Looking to grow both from their existing franchisees and new ones, and aiming to have 125 Subway locations in India by the end of 2007, the submarine chain is on a fast-track expansion mode, throwing up immense opportunities for the prospective franchisees.

Meenakshi Razdan

The increased penchant among more and more Indians to eat out has provided a shot in the arm for the quick-service restaurant (QSR) segment. It comes as no surprise then that many players, both domestic as well as international, want to grab a slice of the rapidly growing QSR pie.
Taking a cue, Subway, the American fast food giant and leader in the QSR industry, has already set up a wholly-owned subsidiary, Subway Systems India Pvt. Ltd. in the country. With more than 26,000 locations in 85 countries, the Subway submarine sandwich network is the world’s largest franchise system in this category.

History & Profile

Subway first set foot in India with an outlet in Saket, New Delhi, in December 2001. From there on it spread wings to both big and small cities like Mumbai, Pune, Bangalore, Chennai, Hyderabad, Ranchi, Baroda, etc. Better known as a multinational restaurant franchise that mainly sells sandwiches and salads, the brand Subway has carved out a niche for itself in the Indian QSR sector, doing things uniquely. They use the slogan ‘Eat Fresh’ to explain how every sandwich is freshly baked using fresh ingredients, in front of the customer, to their exact specification by a ‘sandwich artist’. Their ‘under 6’ menu – SUB sandwiches with six grams of fat or less – is popular with customers all around the world.
As far as the menu is concerned, Subway has taken a cue from the experiences of the current fast-food players offering Indian fare to survive in India, and will be offering a much-Indianised menu, to start with. It’s a specialized Indian menu to cater to the market here, which includes Paneer Tikka, Aloo Patty and Veg Shammi sandwiches, among others in the vegetarian menu. In their non-vegetarian section are Chicken Tikka, Chicken Seekh, Kali Mirch Sandwiches etc. Their six-inch and foot-long versions of Subs, myriad fillings and sauces defy description. Customers at Subway are also granted the opportunity to create their own sandwiches and can customize them to their exact taste and requirement. At Subway restaurants worldwide, the core menu stays relatively the same, with the exception of some variations. Adaptations are to be seen outside the menu as well. The Subway stores in India have a separate vegetarian and non-vegetarian counter preparation area, a feature unique to India only.

Franchising Strategy
Interestingly, more than 70% of new franchise systems are sold to existing owners worldwide. Subway co-founder Fred De Luca accredits his company's success to its franchisees. "This franchisee energy is really amazing in what it brings to the organization," he says.
In addition to its strong positioning as a more health-conscious restaurant, much of Subway's rapid growth can be attributed to its somewhat unique business model. Unlike most franchisors, the parent company does not operate any restaurants. Local franchisees operate the stores, and in most markets Subway enters into a contract with a franchisee to be its ‘development agent’ for that market. The development agent is then responsible for developing new locations, evaluating stores on a monthly basis, and assisting franchisees with whatever needs they may have. Subway’s local Indian company, ‘Subway Systems India Private Limited’, has two area development managers who work in collaboration with the development agents and assist them on a national basis.
With plans to grow in areas where already established and setting shop in several smaller cities, Subway is surging ahead in its expansion plans for India. Looking to set up in non-traditional locations, they recently opened a store in a petrol pump in the Bandra-Kurla complex in Mumbai, and an eatery each at the airport and at a hospital in Delhi.

Support

The success of a franchise business depends on the strength of the brand and its support system and the benefit of marketing, advertising and operational support. Before starting the venture, Subway provides its franchisees with factory equipment, helps with the site selection and the restaurant design. It provides the franchisee with floor plans for specific location, and an intensive two-week training. After getting started the franchisee is provided with an operations manual and video, field support and continuing education through periodic newsletters, e-mails, DVDs and training classes. In addition to this, a franchisee coordinator who is also the main contact person, and field support by a representative who helps kickstart the business and provides ongoing operational evaluations, are also at the franchisee’s service.
With Subway buttressing their franchising system with all the support that it provides to its franchisees, it’s little surprise that this prolific chain is 26524 restaurants strong (as on August 20, 2006), and still setting higher benchmarks in the world of franchising. Surely, making a sandwich is the easy part, the hard part is being named the number-one franchise in Entrepreneur's Franchise 500 for the fourteenth time. Did we say making sandwiches was easy? It sounds more like making history.