Subway sandwich franchise defies recession
Published: 25 February, 2010
The global recession has barely dented the pace of growth at the sandwich franchise business Subway, according to head of real estate John Devine.
“The economy today presents a great many challenges but for Subway it’s been one of our best-ever years,” Devine said in his keynote address at Mapic at the end of 2009. “It’s been easy to go out there and seize upon deals. And the deals that are out there are tremendous.”
“Opening more and more stores creates an image of success,” Devine said. And franchisees are still keen to buy into that success. “We have more than 2,000 franchisees looking for new sites at any one time,” he explained.
Subway has more than 32,000 outlets worldwide and new stores are still opening at a rate of 35 to 40 per week. Within the UK and Irish markets, growth is continuing at a rate of almost five stores per week, and the business is on course to achieve its target of 2,010 stores by the end of 2010, a decade after it crossed the Atlantic.
This would mean the UK and Irish estate would have grown by 50 per cent in just over three years, despite the downturn. Neil Black, development agent for the Subway chain, said: “The chain has expanded from just 25 stores in 2000. The company is recognised for its rapid growth and robust development system, which has been instrumental in the company’s success to date.”
Many landlords are wary of taking franchsees as tenants but Subway overcomes this hurdle by taking headleases on all its stores, and subletting on to the franchisee. Not only does this allow it to exploit its massive covenant strength to negotiate better terms, but it also allows it to replace underperforming operators without losing a valuable site.
Subway trades from high street sites, retail parks, travel hubs and unusual locations like student halls. But shopping centres are seen as an important part of the mix, and it operates successfully from both food court and in-line store locations.
All that is required is A1 usage, although ventilation is not required as cooking is not carried out on the premises. Other prerequisites are a high volume of footfall and good visibility. Units trade from as little as 250 sq ft to as much as 3,000 sq ft although every one carries the full Subway range, demonstrating the flexibility of the format.
Centres already hosting a Subway store include The Trafford Centre in Manchester; Castlecourt in Belfast; Merry Hill in Dudley and the Whitgift Centre in Croydon.
Land Securities has stores in the Stratford shopping centre in East London; the St Johns shopping centre in Liverpool and the White Rose centre in Leeds.
Regional director Gerald Jennings said: “We have been delighted with the success of the Subway store at White Rose in Leeds. Its opening has enhanced our catering offer within the food court and the Subway store quickly established a strong and profitable presence at the centre."
