards middle to upper income

customers than competitors.

• Lunch in most popular occasion.

• Subway is the least patronized restaurant amongst competitors.

 SWOT Analysis
STRENGTH WEAKNESSES

•Brand value •Small menu list

•Wide distribution network across
the country.
•Healthier food range which is
fresh and light.
•International presence of units
•Increasing operational cost for
franchisees
•Location cannibalizing the sales
of other stores

OPPORTUNITIES THREAT

•Industry is still growing despite •Competition from other forms of

slowdown in the Economy.
•Customer target group from
middle and upper middle class.
•People turning health conscious.
•Growth in other Virgin markets
very much possible.
fast food chains
•Easy entry into the industry.
•Patronage of heavy customers is
very less.
 Marketing strategies

• Nutrition Factor- Fresh and so much healthier than others.

• More value for money- improving quality will increase the

value of value of the product.

• Reposition themselves as an upscale sandwich chain- wider

menu, better quality fresh products, healthier life style,
ambience in convenient location.

• Target virgin International markets using the Brand name.

 Brand Strategy
• Brand position as a very healthy fast food chain providing
healthier and fresher food – brand Value

• Positioned between a stripped down version of subs and a full

theme restaurant.

• Service is more like a fast food style but in terms of food

quality, quantity, presentation and fresh puts it closer to a
theme restaurant.
The 4 P’s of marketing
PRODUCT PRICE

•Wider menu providing variety. •Upscale pricing- little higher than

•Fresh and better quality normal subs.
products. •Differential pricing strategy with
•Introduce products like salads, value pricing.
pasta dinners, soups, desserts, •But create value products by
kidz meal etc service in terms of quality,
ambience, variety, convenience.

PLACE PROMOTION

•Market research on the location •Health related events, dance,

preferences, close down poor and sports events.
predatory franchisees. •Awareness campaign on obesity
•More campaign for children,
•Upscale to stripped down shops young adults.
to quasi deli restaurants. •More promotions to increase the
sales during evening and dinner
 Dealing with the Competition
• Use differential advantage of satisfying customers needs for convenient,
value oriented products that taste good.

• The customers may change the mix of which they consume fast food, so
provide them with the variety.

• Decrease operational costs

• Loyalty programs for heavy users to make them stay with Subway.

• Promotion campaigns like FRESHBUZZ, FRESHFIT, SUBWAYKIDS.

• Events like sponsoring sports events, training youths for it, weight loss
programs, hold brand ambassadors like Michel Phelps, Shilpa Shetty ( in
Indian Context) etc.