Subway: Better Positioned To Be Everywhere

Who has the most number of franchise units in the country? If you said McDonald’s you’d be wrong. It’s Subway, with 20,000 U.S. outlets compared to 13,700 for McDonald’s. And according to the WSJ (free), one of the secrets to Subway’s success has been its ability to adapt, to set up shop in non-traditional places – church, hospitals, kosher, schools, convenience stores, WalMarts, Home Depot and more. Here are three points to consider on why Subway is better placed than its competitors to fill every nook and cranny.

• Considerably lower investment ($75,000 in up-front investment vs. McD’s $200,000 in just “non-borrowed personal resources”)
• Organizationally aligned and aggressive to seek out non-traditional locations and adapt. Subway created a division in early 1990s dedicated “just to scout nontraditional locations and help prevent cannibalizing restaurants in fully built-out markets."
• Designed for simplicity. Subway “has an easier time opening in unorthodox spots because it has a simpler kitchen than traditional fast-food restaurants that require frying and grilling equipment.”

McDonald's is still the largest global chain (31,000+). Now Subway (26,401) has to discover the secret to its domestic success and learn to apply it better abroad -- e.g. mini Charsiu sandwiches for Greater China?