With the benefits of an established business, low startup costs, and parent company support, a Subway franchise
Subway
Subway is an American privately held fast food restaurant franchise that primarily sells submarine sandwiches and salads. Subway is one of the fastest-growing franchises in the world and, as of June 2017, has approximately 45,000 stores located in more than 100 countries. More than h…
Is subway a good or bad Franchise Investment?
For many clients from around the world that have inquired about Subway franchise profitability and whether it’s a good or bad franchise investment, and something that’ll qualify them for an E-2, or L-1, or EB-5 investor visa . Our opinion is quite definitively that it is a bad investment decision, a bad franchise to invest in the U.S. at this time.
How do I become a Subway franchisee?
Like any business, you should start by doing thorough research on Subway, the profitability of franchises in your area, and available areas where you can set up your franchise. If you’re feeling a little lost, consult with a franchise consultant or contact Subway’s franchising team to ask for more information.
Is it worth it to become a subway owner?
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.
How many Subway franchises are there?
We work with 500 franchise companies, many of them being food franchises, and when we compare Subway to other emerging and more modern concepts, there are many reasons for us to advice our clients to stay way from a Subway Franchise.
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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.
What makes Subway so successful?
"The simple operation of a Subway restaurant, its reputation for quality, low fat menu options and the fact that you do not need a grill or fryer, make it a natural fit for non-traditional locations, which not only brings our great tasting food to more customers, but also provides additional business opportunities for ...
Does Subway have a good reputation?
Subway has a consumer rating of 1.96 stars from 76 reviews indicating that most customers are generally dissatisfied with their purchases. Consumers complaining about Subway most frequently mention customer service problems. Subway ranks 86th among Restaurants sites.
How much does a Subway franchise owner make a year?
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.
Is Subway the most successful franchise?
Subway is probably the only food company that is growing, and it is one of the franchises that is expanding the fastest around the world. It currently has over 44,000 locations spread out across more than 111 countries. In 2002, it overtook all other US fast-food chains to become the most successful one.
What is Subway's business strategy?
Primary Business Model Subway's business model primarily revolves around their franchise-only system and non-traditional units. Franchising allows them to open many stores across the globe, raise awareness for their brand and reach the masses.
What are some strengths of Subway?
Strengths of Subway It sells millions of sandwiches every day. It operates in 111 countries and has over 41,000 stores worldwide. It has won a number of prestigious awards over the years.
Is Subway more successful than McDonalds?
Sandwich group Subway has overtaken McDonald's as the world's largest restaurant chain, the company has said. Subway had 33,749 sites across the globe at the end of last year, compared with 32,737 for McDonald's.
Is Subway actually healthier than McDonalds?
Looking at the overall meal, the Subway meal in terms of protein and sugar was slightly healthier than McDonald's and provided more vegetables, however it was higher in sodium. Remember both meals contributed the same total number of calories but on top of that, it was a large amount of calories.
Which franchise owner makes the most money?
What is the most profitable franchise to own? According to the Franchise 500 list of 2021, Taco Bell is the most profitable franchise to own. The food chain has been franchising for nearly 6 decades and is still seeking franchises worldwide. As of 2021, they have 7,567 open units.
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...•
Do franchisees make money?
Franchise Business Review found that the average annual pre-tax income of franchise owners in America is $80,000. Only 7% of franchise owners make more than $250,000 annually, and 51% earn less than $50,000. Legally, franchisors cannot give income amounts or forecasts of future income.
What is the key to the success of sandwich making?
The preparation of quality sandwich is more than placing a piece of filling between two slices of bread. Misc- en- place is the key to the success in this endeavor.
What is the unique selling proposition of Subway?
Subway offers a customizable menu where customers can build their sandwiches based on their preference of meat, salads, sauces etc.
Is Subway more successful than Mcdonalds?
Sandwich group Subway has overtaken McDonald's as the world's largest restaurant chain, the company has said. Subway had 33,749 sites across the globe at the end of last year, compared with 32,737 for McDonald's.
What is subways main goal?
Subway is dedicated to producing the highest-quality, safest, and best-tasting sandwiches and meals in every part of the world. Developing and maintaining robust food safety programs is how we work to assure safety for every meal, every day, in every market.
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.
How to find a subway franchisee?
You can easily find Subway franchisees either by looking into the company’s disclosure document (where you’ll find their contact information), or simply stopping at a Subway and talking to a franchisee.
Do subway franchisees own one unit?
Franchisees are usually willing to discuss their experiences with prospective franchisees, and if they have insights as to how to “get one” they’ll tell you. However, it seems to me that few Subway franchisees own just one unit — they own multiple units (it would be a good idea to ask them why) and so they may not be too eager to help someone buy a unit unless it’s far from where they’d like to own another one.
Is subway a good franchise?
Subway must be a good franchise investment for some people because many of the franchisees have been with the company since almost its inception, and (now answering the second question) it seems impossible to “get one” in the USA.
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.
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.
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.
Who is Jack Findaro?
Hello. My name is Jack Findaro. I’m the finance director of Visa franchise , and one of the founders of the firm. Today, I’d like to give a quick summary on our analysis of the Subway franchise investment opportunity. For many clients from around the world that have inquired about Subway and whether it’s a good or bad franchise investment, and something that’ll qualify them for an E-2, or L-1, or EB-5 investor visa.
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Should I Still Franchise a Subway?
That is not to say that Subway franchises were not successful. These drawbacks are simply to show that franchising Subway isn’t as profitable or as easy as the company may make it out to be. So, don’t get too hasty calling Subway to apply as a franchisee until you know for sure what you’re getting into.
How much did the subway franchise make in 2012?
In 2012, prior to Subway’s decline, the average Subway franchise generated $482,000 in revenue. By 2016, that had dropped to $422,500. These numbers have to do with the fact that more Subways are opening but are not earning as much thanks to the increased competition.
How much does subway royalty cost?
Subway’s royalty fees are at 8%, which is twice of what McDonald’s charges its franchisees at 4%. It’s a small number, but for small business owners it can mean significant thousands of dollars that could be the difference between profitability and loss.
How many subways are there in 2020?
As of 2020, there are over 41,500 Subways worldwide, all of them independently owned.
How much does it cost to license a subway franchise?
In comparison, Subway franchises are much more affordable to the average small business owners in the United States. Their licensing fee is at $15,000, much cheaper than other popular food brands like McDonald’s.
Why is the subway so fast growing?
Arguably, the reason for Subway’s fast growth and appeal to potential franchise owners is its low-cost high-return model.
How much does it cost to open a subway?
The total cost of opening a Subway is estimated at $150,000 to $300,000. In terms of franchising, that’s the cost of a less popular restaurant franchise. Yet, Subway’s popularity rivals the big names of the fast-food industry yet keeps its franchising costs low.
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 ...
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.
What is emerging brand?
Emerging brands in general are more modern brands that have already captured the new consumer trends, and modeled a business that will capitalize on that. Many of these brands are backed up by very experienced franchise development companies that have been very successful with older franchise concepts and are aware of the market changes in the horizon. Many of these businesses present a ton of opportunities and potential to profit much more than a Subway franchise!
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).
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…
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.
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
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.
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 are the variables involved in making a decision?
Of course there are many variables involved in making a decision including your business goals, budget, local demographic, exit strategy, and much more. Some Subway locations do very well but we feel the overall trend is now downward.
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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.
