Subway (restaurant)

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Subway
Image:SubwayLogo.png
Type Private company
Founded Bridgeport, Connecticut (1965)
Location Milford, Connecticut
Key people Fred De Luca, President
Industry Restaurants
Products Sandwiches
Salads
Other food products
Revenue Image:Green up.png $468.40 million USD (2003)
Employees 150,000 (2003)
Website http://www.subway.com/

Subway is the name of a multinational restaurant franchise that sells sandwiches and salads. It was founded in 1965 by Fred De Luca and Dr. Peter Buck, and has been one of the fastest growing franchises in the world. For most of the past 15 years, Subway has averaged more than 1000 new locations a year; by August 2005, there were nearly 24000 Subway sandwich shops. The corporate name of Subway is Doctor's Associates Inc. (DAI). The corporate headquarters of DAI is in Fort Lauderdale, Florida; however a subsidiary of Subway called Franchise World Headquarters (FWH) is based in Milford, Connecticut and most of the day to day operations are conducted there.

In the late 1990s, Subway overtook McDonald's Corporation as the fast food chain with the most sites in North America. Many restaurant analysts attribute this to the growing concern on health by restaurant customers, a trend that Subway has taken advantage of in its marketing. In 1999, an Indiana University student named Jared Fogle claimed to have lost 245 pounds (110 kg) with a diet made up mostly of Subway sandwiches. The story is used by Subway as a large part of their marketing campaign. Jared has emerged as a spokesman for Subway, furthering their image as a health-conscious restaurant chain.

The first submarine sandwich shop opened by Fred DeLuca and Peter Buck was opened in 1965 in Bridgeport, Connecticut under the name "Pete's Submarine Sandwiches". The name was changed to "Pete's Subway" and eventually just "Subway". The chain punningly used the New York City Subway as its decorative motif, and has a sandwich named the BMT after the Brooklyn-Manhattan Transit subway line, although in advertising this has been described as "Bigger, Meatier, Tastier."

A large part of Subway's growth can be attributed not only to its place as a more health-conscious restaurant, but also to its somewhat unique business model in the fast-food industry. Unlike most franchisors, DAI does not own any restaurants (except for one store in Connecticut which is a test store for new concepts and products). DAI does not even have any regional offices. Instead, Subway enters into a contract with a franchisee in each market, giving this franchisee the title and position of Development Agent for that market. The Development Agent then becomes responsible for developing new locations for that market, evaluating stores on a monthly basis, and assisting the franchisee with whatever needs they may have. By using this business model, Subway has been able to keep up their aggressive growth.

Among lawyers, Subway has become well-known for its aggressiveness in enforcing the arbitration clauses in its franchise agreements. One case even went all the way to the U.S. Supreme Court (and the company won). See Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681 (1996).

Many different types of subs are served at Subway, ranging from common sandwiches, such as ham, turkey, and cold cut combo (composed of three different forms of deli meats; the composition of this sandwich varies from region to region), to more unusual creations, such as Sweet Onion Chicken Teriyaki, Southwest Chipotle Cheese Steak and (at some locations) a garden burger/veggie-max sandwich. As a result of the low-carb marketing trend, Subway now offers any of its 6-inch sandwiches as low-carb wraps. Some Subway restaurants also offer breakfast. Although not an extensive menu, it features basic items such as eggs. They are also starting to have drive thrus. In 2004, Subway added the option to have sandwiches toasted in large part due to competition from Quizno's, a new, but quickly growing sandwich chain.

Another big marketing campaign that Subway uses is freshness. They advertise how all their sandwiches use fresh ingredients, and never greasy foods or fast food. Each sandwich is made right there in front of you, and the way you want it.

Prior to its December 12, 2003 announcement that, by the second quarter of 2005, all of its restaurants would provide Coca-Cola beverages, 85 percent of Subway restaurants carried beverages marketed by Pepsi. Subway is currently opening new locations inside Wal-Mart stores.

In 2005 Subway announced that the popular Sub Club customer rewards program would be phased out due to counterfeiting.

Subway is the corporate sponsor for two NASCAR Nextel Cup series stock car races: the Subway Fresh 500, held at Phoenix International Raceway; and the Subway 500, held at Martinsville Speedway. They also sponsor a pro cycling team.

Image:Subway-restaurant.jpg

Criticism

The book Fast Food Nation is critical of Subway's franchising policies. It claims that in the 1990's, Subway was involved in many legal disputes with franchisees, usually over encroachment (overly agressive expansion, in which one Subway is so close to another they end up competing), and high royalties.

The book blames the "Development Agents", who are given the task of growing the company regionally. They are rewarded greatly for profits and punished for losses, so it is claimed that it is in their best interest to saturate markets with subway restaurants in a region, despite the effect it will have on a an individual one. Although this may lead to lower profits per Subway, it leads to overall higher profits in the region, and therefore the entire chain.

See also

External links

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