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BUSINESS PLAN
SUBWAY FRANCHISE
8/5/2016
PREPARED BY: KATIE LEE ROSSER
BUSINESS CONSULTANT
NORTHERN ARIZONA UNIVERSITY
SCHOOL OF HOTEL AND RESTAURANT MANAGEMENT
FOR:
SENIOR SEMINAR, HA 490
PROFESSOR, ALLEN Z. REICH, PH.D.
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2. EXECUTIVE SUMMARY
Subway has more than 28,000 units worldwide while its rapid growth has
attracted many investments and brought it many competitors such as McDonalds. Recent
initiatives attract customers beyond Subway traditionally health conscious consumers should
increase the company‘s share of the fast food market. The Subway I am reporting on will be
within the 28,000. Subway’s marketing program addresses health, fresh, custom-made
sandwiches expectations of consumers through a number of approaches. The Subway concept of
serving fresh made sandwiches on fresh baked bread, made right in front of customers, the way
they like it has proven to be a winning marketing strategy. Their customers have really responded
to the high level of service that Subway restaurants are famous for. They have also become
popular with health conscious customers who are searching for higher quality fast food options.
Being part of a highly competitive and dynamic market, Subway faces a strategic marketing
challenge as to what specific marketing mix to use in order to sustain a differential advantage
while maintaining sales growth and above all profitability. Subway effectively competes with
burger chains and others that are in the fast casual segment of the market. Including healthier
meals included in their menu and giving much attention to obesity and diabetes have supported
consumer‘s choice for Subway. However, Subway has not been satisfied thus far, instead, more
intensified efforts have been made to improve business during the dinner hour. Additional menu
options have also been added to answer competitor‘s trends. The report presents a brief
introduction of the Subway sandwich chain and focuses mainly on its marketing strategies and
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objectives. It presents an analysis of its internal and external environments along with a detailed
SWOT analysis for the company. This includes an insight into the target market of the company
along with the promotion and pricing strategies followed by the company so far in order to create
value for its customers. The report ends with a concise statement of marketing objectives for
Subway that it needs to follow in order to achieve its goals.
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Contents
2. EXECUTIVE SUMMARY………………………………………………………………………………………..………..…..2
3. INTERNAL ANALYSIS……………………………………………………………………………………….……..………..10
3.1 MARKETING……………………………………………………………………………………………………...………...10
3.1.1 PRODUCT & SERVICES…………………………………………………………………………..……..……….10
3.1.2 PRICE……………………………………………………………………………………………………………………...11
3.1.3 PLACE/LOCATION…………………………………………………………………………………………………..12
3.1.4 PROMOTION/SALES/SOCIAL……………………………………………………………………..……..……12
3.2 HUMAN RESOURCES……………………………………………………………………………………..……..……..12
3.2.1 VALUES, MORALE, & MOTIVATION………………………………………………………..………..……12
3.2.2 COMPENSATION, BENEFITS AND INCENTIVES………………………………………………..…...12
3.2.3 PREPARING JOB POLICIES……………………………………………………………………….…………....13
3.2.4 TRAINING………………………………………………………………………………………………………...…….13
3.3 FINANCE……………………………………………………………………………………………………………………....13
3.4 OPERATIONS…………………………………………………………………………………………………………………14
3.5 ADMINISTRATIVE MANAGEMENT…………………………………………………………....…………..……14
4.0 ENVIRONMENTAL ANALYSIS:……………………………………………………………………………..………….15
4.1.1 HUMAN RESOURCES/PERSONNEL: Each Subway is independently owned and operated so
their human resources and personnel come individually for each Subway. Our managers double as
human resource and personnel to the employees. In the local area of Page, Arizona many employees
are hired on the spot because of the lack of work force. Low skilled employees such as high school
students and older retirees are what are try to achieve. Subway has a very high employee turnover rate
therefore we are hiring consistently throughout the year. We do not provide any type of compensation
and workers cannot work full time hours because of the health care limitations. This limits our potential
employees.……………………………………………………………………………………………………………………………15
4.1.2 CUSTOMERS: Subway needs to know who their customers are. Subway target market is young
adults between the ages of sixteen to forty. Although people of all ages and background enjoy the
delicious and healthy sandwiches.……………………………………………………………………………..…………....15
4.1.2.1 GEOGRAPHICS: Our actual and potential customers live within a 10-mile drive from our
location. Other customers consist of the ones who come to enjoy Lake Powell or tourists looking for a
quick and healthy meal.…………………………………………………………………………………………………..……..15
4.1.2.2 DEMOGRAPHICS: Related to the age group, gender, life cycle, and income according to
Subway a majority of is customers are concentrated on the age group in between sixteen and forty. We
can observe the change in the products which are consumed by different age groups. Its strategy
involves the promotion of the item which meets income lifestyles.……………………………………………....15
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4.1.2.3 PSYCHOGRAPHICS: The customers are found to be more health conscious. Therefore, by
providing healthy and fresh food, Subway segmented the customer based on the trends or
psychological. By offering the reasonable priced food with fast services Subway reaches many targeted
markets.…………………………………………………………………………………………………………………………..…..16
4.1.2.4 BUYER BEHAVIOR: By providing catering services to our customers, Subway is segmenting
the market based on behavioral of its customers. Subway knew that with hectic and busy lifestyle,
catering of fresh, healthy and fast food is required in everyday life. Subway also makes special
promotions during occasions such as holidays. This shows that they segment the customer based on the
occasion under behavioral of its customers.………………………………………………………...………..………….16
4.1.3 COMPETITORS: Subway customers have high expectations with low loyalty. Its competitors
that offer the same services include KFC, McDonald’s, Burger King, Popeye’s, and others. Our largest
competitor in our area is McDonalds. Product/service is not the same. Their product is not as healthy as
ours is but the quick and quality of service is very competitive. Price is lower than ours. Place/location
is not as great as ours because we are located within a Walmart that attracts a lot of potential customers.
McDonalds is across the street. Promotions such as breakfast all day and the dollar menu are better
than some of ours and more attractive. Human Resources are about the same as what we do. Starting
pay and the typical employee they look for is the same. They do not offer compensation either.……….16
4.1.4 SUPPLIERS: Suppliers include Roma Food Distribution that comes directly out of Phoenix and
Flagstaff Arizona.……………………………………………………………………………………………….…………..…….16
4.2 REMOTE ENVIRONMENT……………………………………………………………………………………………..16
4.2.1 POLITICS: Political factors which are affecting Subway marketing are health and safety
guidelines of the government. Labeling of genetically modified foods and animal rights campaigns
specially organize by some environment friendly groups.……………………………………………….……..……17
4.2.2 ECONOMY: Low set up cost is a good advantage. Franchising facilities setup, support from
major suppliers, growing market for healthy foods, and perceived value for money and increasing
disposable income are main economic factors.…………………………………………………………………………..17
4.2.3 SOCIETAL TRENDS: Busy life style of the new generation is a very good advantage for any
kind of fast food industry. Awareness of healthy eating and obesity, increasing certain health food diets
and social activities regarding fast and healthy foods are the main social factors.……………………………17
4.2.4 TECHNOLOGY: Investments in technological innovations such as chip readers and better
privacy for our customers. Computer orderings through Apps and online are also technological factors.
…………………………………………………………………………………………………………………………………………… 17
5.0 SWOT ANALYSIS…………………………………………………………………………………………………………..….17
5.1 STRENGTHS:…………………………………………………………………………………………………………...……17
5.2 WEAKNESSES…………………………………………………………………………………………………………...….18
5.3 OPPORTUNITIES……………………………………………………………………………………………………………19
5.4 THREATS……………………………………………………………………………………………………………………….20
6.0 KEY FACTOR ANALYSIS…………………………………………………………………………………………….…….21
6.1 STRENGTHS:…………………………………………………………………………………………………………...……21
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6.1.1 PRODUCT: Customers always like to choose and the more choices they can make about their
purchase the more satisfied they are with it.……………………………………………………………………..……21
6.1.2 OPERATIONS: Currently the company operates more than McDonald’s or any other fast food
chain operator.……………………………………………………………………………………………………………..……21
6.1.3 PROMOTION: Subway employs superior marketing techniques and promotional strategies to
attract and grow their customer base.…………………………………………………………………………………....21
6.1.4 PRODUCT: Subway offers a range of low calorie, fresh and nutritious food.……..…….....…....21
6.1.5 PROMOTION: The most successful Subway’s promotional offer was to offer footlongs for
only $5, which became a new pricing standard of a sub.…………………………………………..………..……21
6.1.6 PROMOTION: Subway strengths meets current trend of eating healthier food.………………....21
6.1.7 TRAINING: All Subways are owned by a franchise so the training is conducted the same
throughout the business.…………………………………………………………………………………..…..…………....21
6.1.8 VALUES: Subway has received certificates from both organizations that it serves health meal
options, which is a great reward and differentiates the business from other fast food restaurants.…..21
6.1.9 COMPENSATION: Low startup costs have given Subway a high growth rate.…………………..21
6.2 WEAKNESSES:…………………………………………………………………………………………………………..….21
6.2.1 OPERATIONS: Franchisor can seize the store from the franchisee if they are not fit to run the
business perfect.…………………………………………………………………………………………....………..………..22
6.2.2 PLACE: Lack the interior design and the quality that would welcome everyone to stay and feel
more comfortable than in other competitor’s restaurants.…………………………………………………..…….22
6.2.3 FINANCE: Because of high employee turnover increases in training costs add to overall costs
of Subway.…………………………………………………………………………………………………………….…..……..22
6.2.4 PRODUCT: There is inconsistency with the product amount and taste from store to store......22
6.2.5 PROMOTION: Subway no longer does the $5 footlong which attracted so many customers. .22
6.2.6 MORALE: Subway Sandwich Artist job is a low paid and low skilled job so the morale is not
very high.……………………………………………………………………………………………………………………….…22
6.2.7 PERFORMANCE APPRAISALS: Too much control over its franchisees through contracts that
are more favorable to the franchisor.……………………………………………………………..…..………..……….22
6.2.8 JOB POLICIES: The job policies are not consistent from store to store…………………….……….22
6.2.9 DUTIES: The duties are not consistent from store to store……………………………………....………22
6.2.10 TASKS: The tasks are not consistent from store to store…………………………....…......…......….22
6.3 OPPORTUNITIES……………………………………………………………………………………………………………22
6.3.1 CUSTOMER ANALYSIS: Subway has increasing developed a plan to further introduce low
fat, low salt and more nutritious subs.……………………………………………………………..…………..……….22
6.3.2 ECONOMY: Changing customer habits represents new needs that must be met. This will
improve the economy well-being.………………………………………………………………………………………...22
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6.3.3 COMPETITOR ANALYSIS: Subway has only one variation of restaurants, different to its
competitor McDonald’s, which tries to satisfy and reach previously untapped customer groups......23
6.3.4 HUMAN RESOURCES: Human resources will try to improve the employee turnover rate by
increasing opportunities that obtain and keep employees in the long run.………………..…....…......…..23
6.4 THREATS……………………………………………………………………………………………………………………….23
6.4.1 COMPETITOR ANALYSIS: The fast food market in the developed countries is already
overcrowded by so many fast food restaurant chains.………………………………………………………….…..23
6.4.2 ECONOMY: Subway receives much of its income from foreign operations. Income has to be
converted into the American dollar and may affect the company’s profits.………………………………....23
6.4.3 CUSTOMER ANALYSIS: Only part of Subway’s menu offers healthier choices of meals,
while the rest is not as updated. Customers who care about their food and well-being may opt out for
something else rather than Subway.………………………………………………………………………………..…….23
7. OBJECTIVES…………………………………………………………………………………………………………..………....24
7.1 PRODUCT: Offer a wider variety of cheeses other than Provolone, Swiss, Pepper jack, & American
by December 15, 2016.……………………………………………………………………………………………………..……24
7.2 PRODUCT: Offer a wider range of organic foods by January 20, 2017.……………………....…......….24
7.3 PRICE: Generate additional add-ons to the Subway Sandwiches that can increase the price value by
January 20, 2017.…………………………………………………………………………………………………………………..24
