Subway (restaurant)


Subway (restaurant)
Subway
Type Privately held company
Industry Restaurants
Genre Fast food
Founded Bridgeport, Connecticut, U.S. (August 28, 1965)
Founder(s) Fred DeLuca and Peter Buck
Headquarters Milford, Connecticut, U.S.
Key people Fred DeLuca (President)
Millie Shinn (EVP)
David Worroll (Controller)
Products Subs
Salads
Pizzas
Other food products
Revenue increase $16.2 billion US$ (2010)
Owner(s) Doctor's Associates, Inc.
Website http://subway.com

Subway is an American restaurant franchise that primarily sells submarine sandwiches (subs) and salads. It is owned and operated by Doctor's Associates, Inc. (DAI). Subway is one of the fastest growing franchises in the world with 35,519 restaurants in 98 countries and territories as of October 25th, 2011.[1] It is the largest single-brand restaurant chain globally and is the second largest restaurant operator globally after Yum! Brands (35,000 locations).[2][3][4]

Subway's main operations office is in Milford, Connecticut; five regional centers support Subway's growing international operations. The regional offices for European franchises are located in Amsterdam, Netherlands; the Australia and New Zealand locations are supported from Brisbane, Australia; the Asian locations are supported from offices located in Beirut, Lebanon, Singapore and India and the Latin America support center is in Miami, Florida. In the United Kingdom and Ireland the company hopes to expand to 2,010 restaurants by some time in 2011.[5]

Contents

Doctor's Associates

Doctor's Associates, owners of Subway, was founded by Fred De Luca and Peter Buck in 1966, when they opened the second Subway restaurant in New York.[6] The name comes from the fact that Buck holds a PhD. Despite Subway marketing itself as a health-conscious restaurant, neither Subway nor Doctor's Associates are affiliated with nor endorsed by any medical organizations or doctors.[2]

History

Subway's original logo used from 1968 to 2002.

Fred De Luca borrowed $1,000 from family friend Peter Buck to start his first sandwich shop on August 28, 1965.[7]

Subway restaurant, Pittsfield Township, Michigan

Subway restaurants have been consistently ranked in Entrepreneur magazine's Top 500 Franchises, and Subway was selected as the No.2 overall franchise in 2008. Additionally, it was ranked as the No.3 "Fastest Growing Franchise", and the No.1 "Global Franchise" as well.[8] In March 2011, Subway was ranked the most popular Fast-Food Restaurant in the United States of America in a poll of over 43 thousand social media users.[9]

At end of 2010, Subway restaurant surpassed McDonald's restaurant with 33,749 restaurants across the globe and 32,737 restaurants respectively, but by revenue McDonald's was still ahead of Subway.[10]

Products

A SUBWAY Club 6" sandwich.
White chocolate chip macadamia nut (left) and double chocolate chip cookies.

Subway's core product is the submarine sandwich or "Sub", a long roll akin to a soft baguette and filled with meat, cheese and veggies. In addition to these, the chain also serves wraps and salad as well as baked goods including cookies, donuts and muffins. Menu items vary between countries and markets, however Subway's worldwide signature products include:[11]

  • Italian BMT
  • Steak & Cheese
  • Meatball Marinara
  • Chicken Teriyaki
  • Subway Club
  • Chicken & Bacon Ranch

The chain's biggest selling sandwich.[12], the BMT contains pepperoni, salami and ham and the name originally stood for Brooklyn Manhattan Transit, but now stands for Biggest, Meatiest, Tastiest.[13]

In 2006, the first kosher Subway restaurant in the United States opened in a suburb of Cleveland, Ohio. Subway spokesman Jared Fogle was in attendance at the opening. "With slight modifications, such as no pork-based products, and the use of soy-based cheese product, the menu is virtually identical to that of any other Subway restaurant."[14] Since then, kosher Subways have opened in New York, Los Angeles, Kansas City, and Baltimore,[15] as well as Livingston, NJ, and plans have been announced for Milwaukee, Boston.[16]

Most Subway restaurants in Muslim countries offer a halal menu for its local consumers. Non local customers must purchase from an alternative menu. There are also at least two Subway restaurants in the United States that do the same, three in Canada, and over one hundred in the United Kingdom. Subway is planning to open more halal restaurants.[17]

Subway also offers items other than sandwiches; breakfast items include such baked goods as bagels, egg & sausage sandwiches, and as of July and August 2006, "personal pizzas" are available in select markets to their menu. The personal pizzas are made upon order (as with their sandwiches) and heated "in less than 90 seconds" (cooking for 85 seconds) as advertised on televised commercials. Breakfast and pizza items are only available in some stores. Most stores offer additional toppings upon request. In November 2009, Seattle's Best Coffee announced that they'd signed an agreement to serve freshly brewed coffee as part of Subway's breakfast offerings.[18]

The 2009 Zagat Fast-Food Survey rated Subway as the best provider of "Healthy Options" in the Mega Chain category. Subway was also first in the "Best Service" and "Most Popular" categories, although it was second overall behind Wendy's.[19]

Nutritional content

In 2011, Subway introduced gluten-free bread and brownies at some locations in Texas.[20] The company also cut the salt content in its sandwiches by 15 percent.[21]

In the UK and Ireland, the Subway chain has reduced salt content across its entire range by 33% and has committed to further reductions in line with government targets, the only fast food chain in the UK to do so.[22] Additionally, the chain's range of Low Fat Subs is endorsed by the charity Heart Research UK. [23]

Key: Green = Countries currently with Subway restaurants

Advertising

Subway in Belo Horizonte.
Subway in Amherst, New York.

Subway uses the advertising slogan "Eat Fresh" to explain how every sandwich is made from freshly baked bread, using fresh ingredients, in front of the customer to their exact specification, by employees whom Subway terms "Subway Sandwich Artists".

In November 2007, Subway's US commercials featured the Peter Griffin character from Family Guy in which he extols the virtues of its new Subway Feast sandwich.[24] Subway has also used instant win competitions based on the game Scrabble as promotional tools. Subway was also seen in the 1996 film Happy Gilmore. Subway also has a product placement television advertisement campaign for the US series Chuck, ongoing since its first season. As ratings dwindled in the second season, a campaign to "save Chuck" was launched by fans, which involves purchasing a foot-long sandwich from Subway on April 27, 2009, the date of the season finale. Tony Pace, Subway's marketing officer, reportedly called it the best product placement the restaurant chain has done "in several years."[25]

$5 Footlongs

In 2008, Subway began to offer "Five Dollar Foot-long" submarine sandwiches in the continental United States and Canada as a limited time only promotion. All footlongs were available for $5, excluding premium and double meat subs. "Five Dollar Footlongs" quickly became the company's most successful promotion ever. Upon the initial program's completion, customer response prompted Subway to create a permanent "Five Dollar Foot-long Everyday Value Menu" that includes some footlong sandwiches for $5 a piece. As of 2011, there has been a monthly rotating $5 footlong.[26] Which subs are permanently priced at $5 varies by market.

In October 2011 a similar promotion was launched in the United Kingdom. Customers can choose from a range of nine Subs and any drink for the price of £3 and £5 for the 6" and Footlong respectively.[27]

Sub Club

Sub Club Cards and Sub Club stamps

In early June 2005, Subway announced that the popular customer rewards program would be phased out due to counterfeiting. Officially the Sub Club program has been discontinued in the US and Canada by Doctor's Associates.[28]

Participating Subway restaurants in U.S. and Canada now[when?] offer a "Subway Card" to customers, which functions as a stored-value cash card. In some states and provinces, the card also functions as a "Subway Rewards Card" allowing customers to earn points for free food and sandwiches. Unlike the Sub Club program, no other purchase is needed when redeeming points, and registered cards which are lost or stolen can be replaced.[29] Subway runs periodic promotions that provide free subs for preloading a Subway Card with certain dollar amounts, which are usually listed at mysubwaycard.com.

All stores in the United Kingdom and Ireland participate in the Subcard scheme, a loyalty card offering customers points with each spend at a Subway store, redeemable for free Subs and snacks. Unlike the US scheme, these cards cannot be used to store cash. The scheme is due to be rolled out in Germany and other parts if the EU from 2012.[citation needed]

Controversies

Sandwich size

On February 2, 2007, KNXV-TV with the help of the Arizona Department of Weights and Measures, reported that three Giant Sub Subway sandwiches, nominally each 3-foot (91 cm) long, were only 2 feet 8 inches (81 cm), 2 feet 8+14 inches (81.9 cm), and 2 feet 8+12 inches (82.6 cm) long. The maximum variance in length allowed in that state is 3%, which on a 3-foot sub is 1.08 inches (2.7 cm). Upon further study, the report showed that the box designed to store Subway's 3-foot sandwiches were only 2 feet 10+34 inches (88.3 cm) in length; shorter than the maximum allowable variance. In response to the report, Subway stated that they are currently in the process of reevaluating their advertising, promotional, training and packaging materials with regard to the specific or implied length of Giant Subs and are taking steps to advise their franchisees to only discuss with customers the approximate number of expected servings and not a specific length of measurement.[30]

Franchise relations

In 1995, Subway Sandwich Shops, Fred DeLuca, Peter Buck, and Doctor's Associates, Inc. were found guilty of a breach of contract. An Illinois jury awarded more than $10 million in damages to Nicholas and Victoria Jannotta after finding lease and contract violations.[31]

The U.S. House of Representatives' small-business committee studied the franchise industry 1992 to 1998. Dean Sagar notes: "Subway is the biggest problem in franchising and emerges as one of the key examples of every abuse you can think of."[32] In 1989, the U.S. Small Business Administration refused small-business loans to Subway franchise owners until Subway removed a contract clause giving Subway Corporate the power to seize and purchase any franchise without cause. John 'Mike' Weible, an award-winning franchise owner, was refused the purchase of a second unit. Weible withheld $25,000 in royalties. A Subway Corporate audit of his books indicated that Weible was underreporting sales and owed about $4,700, however an independent audit concluded that Subway actually owed him $200. A week later the company evicted Weible and sold his store for more than $70,000. Weible sued Subway for fraud and breach of contract. In 1993, a panel of arbitrators ruled in Weible's favor and awarded him $220,000.[32]

The Dallas Morning News reported on Subway's seizure of a soldier's Subway stores while he was deployed to Afghanistan in 2006.[33][34] The stores were owned by Leon Batie, Jr., an Army reservist, who was called up to Operation Enduring Freedom in March 2005, three years after he bought his first Subway.[33][34] Batie alleged that Subway violated the U.S. Servicemembers Civil Relief Act. A federal lawsuit filed by Batie against Subway was dismissed. Batie then filed suit in state court in Dallas County, Texas. Both parties involved agreed to "mutually agreeable terms" confidentially in a January 2010 settlement.[35]

UK VAT treatment

In October 2010, Subway franchisees in the UK lost a high court appeal against paying standard VAT on all toasted subs, as enforced by HM Revenue and Customs. The result of this is that in the UK, a toasted sub attracts VAT, whereas a cold sub, eaten off the premises, does not. Competitors such as Greggs, Quiznos and McDonalds do not pay VAT on similar food.[36][37][38]

Casey's trademark case against Subway

On January 31, 2011, Subway lawyer Valerie Pochron wrote to Casey's General Stores, a chain of Iowa-based convenience stores, demanding they cease using the term "footlong" in their advertisements for 12-inch sandwiches. Consequently, in February 2011, Casey's General Stores Inc. filed a lawsuit against Subway in U.S. District Court in Des Moines, seeking a legal declaration that the word "footlong" does not violate Subway's rights. Casey's further sought a declaration that the word "footlong' is a generic description of a sandwich measuring one foot, and that Subway's attempt to assert trademark rights is "frivolous litigation."[39][40]

References

  1. ^ "International Subway Locations". Around the World. Subway.com. http://www.subway.com/subwayroot/Applications/Reports/CountryCount.aspx. Retrieved March 3, 2011. 
  2. ^ Subway publication (2011). "Official SUBWAY Restaurants Web Site". Subway Restaurants. http://subway.com/subwayroot/AboutSubway/index.aspx. Retrieved March 3, 2011. 
  3. ^ Joe Bramhall. "McDonald's Corporation". Hoovers.com. http://www.hoovers.com/mcdonald's/--ID__10974--/free-co-factsheet.xhtml. Retrieved August 23, 2007. 
  4. ^ Joe Bramhall. "YUM! Brands, Inc.". Hoovers.com. http://www.hoovers.com/yum!/--ID__53993--/free-co-factsheet.xhtml. Retrieved August 23, 2007. 
  5. ^ Subway UK publication. "About Us". Doctor's Associates. Archived from the original on September 17, 2007. http://web.archive.org/web/20070917024007/http://www.subway.co.uk/about.asp. Retrieved September 21, 2007. 
  6. ^ Doctor's Associates Inc. – Company Profile, Information, Business Description, History, Background Information
  7. ^ Subway Franchises Rhode Island, MA and CT | Subway Development
  8. ^ "2008 Fastest Growing Global Franchises". Entrepreneur Magazine. http://www.entrepreneur.com/topglobal/index.html. Retrieved February 24, 2008. 
  9. ^ "Subway is the most loved Fast Food Restaurant". http://amplicate.com/news-wire/6221-subway-is-the-most-loved-fast-food-restaurant/. Retrieved March 1, 2011. 
  10. ^ "Subway Passes McDonald's as Largest Fast-Food Chain in World". FOX Washington, DC. March 7, 2011. http://www.myfoxdc.com/dpps/money/subway-passes-mcdonalds-as-largest-fast-food-chain-dpgonc-20110307-fc_12204865. 
  11. ^ http://www.subway.com/Menu/MenuCategoryItems.aspx?CC=USA&LC=ENG&MenuTypeId=1&MenuId=35
  12. ^ Dennis, Guy (April 25, 2004). "Subway sets out to torpedo McDonald's". The Daily Telegraph (London). http://www.telegraph.co.uk/finance/2883871/Subway-sets-out-to-torpedo-McDonald%27s.html. Retrieved May 24, 2010. 
  13. ^ "Official SUBWAY Restaurants FAQs". www.Subway.com. http://www.subway.com/subwayroot/AboutSubway/subwayFaqs.aspx. Retrieved August 25, 2009. 
  14. ^ First Kosher Subway Restaurant Opens in Cleveland
  15. ^ "Kosher Subway opens to rave reviews". Kansas City Jewish Chronicle. http://www.kcjc.com/200710257435/news/kosher-subway-opens-to-rave-reviews.html. 
  16. ^ "Glatt kosher Subway list". TiyulTalk. http://www.tiyultalk.com/smf/index.php?topic=358.0. Retrieved March 2, 2008. 
  17. ^ "Subway goes halal". the Manchester Evening News (Manchester, England). March 8, 2007. http://www.manchestereveningnews.co.uk/news/s/1012/1012707_Subway_goes_halal.html. Retrieved February 24, 2008. "SANDWICH chain Subway is to open two Halal-only stores in Manchester." 
  18. ^ Subway Restaurants to Brew Seattle's Best Coffee Exclusively
  19. ^ "ZAGAT Survey Summary 2009 Fast-Food Restaurants Survey". QSR Magazine. http://www.qsrmagazine.com/articles/features/129/zagat-1.phtml?microsite=bytopic_finance&utm_campaign=20090609&utm_source=jolt&utm_medium=email. Retrieved February 17, 2011. 
  20. ^ Roberson, Amanda. "Gluten-free items come to some Subway's in East Texas". KYTX CBS 19. http://www.cbs19.tv/story/13818841/gluten-free-items-come-to-some-subways-in-east-texas?clienttype=printable. Retrieved June 29, 2011. 
  21. ^ "Subway slashes salt in sandwiches". WHEC News 10. April 19, 2011. http://www.whec.com/news/stories/s2071937.shtml. 
  22. ^ . July 2011. http://www.subway.co.uk/media/news/healthandwellbeing.aspx. 
  23. ^ [1].
  24. ^ Gail Schille (November 17, 2007). "Subway in 'Family Guy' promotion". the Hollywood Reporter. http://www.hollywoodreporter.com/hr/content_display/television/news/e3i831387c49a06d964d2acbdc2458a235e. Retrieved February 24, 2008. "Fox's "Family Guy" has lined up its first national quick service restaurant promotion with Subway Restaurants, which will air a TV spot featuring the show's Peter Griffin and will promote the hit animated series online and in more than 22,000 locations." [dead link]
  25. ^ "Subway: Good Night, and Good 'Chuck'". TV Week. April 27, 2009. http://www.tvweek.com/tvmojoe/2009/04/subway-good-night-and-good-chu.php. Retrieved April 27, 2009. 
  26. ^ Personal Finance News from Yahoo! Finance
  27. ^ http://www.subway.co.uk/menu/subs/value-lunch/default.aspx
  28. ^ SUBWAY Operations Manual (2008 ed.). Doctor's Associates. 2008. p. 17.25. 
  29. ^ "Subway Card FAQ". https://www.mysubwaycard2.com/ContentManager/Controller.aspx?page=English/faq/faq. Retrieved November 1, 2009. 
  30. ^ Joe Ducey (June 26, 2007). "Sub-Standard". KNXV-TV (Phoenix, Arizona). Archived from the original on August 18, 2007. http://web.archive.org/web/20070818130828/http://www.abc15.com/content/news/investigators/story.aspx?content_id=cf4c217c-1910-4040-9a33-0102fdd135c7. Retrieved April 8, 2008. "His [Dennis Ehrhard] office [Phoenix Dept. of Weights and Measures] recently warned Subway, for shorting a customer and the ABC 15 Investigators found Subway was the biggest offender in our test."  Video
  31. ^ Robin Lee Allen (December 11, 1995). "Subway ordered to pay $10M in punitive damages to ex-landlord". Nation's Restaurant News. http://findarticles.com/p/articles/mi_m3190/is_n49_v29/ai_17847096/. Retrieved August 8, 2011. 
  32. ^ a b Richard Behar (March 16, 1998). "Why Subway Is 'The Biggest Problem In Franchising' That's the assessment of a congressional staffer who studied". Forbes Magazine. http://nextraterrestrial.com/pdf/FDeluca-Fortune%20March%2016%201998.htm. Retrieved August 8, 2011. 
  33. ^ a b Karen Robinson-Jacobs (June 21, 2009). "Soldier suing after being stripped of Subway restaurant franchises". Dallas News. http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-franvet_21bus.ART0.State.Edition1.3bfb0e4.html. Retrieved July 28, 2009. [dead link]
  34. ^ a b "Soldier suing after being stripped of Subway restaurant franchises". tullylegal.com. http://tullylegal.com/pdf_2009/SoldierSuing%20_DMN_06252009_FA.pdf. 
  35. ^ Robinson-Jacobs, Karen. "Subway, soldier settle Dallas franchise dispute". The Dallas Morning News. http://www.dallasnews.com/business/headlines/20100104-Subway-soldier-settle-Dallas-franchise-3530.ece. Retrieved 25 August 2011. 
  36. ^ "Subway wrangle over VAT could be heading to high court". The Huddersfield Daily Examiner. January 4, 2011. http://www.examiner.co.uk/news/local-west-yorkshire-news/2011/01/04/subway-wrangle-over-vat-could-be-heading-to-high-court-86081-27927214/. Retrieved June 29, 2011. 
  37. ^ "Big butties, small mindedness". Taxation. October 20, 2010. http://www.taxation.co.uk/taxation/node/21166. Retrieved February 17, 2011. 
  38. ^ "Subway VAT appeal: Subway loses". Howlader & Co. November 4, 2010. http://howladerandco.com/subway-vat-appeal-subway-loses/337/. Retrieved January 17, 2011. 
  39. ^ Welte, Melanie S. (February 14, 2011). "Iowa store chain sues Subway over 'footlong'". MSNBC. http://www.msnbc.msn.com/id/41584626/ns/business-small_business/. Retrieved February 17, 2011. 
  40. ^ "Casey's sues Subway over rights to 'footlong'". USA Today. July 16, 2010. http://www.usatoday.com/money/industries/food/2011-02-14-subway-caseys-footlong-suit_N.htm. Retrieved February 17, 2011. 

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