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Subway Company’s Strategic Analysis and Business Policies Research Paper

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Updated: Jun 2nd, 2021

Introduction

Subway was founded in 1965 by Peter Buck as a small fast food business (“History,” n.d.). The first shop was opened in Bridgeport, CT, but the brand commenced to expand its presence due to the increasing popularity of fresh, inexpensive, made-to-order submarine sandwiches in which Subway specialized (“History,” n.d.). 16 Subway locations were opened by 1974 in the state and, the same year, Buck began franchising in order to foster further company growth (“History,” n.d.).

Nowadays, this sandwich fast-food chain operates globally and has more than 40,000 shops across all continents (“History,” n.d.). As Subway intends to pursue further growth, it is essential to evaluate the enterprise’s main strengths and weaknesses, as well as threats and opportunities associated with the present-day, rapidly changing situation in the market. This report will outline some major environmental analysis points that would support the design of a strategic plan for the company.

Industry Analysis

As for 2019, the fast-food industry and the food and beverage industry, in general, were influenced by significant shifts in consumer preferences. According to Stuckey (2019), consumers tend to purchase healthier, cleaner, sugar-free, and cruelty-free food options more than before. Moreover, they grow more environmentally conscious and not only demand better access to ecological products but also want to see businesses eliminating harmful and unethical practices, for instance, the use of single-serve plastics (Stuckey, 2019). These consumer trends are currently on the rise, and it is valid to expect that they will dominate the industry in the following years.

Meanwhile, the fast-food industry continues to grow globally as consumers still value affordable, tasty, and rapidly served food. According to recent estimates, during 2015-2020, its compound annual growth rate is equated to about 4.5%, resulting in a significant revenue volume increase (“Global fast food market,” n.d.). Nevertheless, the fast-food industry has been losing a substantial portion of its market share to fast-casual restraints, specialized in healthier and higher-quality yet slightly more expensive and slowly served options (“Fast food industry,” 2018). This industry trend is closely interrelated with the abovementioned consumer trends and requires a timely, effective response on part of fast-food restaurants.

SWOTT Analysis

Strengths

The major strengths of Subway derive from its current value propositions. The company has adopted a nutritional responsibility policy that highlights its commitment to food safety and quality, food innovation, and responsible marketing (“Promote wellbeing,” n.d.). Subway is also dedicated to socially responsible practices, including sustainable packaging, community reinvestment, and humanitarian relief (“Build stronger communities,” n.d.; “Preserve our planet,” n.d.).

It means that the business has a good foundation needed to satisfy the interests of contemporary consumers (providing it will deliver on the promise). Other strengths are Subway’s greater number of worldwide locations compared to its major rivals, including McDonalds and Starbucks. The number has reached 43,912 in 2017 in contrast to McDonald’s 37,241 and Starbucks’s 27,339 (Shedd, 2018). These data indicate that Subway enjoys good traffic and is widely accessible.

Weaknesses

Regardless of the superior number of stores, Subway lugs behind its competitors in terms of brand value. Compared to McDonalds and Starbucks whose worth in 2018 was USD 126,044 million and USD 44,503 million respectively, the financial worth of Subway was merely USD 18,766 million (“Brand value,” 2019). Although this sum is relatively good since the brand takes the third position in the list, there is still room for improvement.

Among other weaknesses are internal conflicts and the lack of service innovativeness. The public has grown aware of major disagreements between Subway’s corporate headquarters and franchisees that currently demand changes in the company’s leadership (Taylor, 2018a). As franchises lose profits and fail to deliver on quality (largely due to executive’s decisions and lack of support), many locations commence closing down, putting the brand image at risk.

Opportunities

Based on identified trends, it is valid to say that the focus on health consciousness and diversification will be Subway’s main opportunities in the following years. Besides that, the business may focus on the expansion of its services. For example, it is observed that a growing number of consumers purchase food online and request delivery (Littman, 2019). Thus, by digitalizing consumer experiences and offering a delivery option, Subway will be able to add extra consumer values.

Threats

The competition in the fast-food industry is fierce and it becomes increasingly hard for businesses to expand their customer base. Moreover, the number of restaurants specializing in healthy fast food is continuously growing, which can make it difficult for Subway to stand out in terms of products and services. Recent accusations regarding poor food quality and the use of spoilt and artificial ingredients in Subway stores harm the company as well (Taylor, 2018b). Due to this, Subway’s reputation is under threat and, since the company claims to make its sandwiches only out of fresh ingredients, customers’ trust may decline.

Trends

Besides previously discussed consumer trends (increasing environmental and health consciousness), the fast-food industry is influenced by technology-driven trends. Interest in robotics and automation is rapidly growing and it is expected that various advanced and smart technologies will soon become integrated into both production, service, and delivery of foods (Stuckey, 2018). Moreover, demand for certain unconventional foods and components is growing as well. For instance, hemp has recently received the status of superfood and consumers are now drawn to its potential health benefits (Stuckey, 2018).

Mission and Vision Statement

The company is currently oriented to promoting community well-being and increasing access to high-quality and balanced nutrition. The existing brand values may be utilized to clarify its vision and mission that would come in operation within the next few years. A possible vision statement may be as follows: “Universal access to high-quality, nutritious, responsibly produced, and safe food to drive individual and community development and wellbeing.” As for the mission statement, it may be as follows: “To utilize business to inspire community health and offer the great-tasting, affordable, and ethical products.”

SMART Goals

Based on the findings of the SWOTT analysis, it may be recommended for Subway to focus on the attainment of the following goals in the next 3-5 years:

  • Intensify quality control by developing partnerships with verified suppliers of organic/safe foods and engaging Subway staff in food safety training during 2019-2021.
  • Increase service and brand innovation by incorporating modern automation and IT technologies in stores, designing new image, digitalizing services, and establishing a reliable delivery service by the end of 2022.
  • Improve internal culture through active communication of brand values, mission, and vision to staff and enforcement of ethical standards and professional policies across all franchises by the end of 2020. As part of this goal, Subway can establish a knowledge management system for the mutual sharing of information across headquarters and stores.
  • By 2021, change pricing policy in order to stop compromising food and service quality, as well as employee wellbeing; incorporate and communicate the values of improved quality and environmental consciousness through marketing messages to regain consumer trust and attract new customers.

Perceptual Map

This map demonstrates how Subway may be perceived by consumers after the proposed SMART goals are achieved. The dimensions that were chosen to compose the map are Innovativeness, Environmental Sustainability/Ethical Accountability, Quality/Product Diversity/Health, and Affordability. The results of the conducted analysis suggest that these parameters represent the prevailing consumer interests best.

Perceptual Map

References

. (2019). Web.

. (n.d.). Web.

. (2018). Web.

. (n.d.). Web.

Littman, J. (2019). . Restaurant Dive. Web.

. (n.d.). Web.

. (n.d.). Web.

. (n.d.). Web.

Shedd, K. (2018). . CNBC. Web.

Stuckey, B. (2019). . Forbes. Web.

Taylor, K. (2018a). . Business Insider. Web.

Taylor, K. (2018b). . Business Insider. Web.

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IvyPanda. 2021. "Subway Company's Strategic Analysis and Business Policies." June 2, 2021. https://ivypanda.com/essays/subway-companys-strategic-analysis-and-business-policies/.

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IvyPanda. (2021) 'Subway Company's Strategic Analysis and Business Policies'. 2 June.

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