Subway Sandwiches

The sub shops Industry

• Gives easy entry into the fast food chain industry which is growing rapidly.

• Intensifying competition with hamburgers chain like Hardees and Burger King introducing sub sandwiches in their menu.

• McDonalds, KFC also getting into competition with the subs.

SUBWAY

• First Shop was opened in Bridgeport in 1965.

• Primary aim was to avoid bankruptcy.

• In 1982, planned to open 5000 subs by 1994.

• Expansion was fast and steady.

• Topped the list of Franchises in Entrepreneur in 1991.

• Undisputed market leader with 10 times more location than other competitors.

• Operated 7825 units by mid 1993 with 7750 units in North America alone.

• No.2 fast food chain in the United States.

• Sales grew from $360m to $2.2b by 1992.

• In terms of sales, it was ranked 12th with only 15% sales of McDonalds.

• Expansion was done in Non Traditional sites.

• Steps taken to improve business during dinner and late night sales, and marketing to children.

The competitors

Blimpie

• 2nd among sub operators both in units and total sales.

• Used the main vulnerability of quality of subway to take on them.

Quizno

• Rather remaining a stripped down version of the sub, Quizno stores were designed as casual deli restaurants.

• Menu offered a wide variety including salads, pasta dinners, soups and desserts.

• Boosted evening sales from 10% to 30% of volume, substantially increased week end sales.

The problem

• Units lacked in variety and hence even heavy users were not visiting the stores on regular basis.

• And they were not able to increase unit sales

• Higher Operation cost and low unit sales lead to low ROI and decreased profits.

• Decreasing market share hence forth.

Customer Analysis

• 78.7% of adults were patronized to fast food of which 31% went 14+ times in the last 30 days.

• Heavy users are usually male, young adults, and single.

• Subway is more skewed towards middle to upper income customers than competitors.

• Lunch in most popular occasion.

• Subway is the least patronized restaurant amongst competitors.

SWOT AnalysisSTRENGTH

•Brand value•Wide distribution network across the country.•Healthier food range which is fresh and light.•International presence of units

WEAKNESSES

•Small menu list•Increasing operational cost for franchisees•Location cannibalizing the sales of other stores

OPPORTUNITIES

•Industry is still growing despite slowdown in the Economy.•Customer target group from middle and upper middle class.•People turning health conscious.•Growth in other Virgin markets very much possible.

THREAT

•Competition from other forms of fast food chains•Easy entry into the industry.•Patronage of heavy customers is very less.

Marketing strategies

• Nutrition Factor- Fresh and so much healthier than others.

• More value for money- improving quality will increase the value of value of the product.

• Reposition themselves as an upscale sandwich chain- wider menu, better quality fresh products, healthier life style, ambience in convenient location.

• Target virgin International markets using the Brand name.

Brand Strategy

• Brand position as a very healthy fast food chain providing healthier and fresher food – brand Value

• Positioned between a stripped down version of subs and a full theme restaurant.

• Service is more like a fast food style but in terms of food quality, quantity, presentation and fresh puts it closer to a theme restaurant.

The 4 P’s of marketingPRODUCT

•Wider menu providing variety.•Fresh and better quality products.•Introduce products like salads, pasta dinners, soups, desserts, kidz meal etc

PRICE

•Upscale pricing- little higher than normal subs.•Differential pricing strategy with value pricing.•But create value products by service in terms of quality, ambience, variety, convenience.

PLACE

•Market research on the location preferences, close down poor and predatory franchisees.

•Upscale to stripped down shops to quasi deli restaurants.

PROMOTION

•Health related events, dance, sports events.•Awareness campaign on obesity•More campaign for children, young adults.•More promotions to increase the sales during evening and dinner time.

Dealing with the Competition

• Use differential advantage of satisfying customers needs for convenient, value oriented products that taste good.

• The customers may change the mix of which they consume fast food, so provide them with the variety.

• Decrease operational costs

• Loyalty programs for heavy users to make them stay with Subway.

• Promotion campaigns like FRESHBUZZ, FRESHFIT, SUBWAYKIDS.

• Events like sponsoring sports events, training youths for it, weight loss programs, hold brand ambassadors like Michel Phelps, Shilpa Shetty ( in Indian Context) etc.