According to data reports, Subway makes an average of 11 billion annual sales through its entire franchise system. Statistically, the profit margin is only 7.5% of their annual sales, which is roughly up to $31,000, while the average sale of other restaurants is higher than Subway, and they also charge high recurring fees to its franchisees.
Full Answer
Can you make money with a Subway franchise?
Well, becoming a Subway owner can bring the exact opposite. If you are planning to own a single-unit of a Subway franchise, unless you spend your time running the business, you will make very little money out of it. So you will need to be involved, and that means actively managing a business operation that is open 7 days a week, for long hours…not very appealing…
What is the average income of a Subway franchise?
There was a survey of several hundred owners performed by a Subway owners association that showed the average store profit is in the $28,000 per year range. Any loans taken to purchase the store (ave. store cost to build is in the $200K range) needs to be subtracted from this number.
How much money does Subway franchise make?
They generate an annual average of $422,000 sales per franchise unit. Statistically speaking, most franchises make only an average of 7.5% of their annual sales, which comes around to $31,000 profit. Is it worth it to buy a Subway franchise?
How much cash to open a Subway franchise?
- Initial Franchise Fee – $15,000
- Real Property – $2,000 to $12,000
- Leasehold Improvements – $29,900 to $77,000
- Equipment Lease Security Deposit – $4,500 to $7,500
- Optional Security System – $2,450 to $3,550
- Freight Charges – $3,000 to $4,000
- Outside Signage – $1,600 to $8,000
- Opening Inventory – $4,400 to $6,050
- Insurance – $1,200 to $5,000
See more
How much does a Subway franchise owner make?
Average Sales / Revenue per Year They generate an annual average of $422,000 sales per franchise unit. Statistically speaking, most franchises make only an average of 7.5% of their annual sales, which comes around to $31,000 profit.
How much does an average Subway owner make a year?
Subway Salary FAQs The average salary for an Owner is $122,559 per year in United States, which is 35% higher than the average Subway salary of $90,272 per year for this job.
Is opening a Subway profitable?
In 2021, Subway saw a 21.3% increase in revenue, growing from $634 million in 2020 to $769 million in 2021. Based on the average sales calculated above, at an average of a 15% profit margin, it will take approximately 7.3 years to recoup your investment, which is longer than most franchise opportunities.
Is Subway a good business to own?
The Bottom Line. With the benefits of an established business, low startup costs, and parent company support, a Subway franchise is a good option for entrepreneurs interested in opening a franchise business.
What is the most profitable franchise?
Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•
How much does a 711 owner make?
However, if a particular franchise is not making the given amount, 7-Eleven adjusts the monthly charge to cover this minimum gross income. In terms of profit, the franchise owners can draw $50,000 – $75,000 on an average for their salary.
How much does a franchise owner make?
The Numbers According to a survey done by Franchise Business Review involving 28,500 franchise owners, the average pre-tax annual income of franchise owners is about 80,000 dollars.
What is Subway's royalty fee?
8%How much are the royalty and advertising fees? Subway® Franchisees pay 12.5% every week (gross sales minus the sales tax); 8% goes toward the franchise royalties and 4.5% goes towards advertising.
What is Starbucks franchise fee?
What are the Financial requirements for a Starbucks licensed store? You need to pay the licensing fee of between $50,000 – $315,000 and you must have over $1,000,000 in liquid assets to be considered for a licensed store by Starbucks.
What are the requirements to own a Subway franchise?
To buy a franchise with Subway®, you'll need to have at least $40,000 in liquid capital and a minimum net worth of $80,000. Franchisees can expect to make a total investment of $150,050 - $328,700.
What is the most profitable franchise?
Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•
How much do franchise owners make?
When researchers accounted for the inflations caused by the few top franchises, it was established that the average annual income of 51 percent of franchisees is less than 50,000 dollars. The study also found that only 7 percent of franchise owners earn over 250,000 dollars a year.
How much does a McDonald's franchise cost?
McDonald's franchisee applicants must have a minimum of $500,000 available in liquid assets and pay a $45,000 franchise fee. Those looking to launch a new McDonald's franchise can expect to shell out between $1,314,500 and $2,306,500. Existing franchise prices can cost upwards of $1 million or more.
What do you need to open a Subway franchise?
To buy a franchise with Subway, you'll need to have at least $40,000 in liquid capital and a minimum net worth of $80,000. Franchisees can expect to make a total investment of $150,050 - $328,700.
What is the initial investment required to open a Subway franchise?
Opening a Subway franchise requires an initial investment of $150,050 – $328,700
What is the average revenue of a Subway?
Subway makes an average of 11 billion annual sales through its entire franchise system.
How many Subway franchises Outlets are there?
Subway has more than 44,852 outlets worldwide.
Why is subway franchise bad?
They didn’t have territory protection. So that’s why you see sometimes where you have one franchisee or one Subway franchise, located on one corner and then down the block, you have another Subway franchise. This is a big issue for franchisees because this leads to sales cannibalization. Where one store negatively impacts the sales of another store. And this decreases the sales for both stores.
What is the difficulty of a subway operator?
Another difficulty in the Subway operator or Subway franchisee is there’s high employee turnover. Like many food services, and businesses, there’s a lot of employee turnover. They work for a short amount of time and then they leave. And so as an owner or an operator, you need to keep finding people, constantly finding people, and train them.
Is subway a bad investment?
Our opinion is quite definitively that it is a bad investment decision, a bad franchise to invest in the U.S. at this time. And there’s a number of reasons for this. A brief summary is that Subway was founded in 1965 in Bridgeport, Connecticut by Fred DeLuca and Peter Buck. Since then, Subway has become one of the largest franchises in the world, in terms of the number of units with over 44,000 units worldwide.
Can foreigners own subways?
And one of the biggest issues for someone looking to do a Subway franchise investment is if you’re a foreign national looking and doing E-2, L-1, or EB-5 investor visa. Subway does not allow foreign nationals as franchisees in the U.S. The person needs to be a green card holder or be an American citizen. Which means it’s not even an option for someone looking to do an investor visa like the E-2,L-1, or EB-5. I hope you found this insightful. Again my name is Jack Findaro. I’m the finance director at Visa franchise. And if you’d like to learn more, please visit our website www.visafranchise.com. Thank you.
How much do subway franchises have to contribute to the total sales of the franchise?
Subway franchisees are required to contribute 12.5% in gross total sales each week to cover the costs of royalties (8.5%) and advertising (4.5%).
How much does it cost to franchise a subway?
Subway is one of the cheapest restaurant franchises to enter. Total initial investment can run between $150,000 and $328,000 for a traditional location (and $89,550 to $209,400 for a non-traditional location), assuming you lease your equipment from Subway, according to the Franchise Disclosure Document. As a comparison, McDonald's charges a franchise fee of $45,000 and startup expenses can cost up to $2.2 million, according to the McDonald’s Franchise Disclosure Document. A Subway restaurant, on average, generates $422,000 in sales annually, compared to $2.6 million in average annual revenue for McDonald's restaurants, according to QSR magazine.
How Do You Become a Subway Franchisee?
There are no company-owned Subway franchises. Like the original owners, you don’t have to be a sandwich artist or have owned a restaurant to become a Subway franchisee. There are financial requirements, which include having liquid assets between $30,000 to $90,000 and a net worth between $80,000-$310,000. You must, however, participate in a two-week long training course that teaches business concepts, methods of operation, and basic management skills. The training time is spent in a classroom and on-site at a local Subway franchise for a "hands-on" experience. At the end of the two weeks, each potential franchisee must pass an exam to become a Subway franchisee.
What Are Some Other Sandwich Franchise Alternatives?
If you are interested in owning a quick service franchise, but don’t believe that a Subway franchise is right for you, fortunately there are many other options available. The quick service food franchises listed below are all award-winning brands that have been rated highly in FBR franchisee satisfaction surveys.
How many checkers and rally restaurants are there?
With more than 900 restaurants in 29 states and Washington, D.C., the 30-year-old Checkers & Rally’s brand stands out thanks to its black, white and red checkered design. Milkshakes, burgers, chicken wings, and seasoned fries make up the menu, and customers can choose between eat-in, drive-through, and delivery options. Buildings could include stand-alone restaurants, converted spaces, or non-traditional locations, giving franchisees leeway to lower their real estate investments, according to the Checkers & Rally’s website. A recent Franchise Business Review survey shows it ranked among one of the best opportunities for franchising by its franchisees, citing it as “very good” for training and support, financial opportunity and general satisfaction.
What do you need to sell on a subway?
As a Subway franchisee, you are required to sell six-inch and foot-long specialty sandwiches, salads, wraps and other food items. You must also offer a breakfast menu that offers egg sandwiches, bacon, sausage, muffins, coffee and juice if you operate your franchise in the United States, according to Subway’s Franchise Disclosure Document.
How much is subway worth?
It’s brand value is in the millions worldwide: $18,766 according to Statista.
How To Acquire A Subway Franchise
Much like other franchises, applying is relatively simple. However, there is a process. To start, there is a form you have to fill out in order to apply for a location. The form is quite expensive and requires a considerable amount of information. For example, the form asks for both your and your spouse’s personal information.
The Associated Costs
In terms of costs, there are quite a few. However, Subway provides a PDF that gives an in-depth analysis of how much money you will approximately need to invest. However, this is only for the initial investment. Some of the costs include franchise fees ($15,000), equipment, and insurances.
How Much You Can Earn
Lastly, we will take a look at how much you can potentially earn from owning a Subway franchise. Unfortunately, according to Subway, their franchisees are not allowed to disclose how much money they earn. However, we can conjure up some numbers from external sources.
Is Subway A Good Investment?
Whether or not Subway is a good investment is completely up to you. There are definitely times where it is. For example, if you find a good area where there aren’t many Subways around, you can definitely earn more than the average franchise. This is due to the fact that you will have a mini monopoly on the area.
Can a business succeed without a plan?
No business will succeed without some kind of plan, most people rely on instinct and intuition and fail so it is up to you, do you want to succeed or fail ? Failure is the easy option, most choose it by default through ignorance or laziness and then blame the World, for dealing them a bad hand.
Should the minimum wage be raised?
Minimum wage should definitely rise but it should be tiered. 16–18, 18–21 and over 21. Kids don't need a living wage Adults do. over 25 might make more sense that 21.
Background
Subway is the world's largest submarine sandwich chain. The company has more than 40,000 locations globally. Its becoming ta leading choice for people seeking quick, nutritious meal options that the whole family can enjoy. From the beginning, Fred DeLuca has had a clear vision for the future of the Subway brand.
Support and Training Offered By Subway
On-The-Job Training 20 hours Classroom Training 80 hours Additional Training Training available in Australia, China, Germany, India, Montreal, Canada & Miami Subway also offers in-house and third-party finance options
2022 Franchise Requirements Needed to Own a Subway Franchise
Veteran Incentives: A veteran's franchise fee waived if opening on a military or government funded location. Additionally, they'll receive 50% off the franchise fee if opening a non government location with government financing
Franchises Similar to Subway
The International Franchise Professionals Group (IFPG) is an internationally recognized membership-based franchise organization. IFPG Franchise Consultants guide aspiring business owners through the process of identifying and investing in franchise businesses. The IFPG represents more than 550 franchises.
Why are subway franchisees unhappy?
Unhappy franchisees: Just google it and you will find a lot of information about franchisees who are struggling and extremely unhappy with their Subway franchise! The reasons are very diverse, from the low margins mentioned before in this article, to the aggressive expansion of the system (creating competition among franchisees), questionable marketing tactics that squeeze owner profits, and so on.
Why do people want to become a subway owner?
Undesirable Lifestyle: many of the people we talk to want to become a business owner in order to achieve a better lifestyle, have more personal time, and ability to dedicate more to their families. Well, becoming a Subway owner can bring the exact opposite. If you are planning to own a single-unit of a Subway franchise, unless you spend your time running the business, you will make very little money out of it. So you will need to be involved, and that means actively managing a business operation that is open 7 days a week, for long hours…not very appealing…
What is the highest royalties in the food industry?
One of the highest royalties charged in the food industry: Subway charges 8% royalty fees of their franchisees!! That’s one of the highest royalties charged in the food franchise industry! McDonald’s for example, charges 4%, and most other food franchises will range between 4 and 6%. When you take into account that 8% is being charged out ...
How much is subway marketing fee?
Super high marketing fee: Subway charges, in addition to 8% royalty fee, a 4.5% marketing fee. That again is charged on top of your gross revenue. So you are leaving 12.5% to Subway off the bat, and that’s not yet even discounting all the other costs you will incur (cost of goods, rent costs, employees, licenses, taxes, and more).
How much is the average gross revenue per store in 2016?
The system is showing signs of decline – per unit sales are declining: In 2016, the average gross revenue per store was U$422.5K. As compared to 4 years before, average sales per unit were U$482,000. That’s a decline of U$60,000 per store. It has been reported, in 2017, that location traffic has fallen over 25% during the past 5 years. For an inexperienced business investor, looking at the gross revenues number, it may still sound appealing, but first, you don’t want to invest in a system with declining revenues (as this is a bad sign), but also, when you consider all your costs (super high fees, rent, employment costs, cost of goods, taxes, etc), and on top of that the fact the product cost is super cheap, with very low gross margins, how much really is left for the owner…hum…no wonder why so many stores have been closing, huh!?
How many subways are there in the US?
Subway was founded in 1965 by Fred de Luca and the concept was franchised in 1974. Currently they have 25,835 locations in the US, plus 18,317 locations in 98 countries! Yes, this has been a very successful business for Fred de Luca, even though as you will see in this article, the system is showing very concerning signs of an incoming crash (for example, over the past 2 years, hundreds of stores closed each year). Even though the corporation has been successful, that doesn’t mean that for you, the aspiring franchisee, this would be a great business as well.
Is subway keeping up with new demands?
Consumer habits are changing, and Subway is not keeping up to new demands: this applies to all the mature fast-food concepts out there. The new generation of consumers are much more informed on the true nutritional value of products, and are coming with many new food habits and demands. More and more you see people looking for healthier food choices, with fresh and organic ingredients, and demands such as Vegan menu, gluten free, lactose free, etc. All restaurants with a healthy appeal, or farm-to-table concepts, tend to be always packed and very successful. Keep in mind that when you sign up for a franchise, you sign an agreement of 5 or 10 years term, and you should think about what should happen to consumer habits and market trends over this time frame and how this could impact your business. When it comes to businesses such as Subway, McDonald’s or Pizza Hut, this is an area of concern!
How much did subways sell in 2015?
This 2015 post states the average sales were about $437,000 - The rise and fall of Subway, the world’s biggest food chain.
How much cash flow does 200k make?
So for a 200k investment in an existing store with reasonable rent, you will probably see sales of $6500 a week translating into about $60,000 cash flow in your pocket as an owner operator working 40 hours a week. Usually therefore people like two such stores for a decent income. All this is before debt service.
