Subway Franchise Profit Estimates With the wide reach of 2428 stores across the United Kingdom, Subway makes pretty decent profit annually ranging up to $490k or £381k per store annually according to QSR Magazine. Also with the kind of such low initial set up cost earning such a profit is very well justified to invest in the brand.
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
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Is owning a Subway franchise 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.
How much does a Subway owner make a year?
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 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.
Do subways make money?
An average Subway currently generates only $416,000 annually. To put that in perspective an average Chick-fil-A generates 10 times that amount, over 4 million per year.
What is the most profitable franchise to own in 2022?
Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•
How do franchise owners get paid?
How do franchise owners get paid? Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.
What is subways franchise fee?
$10,000 - $15,000How much is the franchisee fee? The initial franchise fee ranges from $10,000 - $15,000* (US dollars) depending on your country.
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 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 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.
Is Subway going out of business?
It is unlikely that Subway will close anytime soon. Subway's previous success will keep the company in business for a long time. However, Subway has launched several failed marketing campaigns to reset Subway to its former glory.
Is a Mcdonalds franchise profitable?
Income statement key insights To the franchisor, McDonald's is a very profitable business with an average annual net income of over 2 billion dollars. The average net income of 2020, 2019, and 2018 was $2.338 billion. Franchised restaurants generated the highest revenue, averaging about $5 billion annually.
How much does a franchise owner make a year?
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.
How much is it to buy a Subway franchise?
The initial franchise fee ranges from $10,000 - $15,000* (US dollars) depending on your country.
How much do fast food franchise owners make?
Fast food franchises are incredibly profitable compared to other types of businesses. According to a McKinsey study, the average fast-food franchise makes a gross profit of more than 20 percent on revenues of $2.5 million per year. That's more than twice the profitability of the average small business.
What percentage do franchise owners make?
Franchise royalties range from 4% of your revenue all the way up to 12% or more. The amount has to do with the type of franchise business.
What is the problem with franchising?
Massive market saturation (The problem in franchising is the brands that are most visible get the most people applying for a franchise. But it is that exact visibility that hurts you financially as a franchisee with so many locations vying for business.
Do subway franchises have disclosure documents?
Now as Franchise brokers and consultants we are in a unique position in that we have access to every Franchise Disclosure Document out there. We also speak regularly with existing Subway franchise owners selling their locations and we hear the reasons why they want to sell. One of our partners here at franchise.city was also a multi units Subway owner for a number of years before selling his stores.
How much does it cost to open a subway?
Initial costs for a store site include its real estate and construction expenses. For a Subway business, it is estimated the total cost for the initial restaurant site ranges from $150,050 to $342,400, much lower than other competing fast food franchises.
Why do entrepreneurs want to own a franchise?
With franchise ownership, franchisee entrepreneurs gain the benefit of licensing an established business's procedures and processes from the franchisor. These licensing benefits give the business owner numerous advantages, including an association with an established business and the benefits of an already established branding strategy.
How much does it cost to franchise a McDonald's?
An initial startup licensing fee of $15,000 is required to begin the business, compared with a $40,000 to $90,000 licensing fee for Dunkin' ( DNKN) or the $45,000 fee that Mcdonald's ( MCD) charges. Annually, royalty fees are also required. Subway royalty fees are 8% of annual gross sales, which are higher than the 5% and 4% that Dunkin' and Mcdonald's charge, respectively. Additionally, the franchisee is required to pay an ad fund fee that is 4.5% of total gross sales.
What are the benefits of franchise?
One of the greatest benefits of a franchised business is the ability to gain use of the company’s operational procedures, trademark rights, and branding. With these licensed business advantages, franchisees can primarily rely on the established marketing of the franchised business for its sales.
Is subway the largest fast food company?
In fact, Subway is the largest fast food company in the world in terms of store count. It is one of the most popular businesses to franchise and is also known to have among the lowest franchising costs. For 2020, it is ranked #107 on Entrepreneur Magazine's " Franchise 500 Ranking .".
Is subway a licensor?
These licensing benefits give the business owner numerous advantages, including an association with an established business and the benefits of an already established branding strategy. In the fast food industry, Subway is an extremely well-established licensor of its sandwich stores. In fact, Subway is the largest fast food company in ...
Is subway a privately owned company?
Subway has a long history in the fast food business. It is a privately owned company that opened its first restaurant in Connecticut by founder Fred DeLuca in 1965 under the name "Peter's Super Submarines.". Its deep roots have allowed the company to build a strong strategic brand around its sandwiches and ...
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 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 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.
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.
Why did Fred DeLuca start Subway?
Peter Buck gave college freshman Fred DeLuca, the founder of Subway, the idea to open a submarine sandwich shop as a way to help pay tuition. DeLuca’s first two attempts did not immediately spell success, according to a New York Times article. Originally named Pete’s Submarines (after his friend Dr. Peter Buck), the name had to change because it did not translate well over radio advertising. However, Buck’s initial investment of $1,000 did pay off. By 1974, the two men owned and operated 16 sandwich shops in its birthplace of Connecticut under Doctor’s Associates, Inc. The name derived from the idea that DeLuca hoped to earn enough money in the sandwich business to eventually become a doctor.
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 does it cost to open a subway?
Your total investment to open a new Subway franchise will range between $150,000 to $328,700. Be prepared for a $200,000 plus investment on average. Your payments to Subway will include 8% of your total gross sales as well as 4.5% of your gross sales that will be allocated to advertising. There are other fees including your local rent/license fee, equipment leases, software maintenance call us for specific details.
What does it mean when a subway has thousands of locations?
It means they have thousands of locations -and that means that you will very likely have a competing Subway store very close to your own. Then I ask if they have previous food service experience. Most don't.
What is franchise city?
Franchise city helps aspiring investors find profitable franchises. We'll tell you the good and the bad and work with you to identify and research option best suited to your operational preferences, business goals, market demand, exit strategy and other criteria. We work with several food franchises that can compare against Subway. There is no charge for our service, just like your real estate agent, and your franchise will never cost you more by using a broker. Learn more by clicking the link above.
How many subway stores were closed in 2016?
2. Store Closures and Corporate Decline. Subway had about 357 store closures in 2016, the first time ever. 864 stores closed in 2017. For the past 6 years we have been cautioning Subway investors on what appeared to be a potentially over saturated and overheated market. Despite all the red flags people are still lining up to buy this big name. It is an interesting phenomenon
Is there a massive influx of investors who throw money at a supposedly "incredible opportunity"?
and you see this type of behavior in real estate speculation, cryptocurrency, as well as in stock market investing. Right before the decline, at the height of public popularity, there is a massive influx of investors who throw money at a supposedly "incredible opportunity". But the opportunity only looks incredible because everyone else is doing it. And you can't blame investors as they see franchises everywhere and assume that equates to success - when all it really means is intense competition.
Is subway legal?
Needless to say Subway has a very active legal department. Of course there are Subway franchise owners who are successful. Most of those are pioneers who invested long ago. Often those who choose to join early with emerging brands will have the most success.
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.
