Subway’s Journey to Becoming Large

  • May 20th, 2013
  • Mike Alder
Fred DeLuca - Founder of Subway

Fred DeLuca – Founder of Subway

Being a college student I tend to eat out more than I should. It is easier than ever to justify it when you have fast food restaurants with value menu’s. I have found Subway to be one of my favorite for lunch because it isn’t as bad for my body as the other fast food and it doesn’t hurt my wallet either.

I recently read an article about Subway titled, “The Sandwich That Ate the World”. The first thing I learned is that Subway has more locations than McDonald’s. Here are three other things I picked up from reading this article:

One bite at a time – The importance of goal setting

Goal setting is very important especially when it comes to starting and building a successful business. Goals help you push and pace yourself to better things. One of the goals of Fred DeLuca, founder of Subway, was to have more stores than his competitors.

DeLuca started his first store in Bridgeport, Connecticut in 1965 with a family friend’s $1,000 investment. It wasn’t until 1974 that he decided to franchise the business with a goal of expanding to 32 stores. By 2002, Subway had more stores in the U.S. than McDonalds. Eight years later, in 2010, it passed up McDonald’s in their global store count as well.

DeLuca contributes three things to the success of  Subway. “We build sales at the store level, we build profits at the store level, and we build more stores. The first two things go in tandem, of course. It’s pretty tough to build profits without sales.” In a nut shell, each store has to be successful.

Your business has a learning curve

There are base principals that hypothetically could make any and every business successful. This however, isn’t always the truth. Each start up has to learn its lessons of what works and what doesn’t work for its business.

When DeLuca decided to franchising Subway in 1974 he was taking a big risk. Most businesses fail when trying to expand especially when you haven’t done it before. This lead to some lesson that need to be learned because they didn’t have any experts or professionals to hold their hand through this process.

One lesson he learned came from the lack of people wanting to buy into the franchise. This was because of their high franchise fee. After lowering that DeLuca saw more people coming to Subway wanting to be a part of the franchise. Eight years later Subway had grown to 200 stores. DeLuca was able to relax saying, “Oh, my gosh, we kind of know what we’re doing here. I wonder what the possibilities are?”

Building a brand – What sets Subway apart?

As a business you need to find out what sets you apart from your direct and indirect competitors. Some easy ways to set your company apart is a higher level of customer service, cleanliness, quality of product/service, or price of your product/service.

Besides McDonald’s there are some other franchises that Subway has to compete with. I think that people always understood that a cold cut sandwich was healthier than a hamburger but no store had marketed that successfully until Subway started its “Jared” success story marketing campaign. What a great way to grow your business—focus on a demographic of people who want to eat healthy. People now understood they could go to Subway to eat low calorie meals with the goal to lose weight.

There was a big change in fast food when “the dollar menu” became a permanent fixture amongst fast food chains in 2002. Subway brought out their “five dollar footlongs” to compete with value menu’s. Subway now was considered as a place to save you waistline and your wallet. Not many fast food chains can claim both of those.

 

When DeLuca started his business at the age of 17, I bet he didn’t realize how big his business was going to be 48 years later. Deciding to franchise might have been scary at first but Subway now has more locations worldwide than any other fast food restaurant. This is because of the proper goal setting, applying the lessons he learned, and setting subway apart from other fast food.

What lessons have you learn in your adventures (or misadventures) while being an entrepreneur?

About the Author

  • Mike Alder

Mike Alder is a University of Utah business marketing student and marketing specialist at Lendio. Passionate about entrepreneurship, small businesses, and inbound marketing. Mike shows his passion by sharing stories of successful entrepreneurs and companies with small business owners on the Lendio blog. He makes these big success stories easy-to-apply in simple and easy to read language for the everyday small business owner and entrepreneur.
 

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