Subway, a global fast-food chain, is one of the largest sandwich chains in the world. With a rich history that dates back to 1965, Subway has established itself as a household name, known for its delicious sandwiches and healthy options. However, in recent years, the company has faced numerous challenges that have resulted in a search for new leadership and a shift in business strategy. Despite its popularity and success, Subway has struggled to stay afloat and has been searching for a new direction to help it regain its position as a leading fast-food chain. In order to make the franchise more attractive to franchisees, Subway should consider alternative strategies whereby they can sell the company at a higher price while making it easier to work at the grassroots level.
The Current Strategy of Subway
The current strategy of Subway is centered on maximizing profitability by reducing expenses and delegating responsibilities to third-party vendors and franchisees. The company has implemented a lean operation that has resulted in the layoff of over 2000 employees in the United States alone (Ganatra et al., 2021). Revenues have improved due to reduced expenses, but the company has faced a lot of discontent from franchisees. The franchisees have been forced to accept changes, including the costs associated with such alliances. Most of the in-house tasks and costs associated with these changes have been passed on to the franchisees, thus shrinking their bottom line.
Subway’s current strategy has introduced third-party vendors who have delegated most of the in-house tasks, including ordering uniforms and equipment, leasing, and store inspections. This has helped the company reduce its expenses and increase sales, revenue, and profitability, but it has also resulted in much discontent among franchisees. The franchisees feel they are being forced to bear the burden of these changes, which has negatively impacted their bottom line.
The company has similarly made some mistakes, such as introducing a slicer in restaurants without the prior approval of the health department. As a result, most stores have been fined an average of $350 for installing unauthorized equipment. Every franchisee has had to spend an additional $200-350 and submit new plans to the health department for review and inspection (Ganatra et al., 2021). This has created a lot of discontent among franchisees, who now face additional expenses and operational challenges.
The overall goal of Subway’s current approach is to increase profitability by cutting costs and handing over duties to franchisees and third-party partners. Although this method has increased the company’s sales, revenue, and profitability, it has also caused dissatisfaction among the franchisees. It has resulted in the introduction of unlicensed equipment, which has cost the health department money. Subway needs to change its approach and concentrate on enlisting franchisees and enhancing operations at the ground level to boost the company’s worth and make it more appealing for sale. This can be accomplished by supply franchisees with more resources and assistance, soliciting franchisee feedback, providing incentives, enhancing the menu, and making technology investments.
Alternative Strategy for Subway
When choosing a franchise company, the decisive factor is often not the number of royalties, products, or brand awareness but the level of corporate support. A strong team and interaction between structural divisions can be decisive for new investors in choosing your company. An experienced franchisee evaluates the availability of innovations, the effectiveness of tools and work planning, and openness and interest in partners’ success. Franchisees play a vital role in the success of Subway, as they operate individual stores and represent the brand in their communities (Nyadzayo et al., 2018). However, as the company has implemented cost-cutting measures and shifted responsibilities to franchisees, many have become dissatisfied and struggled to run their businesses effectively. Improving franchisee support can help address these challenges and bring franchisees back on board, ultimately strengthening the company’s overall success.
To improve franchisee support, Subway can offer more resources and training programs to help franchisees run their businesses more effectively. This can include marketing support to help drive sales and streamlined ordering processes to make it easier for franchisees to obtain the necessary supplies and equipment. In addition, Subway can provide training programs to help franchisees improve their operations, including best practices for customer service, food preparation, and store management. Another way to improve franchisee support is by offering financial assistance to help franchisees upgrade their stores and equipment. That can include grants, loans, or other forms of financing to help franchisees purchase new equipment, make renovations, or expand their businesses (Ganatra et al., 2021). It not only helps franchisees improve the overall customer experience but moreover helps the company maintain its competitive edge by offering high-quality products and services.
Finally, Subway can improve franchisee support by providing regular communication and support from corporate headquarters. It can include regular meetings, webinars, and other opportunities for franchisees to share their experiences, ask questions, and receive feedback from corporate leaders (Ganatra et al., 2021). An open and transparent communication can help franchisees feel more connected to the company and feel more confident in their ability to run their businesses effectively.
Investing in Technology as a Way to Attract Franchisees
Technology advancements have revolutionized the fast food industry, and Subway can take advantage of this trend by investing in innovative technology solutions. One area where Subway can invest in technology is its ordering process. By introducing an advanced online ordering system, Subway can streamline customers’ ordering process, increasing sales and convenience (Palacios & Jun, 2020). Additionally, the franchisees will benefit from a more efficient and automated ordering process, which will reduce the workload and increase accuracy. Another area where Subway can invest in technology is in its kitchen operations (Ganatra et al., 2021). For example, present smart kitchen equipment can help franchisees manage their inventory and track food waste. This will improve their bottom line and help reduce waste and make more environmentally friendly decisions.
Subway can similarly invest in digital marketing technologies to increase its online presence and reach a wider audience. A robust digital marketing strategy can help Subway attract new customers, engage existing customers, and build loyalty. Moreover, franchisees can benefit from these efforts through increased brand recognition and sales. Additionally, investing in technology can help Subway to improve its supply chain management (Palacios & Jun, 2020). By implementing sophisticated logistics and transportation management systems, Subway can better manage its supply chain, reducing waste and ensuring timely delivery of food and supplies to franchisees.
Sustainability in Franchisee Attraction
Focusing on sustainability is a crucial alternative strategy that Subway can implement to appeal to customers who are increasingly concerned about the impact of their food choices on the environment. By incorporating sustainable practices into its operations, Subway can show that it cares about the environment and appeal to customers who are conscious of the impact of their food choices (Ganatra et al., 2021). Subway can focus on sustainability by using recyclable packaging, reducing waste, sourcing ingredients from local and sustainable suppliers, and using energy-efficient equipment.
In addition, by focusing on sustainability, Subway can differentiate itself from its competitors and build a strong reputation as a reliable and eco-friendly brand. This can also help attract new environmentally conscious customers who want to support brands that share their values. Furthermore, implementing sustainable practices can lower operating costs and improve the franchisees’ bottom line, as they can benefit from reduced waste and energy costs (Ganatra et al., 2021). Focusing on sustainability is a win-win strategy that can help Subway increase its appeal to customers, stand out from its competitors, and lower its operating costs.
Franchise Marketing
For every start-up business, even part of a franchise, a customer acquisition strategy is important, as this will show potential attraction for customers. In this regard, it is important to maintain a competent and effective marketing campaign for Subway. For a franchise to be successful, the marketing activity of the entire network must attract many customers (Sashi & Brynildsen, 2022). If the franchise network can do this all the time, all possible internal conflicts will be stopped. The most successful franchise networks give franchisees the opportunity to express their opinion on the plan of marketing activities (Sashi & Brynildsen, 2022). While the franchisor will make the final decision, it is important to allow everyone to contribute. It will not only allow the franchisee to become part of the entire business but can also greatly help attract customers since the franchisee is in direct contact with them.
Within the franchising system, it is necessary to build communications with the franchisee in such a way that he promptly receives information about the conduct of marketing and promotional activities and is able to carry out these activities in his retail facilities in the same volume and at the same level as the franchisor, and others franchisee. In this regard, the franchisor should develop a procedure for transferring information about marketing and advertising activities to the franchisee. Thus, when selling a business-format franchise, the franchisor and the franchisee sign an agreement that establishes that the franchise user undertakes to carry out the same marketing and advertising campaigns that the franchisor implements. It includes participation in loyalty programs in which the copyright holder participates. Particular attention should be paid to considering franchisee proposals for improving and supplementing marketing activities within the franchise system. Regional features of market development, and significant differences in the methods of competition of local retail chains, form the conditions for adjusting the activities of franchisees in various regions and cities.
Conclusion
In conclusion, Subway has the potential to overcome its current challenges and increase its value by implementing several alternative strategies. By improving franchisee support, investing in technology, and focusing on sustainability, Subway can create a more efficient and appealing brand that appeals to customers and attracts new investors. Particular attention should also be paid to the marketing audit conducted by franchisors as part of the overall program for monitoring the franchisee’s activities and the level of their involvement in marketing. These strategies can help Subway differentiate itself from its competitors, attract environmentally conscious customers, and lower operating costs while increasing profitability. Ultimately, by taking these steps, Subway can position itself for success and create a brand that appeals to customers and investors alike.
References
Ganatra, V., Utama, A. A. G., Puran, P., Pandey, R., Qi, L. M., Kee, D. M., Ling, I. S., Sien, L. H., Tien, T. J., Ramadhan, H. S., Sin, L. G., & Pandey, M. A. (2021). A study of Subway Marketing 4P strategy. Asia Pacific Journal of Management and Education, 4(2), 47–64. Web.
Nyadzayo, M. W., Matanda, M. J., & Rajaguru, R. (2018). The determinants of franchise brand loyalty in B2B markets: An emerging market perspective. Journal of Business Research, 86, 435–445. Web.
Palacios, S., & Jun, M. (2020). An exploration of online shopping convenience dimensions and their associations with customer satisfaction. International Journal of Electronic Marketing and Retailing, 11(1), 24. Web.
Sashi, C. M., & Brynildsen, G. (2022). Franchise network relationships and word of mouth communication in Social Media Networks. Industrial Marketing Management, 102, 153–163. Web.