Subway Restaurants is one of the top fast food restaurant chains in North America. Subway falls under the customer service sector, in the fast food service industry. They provide a healthy alternative to burgers and pizza for people who are looking to pick up food on the run. Subway's goal is: "to offer a quality product that is made specific to each individual customers taste" (retrieved from http://world.subway.com/Countries/frmMenu.aspx?CC=mal&LC=eng&Mode= August 26, 2012).
There is some stiff competition in this industry, but the following posts will outline how Subway got it's start, and how they stand up against these competitors.
Wednesday, August 29, 2012
Company History
The first Subway restaurant was opened in 1965 in Bridgeport, Connecticut. The founder, Fred DeLuca, was a 17-year-old who borrowed $1000 from a family friend to open a sandwich shop to help pay his way through university. Fred DeLuca is still the president of Subway today. (Retrieved from http://www.subway.com/ContactUs/StudentGuideEdits.pdf August 24, 2012).
Subway has grown vastly over the years. Today they have more than 37,000 restaurants in over 100 countries. (Retrieved from http://world.subway.com/Countries/frmMainPage.aspx?CC=CAN August 24, 2012).
Subway has grown vastly over the years. Today they have more than 37,000 restaurants in over 100 countries. (Retrieved from http://world.subway.com/Countries/frmMainPage.aspx?CC=CAN August 24, 2012).
Company Production
Subway's main product is submarine sandwiches, although they serve much more than that today. Their main target in marketing is adults aged 18-49. (Retrieved from http://www.subway.com/ContactUs/StudentGuideEdits.pdf August 24, 2012).
Subway’s Stages of production at each restaurant are as follows:
There are many other steps to running a restaurant not directly related to producing the meal that the customer buys, but that contribute to the restaurant functioning and allow for it to remain in business. For example, the restaurant needs to be clean and maintained. Preparation goes into getting the food ready to be served so quickly before, after and during store hours – veggies need to be washed, diced, sliced and stored. Cheese and meat are packaged in the right amount for each sandwich so that it doesn’t need to be counted or weighed every time. All of this preparation contributes to the productivity of the store. Without these steps, the restaurant would not run efficiently.
New promotions often affect supply and demand. For example, when the $5 footlong promotion began, it “was so popular, so fast, that it caused inventory shortages throughout the company” (Retrieved from http://ahan-analytics.drduru.com/thoughtblog/2009/11/11/analytic-lessons-from-subway-5footlong-promotion/ August 27, 2012). Even though they were making less money per sandwich, the volume customers demanded of these items increased. The company was able to modify the amount supplied to meet the demand, and this was so successful that it went from being a local promotion in Florida to a company-wide promotion.
Subway’s Stages of production at each restaurant are as follows:
· Purchase fresh produce, meat, condiments, etc.
· Bake the bread fresh daily used for the sandwiches.
· Staff prepares and serves each meal as directed by customer.
There are many other steps to running a restaurant not directly related to producing the meal that the customer buys, but that contribute to the restaurant functioning and allow for it to remain in business. For example, the restaurant needs to be clean and maintained. Preparation goes into getting the food ready to be served so quickly before, after and during store hours – veggies need to be washed, diced, sliced and stored. Cheese and meat are packaged in the right amount for each sandwich so that it doesn’t need to be counted or weighed every time. All of this preparation contributes to the productivity of the store. Without these steps, the restaurant would not run efficiently.
New promotions often affect supply and demand. For example, when the $5 footlong promotion began, it “was so popular, so fast, that it caused inventory shortages throughout the company” (Retrieved from http://ahan-analytics.drduru.com/thoughtblog/2009/11/11/analytic-lessons-from-subway-5footlong-promotion/ August 27, 2012). Even though they were making less money per sandwich, the volume customers demanded of these items increased. The company was able to modify the amount supplied to meet the demand, and this was so successful that it went from being a local promotion in Florida to a company-wide promotion.
Company Costs and Profits
The price of a Subway sub seems to vary by location, and also by the type of sub you buy! With 6” subs starting at $2.49 and footlong subs as high as $5.89 at this local Alberta restaurant, they are very affordable. Subway also offers salads from $3.49 to $4.89 (Retrieved from http://www.snapfinger.com/Menus/Subway/Menu.aspx?SiteID=2575&category=Subs August 27, 2012).
At the individual restaurant level, some of Subway’s fixed costs would be rent/mortgage on the building, insurance, and the cost of certain supplies, such as cleaning supplies, of which the quantity needed, would be relatively consistent. Also, the salary for the owner and/or manager would be fixed as these need to be paid.
Some of their variable costs would include the cost of meat and produce, as they would need more at certain times of the year and during certain promotions. Utilities can vary during different months of the year, as well as price fluctuations for oil, etc. and so this would be a variable cost. Labour is also a variable cost as employees come and go, more staff is needed for busy times of the year (summer, holidays, etc.), increases in minimum wage and raises can all affect the cost.
Subway’s profits would be difficult to state on any individual restaurant for several reasons. That information is not necessarily accessible for the general public. It would vary greatly from store to store because the number of sales would vary. A location in a busy, highly populated area would show more profit than a location in a small town. However, the company’s profit as a whole is available for review. In 2011 “Subway generated revenue of $16.6 billion and added 24,000 jobs” (Retrieved from http://www.forbes.com/profile/fred-deluca/ August 27, 2012)
The Competition
Subway’s strongest competitors, according to The Huffington Post, are Dairy Queen and Wendy’s. In today’s society, people are busy with work, school and family activities and often don’t have time to prepare home-cooked meals every day. Fast food restaurants provide meals for people on the run, which describes a lot of us today.
The advantage that Subway has over these other restaurants is that, while still providing meals quickly, they offer a healthy alternative to burgers and fries, or pizza. With promotions such as subs with 6 grams of fat or less, and advertising the weight loss of Jerod “the Subway guy”, people can feel good about eating out and still eating good food. (Retrieved from http://www.huffingtonpost.com/2012/05/10/best-fast-food-restaurants_n_1507319.html August 27, 2012).
Summary
Subway as a company does quite well. They provide quality, fresh, healthy food fast. They have shown steady growth throughout the years and are now the number one fast food restaurant in the United States.
One weakness that may prevent them from gaining more customers is the lack of a drive-through. When people are really in a hurry they will sometimes bypass Subway because they have to park, get out and go inside to stand in line, making it a little less speedy and convenient than Dairy Queen or Wendy’s. Currently, that doesn’t seem to be hindering them at all as they are still ranked over these speedier restaurants.
Subway has come a long way from its beginnings. Fred DeLuca, a 17-year-old boy with a $1,000 loan, has built an empire.
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