SWOT Analysis of Subway | Subway Strengths and Weakness, Opportunities and Threat
1. What is Subway?
Subway is a sandwich restaurant franchise that specializes in submarine sandwiches. It was founded by Fred DeLuca and Peter Buck and Carmela DeLuca on August 28th, 1965 in Bridgeport.
The headquarters is Milford, Connecticut, United State. Subway is around 41,600 units and is located in 104 countries with more than number of employees 5,000.
2. How is the Business Model of Subway?
Subway’s business model is franchising. The company sells the franchise to store owners for a fee and gets revenue from franchise fees and product sales.
Subway is selling submarine sandwiches at a cheap price and this may be its biggest selling point because of the current economic status of students and young professionals.
Professionals on tight budget would love to find a cheap place to eat that offers fresh and satisfying food.
Place as business model is another way to improve the revenue of subway. Subway has placed its stores in strategic locations to capture market. These places are near school, universities, offices and malls.
The price that subway offers is also cheaper than most of the other food chains that are established in the country where subway is located.
So, with these factors combined including the growing economy in most countries around the world, customers will surely patronize subway, increasing its revenues by a big margin.
Customer segment business model is also used by subway to solve the varying needs of customers. Because of the diverse market, customers would love to find restaurants that can satisfy their taste.
Subway is not only sure that its cheap price can attract customers but it should also be able to cater to the different segment of its customers.
It should be able to meet the needs of students, families, professionals and other specific customer segments.
3. Subway Revenue and Financials
In the United States, Subway made roughly 10.2 billion dollars in sales in 2019, down 210 million from the previous year.
Subway is the most popular sandwich chain in the United States, with more than three times the sales of its next competitor, Arby’s.
Arby’s, the second largest sandwich chain, with revenues of around 3.89 billion dollars in 2019.
Subway’s revenue increased by 12% to reach 10.2 billion dollars in 2019, which was up from 8.8 billion in 2017.
The 3% drop was not due to competition or because of changes in consumer preferences, but rather due to “lower sales volume”.
Subway’s initial franchise investments were anticipated to total 342,400 dollars in 2020, with leasehold upgrades being the most expensive at 200 thousand dollars.
Meanwhile, the restaurant chain’s franchise fee was $15,000 US dollars.
4. Subway Partners
Subway marketing partners are;
a) Doordash: Subway partnered with the delivery platform Doordash to deliver its subs to its customers. Subway has modified its store’s layout so that Doordash can fit more subs into the same space. The aim is to serve subs in 10 minutes or less at $10 for delivery anywhere near the customer. Subs cost $5 for free delivery, if ordered over $10 within six miles of subway’s location.
b) Grubhub: From 2018, Grubhub partnered with Subway. The deal is intended to offer customers from their apps or websites a discount on ordering from Subway. The promotion was for a flat delivery fee of $10. During this period, Grubhub delivered more than 10 thousand subs in the United States out of over five thousand ordered through the app.
c) UberEATS: In 2019, Uber Eats partnered with Subway in Canada. In order to get a free taco or a drink from Subway, customers need to download the UberEATS.
d) Postmates: In 2018, Postmates announced a partnership with Subway in which subscribers can get a free drink and pretzel when they place an order and pay for the whole amount using the Postmates app. The deal also offers subscribers a free drink and pretzel when they order from Subway for delivery to their location.
5. Subway Competitors
Subway competes with other major food chains. These include;
a) Darden Restaurants: Darden Restaurant is a competitor of subway. It has over 1,500 locations and it has a total revenue of $8,080 million dollars in 2018. It can therefore be said that Darden is the largest competitor of subway, since the history of Darden is longer than that of Subway.
b) Pizza Hut: Pizza Hut is another competitor of Subway. Pizza Hut’s revenue climbed by 3.9 percent from $988 million in 2018 to $1 billion in 2019.
c) McDonald: It is known that McDonald is the biggest competitor of subway. McDonald’s made a total of 19.21 billion dollars in sales in 2020. When looking at McDonald’s revenue by area in that year, the United States was the country that created the most income, accounting for 7.66 billion dollars.
d) Starbucks: Starbucks is another competitor of Subway. In 2020, Starbucks had total revenues of $23.5 billion, down 11% year over year. In addition, cash inflows from operating activities totaled $1.6 billion for the year.
6. Subway Business and Market Strategies
Subway is able to maintain its brand recognition due to the following factors
a) Advertisement: Subway is always active in advertisements. This strategy has made sure that the company is able to maintain its brand recognition. Subway management makes sure that it goes to different shows and other big events and do some advertisement there so as to attract more customers and market its brand internationally.
b) Promotion: Subway is also the owner of various promotions that it has done in order to attract more customers. Its advertising strategies like advertisement in different forms like TV, radio, newspapers etc. The company also makes sure that it has its brand name written in articles in order to make sure that it gets well known in different countries.
c) Distribution: Subway makes sure that it distributes its products in all parts of the world to make sure that its product reaches all parts of the world and hence increase their reach.
e) Products: Subway has innovated its products to make them appeal to many people and it has done this through different ways such as changing its chicken to a new chicken that is healthier for the customers. This has increased the sales of subway as more people come into it because of their health concern.
d) Bargaining: Subway’s bargaining strategy is that it makes sure that they do not compromise on the quality and quantity of their services and hence they bargain with their suppliers and other companies in order make sure that they get the best products at a good price.
e) Market research: Subway is currently researching on how they can add more products to their outlets in order to make their services better and they try very hard in order to make sure that they get new products at a low cost, which has also improved the condition of the company.
f) Distribution channels: Subway has used various distribution channels and business strategies and this has made sure that the company is able to maintain its status in the market. Some of these distribution channels include franchising, franchising and licensing agreements.
7. SWOT Analysis of Subway
· Strengths of Subway
a) Customers of Subway are very loyal to the brand of this company.
b) The Subway brand is very popular worldwide.
c) Subway has many outlets spread across the world.
d) The products of subway are of good quality, and they are made with fresh ingredients.
e) The company has a good and well branded advertising strategy.
f) The products of subway are very affordable.
g) The outlet of Subway offers different types of discounts to its customers, therefore many people can afford their products.
h) The time that it takes for Subway to serve a customer is very short as opposed to the other food outlets.
i) Subway has also innovated its product line, and now they have salads which include pasta, breadsticks and breads among others.
j) Subway is one of the most popular fast food chains in the U.S.
k) Subway has excellent customer service.
· Weaknesses of Subway
a) Customer loyalty is not guaranteed when there are many competitors in the market like McDonalds, Starbucks and Pizza Hut.
b) High competition in the fast food industry makes it very difficult for subway to maintain its brand image in the market, therefore it becomes difficult to attract new customers to their outlets.
c) Subway is not the only fast food chains that serve sandwiches.
d) Subway is costly compared to the other fast food chains.
e) Subway has many outlets in some parts of the world, therefore it becomes difficult to reach all parts of the world.
f) Subways are not present in all parts of Africa, some areas have no access to a Subway outlet.
g) The opening hours of the outlets of subway are not always convenient for people who have been working throughout the day.
h) People who do not like Subway’s food can easily switch to other food outlets.
i) The price of the Subway is very high as compared to its competitors such as McDonalds and Pizza Hut.
j) High travel cost as a result of Subway being located in big cities which are far from land borders or near the sea.
k) Subway is a very capital intensive business, therefore it is necessary to have a lot of money for operations and expansion.
l) Subway is dependent on its suppliers and other companies.
m) Subway has a low technology and innovation rate as compared to the other companies in the food industry, therefore it is difficult for Subway to expand their operations.
n) Subway does not have a wide variety of products that can be sold, therefore it cannot compete with its competitors.
· Opportunities of Subway
a) Subway is introducing new products in the market, this makes sure that it attracts many people to its brand.
b) Subway is now planning on entering the African Market.
c) Subway has introduced new healthier food products in the market, this makes sure that their brand image is better.
d) Subway is introducing more new outlet in some parts of the world.
e) Subway has a wide range of products in its outlets, this means that it can attract more people from different regions to its brand.
f) Subway is a well-known brand, therefore it attracts many customers from far and near to come and purchase their products.
g) The company can also set up a franchise in other parts of the world if the African market gives positive response to its products.
h) The company has a good and well branded advertising strategy, therefore it attracts more and more customers to come to its outlet.
i) Subway has a strong distribution channel, therefore it gets better products at a lower price.
j) Subway is very attractive for its customers as compared to other fast food chains.
k) Subway has a large number of outlets, therefore it can expand its operations in any part of the world.
l) Customers are very loyal to Subway because they have a good reputation in the market.
· Threats of Subway
a) Subway is highly dependent on its suppliers, therefore if these suppliers are not able to supply Subway with products, this can affect the sales of the company greatly.
b) If other companies are able to get their products before subway, then they could have excellent sales.
c) Subway is in a price war with its competitors, therefore the company may lose money in the long run.
d) The products of subway are not available in many areas of the world, therefore it is difficult for Subway to expand their operations.
e) It is very expensive to build Subway stores, this increases the cost of operations.
f) The outlets of Subway are not located in all parts of Africa, therefore it cannot reach all parts of Africa quickly.
g) Subway does not have a wide range of products in its outlets.
h) Subway does not have a very attractive advertisement, therefore it is difficult to attract new customers.
i) Subway is getting stiff competition from the other fast food chains.
j) Subway has a low technology and innovation rate in its operations, therefore it is difficult for Subway to expand.
k) Subways are not very durable in the market, therefore it gets affected easily.
l) It is expensive to establish companies like Subway hence companies that come into business will find more profit in competing with other food chains than establishing their own businesses.
Subway FAQs
Is there a vegetarian subway?
Yes. Subway has a vegetarian menu option for all of its sandwiches. However, meat may be added to any vegetable sandwich on request.
Where is Subway situated?
Subway restaurants can be found in both urban and rural areas. They are usually open from 7:00 am to 11:00 pm.
What are the major Competitors of Subway?
Starbucks, Pizza Hut, Darden Restaurants, & McDonald’s
What is the revenue of Subway?
The revenue of subway is $16.1 billion in 2019.
What are the ways to increase sales & sales growth?
Subway will increase sales by developing new flavours, new products and improved service.
How many outlets does Subway have?
Subway has more than 41,600 outlets in 108 countries and more than 42,431 restaurants worldwide.
How many employees does the Subway have?
The Subway employs over 5,000 including Franchises is 41,000.
What are the challenges of Subway?
Subway has low food innovation. Subway is still small when compared to other fast-food chains. There is no franchising available in Subways yet
What are the future plans for Subway?
It has plans to open up more stores in major cities in Brazil
What are the revenue growth strategies of Subway?
Subway is planning to expand its operations in Brazil soon by franchising.
Does McDonald’s own Subway?
McDonald’s owns around 20% of its locations, with the remaining 80% owned and operated by independent franchisees.
This necessitates more cash, which may limit the capacity of other chains, such as Subway, to expand at the same rate.
How does Subway compete against other food chains?
Subway is mainly competing with McDonald’s, the second largest fast-food chain in America. The major competitors of Subway are McDonald’s and Starbucks.
Both of these competitors are larger than Subway. Therefore, if subway can overcome these challenges then it can be able to take over other food chains easily.
Subway has many threats as well as opportunities that it needs to overcome to stay in business.
Which state has the most Subway restaurants?
California has the most Subway restaurants compared to other states.
How do Subway and other fast food chains compete against one another?
They compete in terms of price and taste, but not in terms of quality. The major competitor of Subway is McDonald’s because McDonald’s has a bigger network.
The major competitors of McDonald’s are McDonald’s and Starbucks.
Are there more subways or Starbucks?
There are more Subway restaurants in the world than Starbucks.
What is a franchise?
A franchise is a company that purchases a product from another company and retails it to customers under its own name.
The original company after selling the product to the franchisee may exercise direct control over individual outlets, but not at a corporate level.
In return for this, the franchisee typically receives substantial compensation, though it may be difficult to manage all of them from afar due to their worldwide presence.
Which is worse Subway or McDonald’s?
Subway is a global-based franchised restaurant chain serving fresh-baked bread, salami, sandwiches and other fast food items.
It has been the world’s largest restaurant chain since 2014, and the second largest in America behind McDonald’s since 2007.
In addition to its food items, Subway also advertises franchises that operate around the world.
Is Subway vegetarian?
Subway does not have a vegetarian menu option. However, the Subway meats used to make sandwiches are usually vegetarian ingredients such as soy and wheat gluten.
When adding meat to an otherwise vegetarian sandwich, the vendor may ask if the user wants a ‘soy patty,’ ‘veggie patty’ or ‘veggie bologna’ before serving said sandwich.
The Subway restaurants in England do offer a vegetarian option — but it is not available all over the world.
How many Subways are in California?
There are well over 2,138 Subway’s in California.
What is subway overtime?
Subway overtime is a range of additional working hours that increased overtime pay. As a result, Subway employees often have to work more than 40 hours a week.
The amount of overtime paid depends on the quality of service provided by the Subway employees during their shift.
How long is the Subway job?
Subways require no qualifications to get hired. In fact, most jobs are filled by persons that have been standing around the store for a while hoping to get hired for an opening.
Is subway better than McDonald’s?
Subway is better than McDonald’s because it has a variety of food whereas McDonald’s has no variety at all.
