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2019

ANALYSIS OF SERVICE
DELIVERY - SUBWAY

SUMMATIVE ASSIGNMENT
ANONYMOUS CODE - Z0977942
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EXECUTIVE SUMMARY

Subway is a leading market player of the quick service restaurant industry. It has been in
the business for over 50 years and has a service encounter process which is interactive
and efficient. Along with its healthy food mantra, it uses a combination of factors to attract
its customers. Using the Service Encounter Triad, the satisfaction of every aspect of the
company is evaluated. Customer journey and emotional mapping is the next tool which
illustrates the emotions the consumers go through while experiencing this service. By
analysing Subway’s evolving servicescape through atmospherics and applauding its co-
production activities, recommendations for the future success of the company have been
enlisted.

TABLE OF CONTENTS

Index No. Topic Page No.

1 Introduction 3
2 Service Encounter Triad 7
3 Customer Journey Mapping 8
4 Servicescape 11
5 Co-Production 14
6 Recommendations 15
7 Conclusion 16
8 References 17
9 Appendix 20

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1. INTRODUCTION

This report has been undertaken to understand and analyse the service encounter of a
global fast-food company namely Subway. The report begins with a brief about the
company following which it discusses its competitive advantage and, providing a
perceptual map and highlights its challenges. Next, the report uses the ‘Service Encounter
Triad’ framework and tools of customer journey and emotional mapping to understand
customer satisfaction and organisational integration. It further discusses the
servicescape design and how Subway incorporates co-production (discussing human
factors), thereby touching upon all aspects of a service delivery. Finally, the report gives
recommendations to improve the functionality of this organization.

1.1 Company Background

Subway was started in 1965 as a small sandwich shop in Connecticut. Since then, it has
developed into a company and begun franchising all around the world (appendix 1)
(Subway, 2019). It is established in several locations from stores and malls to railway
stations and even within universities, making the brand omnipresent. It is one of the
leading fast-food chains and distinguishes itself in the quick-service restaurants (QSR)
industry with its quick yet healthy on-the-go food options. Its most prominent food item
is its sandwich or ‘sub’. Its target market consists of young adults (16 years) to middle
aged people (40 years) (Subway, 2019). The company has recently adopted a ‘fresh
feature’ of re-designing its stores.

1.2 Competitive Advantage

It is established that Subway’s biggest rival within the fast-food is McDonalds among
other global franchises such as Starbucks, Burger King, KFC and Dominos. The aspect
which distinguishes Subway the most is the fact that it markets itself as a healthy food
chain. This draws customers towards it as it is competing in an environment filled with
burgers and pizzas and with the rise in awareness for healthy-eating, this organisation
sustains itself comfortably. The franchise is spread over 44,000 locations whereas
McDonalds has covered about 35,000. McDonalds is struggling to up its sales while

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Subway on the other hand has projected a bold expansion of reaching 100,000
restaurants by 2030(BusinessInsider, 2019).

Unfortunately, Subway does not gross as many sales as McDonalds. As per its price and
quality, it is mapped against its competitors as shown below, indicating that it has high
quality and relatively low price.

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Overall, the business has a strong market position. The company also thrives on its ease
of access and high customization of its products which leads customer to favour this
brand. Its menu comprises an extensive variety of products along with raising awareness
about nutrition (Subway, 2019).

Subway prides itself with high brand loyalty and issues loyalty cards to its customers,
prompting repeat purchasing. Finally, the company is very environment-friendly as its
packaging is paper-based and has undertaken several projects to reduce waste (Subway,
2019).

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1.3 Challenges
Subway has several stores however, does not have an online presence. As per a record in
2017, Britain showed a takeaway consumption of 100 million meals per week (Gallagher,
2019). Delivery sales have been on the rise and Subway is missing reaching out to a wide
consumer base. Another pitfall for Subway is goods are highly perishable. They display
fresh stock and need to renew it every day, which may result in losses. Although Subway
has a good brand value, it cannot compete with that of McDonalds’, as shown below
(Bhasin,2019).

Subway has rigid franchising policies and has been seen to exploit its franchisees. They
are required to pay 8% of the store’s gross sales, some are not even aware of this and
tend to suffer the consequences (Behar, 1998).
The QSR industry is highly competitive and has reached its saturation level with the
number of players in the market which causes price wars. Currency fluctuations also
impact the company, given its global presence. Since its operations are widespread it is
difficult to attain homogeneity of products and services, which makes consumers
question the brand image.

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2. SERVICE ENCOUNTER TRIAD

The service encounter triad is a framework which can be used to deliver customer
satisfaction. Both the customer and personnel are perceived to have control over the
service organization (Cook et al., 2002). This three-way model imbibes aspects of
customer behaviour, sociology and psychology to orchestrate a worthwhile customer
experience, given that the three dimensions work in cohesion. Operational efficiency can
be achieved if the organisation satisfies the consumers and personnel. Customer and job
satisfaction can be obtained if the personnel follow the instructions laid out by the
organisation. Lastly, service satisfaction can be attained if the customers cooperate with
the personnel, abiding by the structure determined by the service organization. This final
feature is prominent since it indicates that customers have control over the service
procedure which positively impacts their experience (Bateson, 1985).

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Achieving this customer satisfaction has a direct impact on brand image, benefitting the
company. Since the sandwiches are highly customizable, consumers enjoy the control
they execute over formation of the final product. Additionally, staff the also experience
job satisfaction since they create the subs in-front-of the customers. Hence, the complete
purchasing process comprising product and non-product related merits is mutually
beneficial to all parties involved. Subway delivers an efficient service encounter by
balancing all three aspects perfectly.

3. CUSTOMER JOURNEY MAPPING

Developing a customer journey map helps create a visual representation of a customers’

step-by-step experience of the service. It encapsulates how the consumer interacts with
the service analysing the different touch points and checks whether it is in a logical order
or not. It is insightful since it steps into customer’s shoes, understanding their perspective
and benefits them in the long run (Salesforce, 2019). A customer journey map for Subway
has been formulated below.

Elaborating upon the figure, the consumers journey of purchasing a sub is as follows.
They first enter the shop and wait in the queue. Once they move closer to the counter they
can see the menu displayed on a big board behind them. It shows a list of meals, ‘regular
subs’ and can view the bread, filling and add-on (customizable) options. Next, they
encounter the server and place an order as per their preferences. They can choose if they
want it toasted or not and finally choose which sauces they would like. Once their
sandwich is ready, they move over to the till to buy their product, completing the
experience. A more detailed diagram is provided below.

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3.1 Emotional Mapping

Emotions dictate people’s behaviours, influencing decision-making processes more than
one would think. It induces purchases if service encounters are positive, creating
powerful bonds and vice versa. Not many businesses take into consideration how they
make their customers feel (Johnston et al., 2012:166). Hence, emotional mapping is a
simple but useful addendum to customer journey mapping, as shown below.

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Customers’ reactions to the same service encounter can be bifurcate. The positive
emotions experienced venturing through Subway may be as follows. Once customers
arrive, they take in the smell of fresh bread which invokes happiness. While their order
is being processed, they feel the pleasure of their meal being prepared in front of them
with fresh ingredients and observe the cleanliness of the procedure by noticing their
servers wearing gloves (and changing them for every new order). ‘People cues’ also make
a difference therefore, by interacting with the server, exchanging smiles, observing the
uniforms (in this case, aprons) they wear, all fill the consumer with confidence. The
consumer is most content with the product they have indirectly created and once they’ve
reached the end of the process and need to pay, they appreciate the efficiency and
uniqueness of it.

Alternatively, people can go through negative emotions during the same process. Waiting
in line for a long time would be quite frustrating and might even prevent potential
consumers from entering. During preparation of the order, if the server inserts the
incorrect ingredients (for example adds the wrong sauce), this step would be difficult to
undo and would anger customers. Finally, the wait before reaching the counter combined
with the time of the order being prepared (from cutting of bread, to compiling ingredients
to waiting for it to be toasted) followed by the delay one may experience while waiting to
pay, all might be too cumbersome for the buyer. They might find it monotonous and tiring.
Using this tool, Subway can find ways to improve their service by analysing it from start
to finish.

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4. SERVICESCAPE

Servicescape encompasses the physical attributes of a service organisation’s

environment (Linn et al., 2010). It includes ‘atmospherics’ comprising tangible and non-
tangible elements such as smell, colour, layout of the shop and music which
subconsciously influences the customers’ experience (Wansink, 2004). Bitner (1992)
suggests that an effective servicescape may affect emotional, psychological and cognitive
aspects of consumers, nudging them towards further purchases. There is sufficient
evidence from previous literature stressing the significance of a well-designed
servicescape (Kotler, 1973; Reimer et al., 2005). Hence, to engineer a the holistic
servicescape of Subway, its ‘atmospherics’ will be analysed and the customers journey
will be assessed using an emotional map.

4.1 Atmospherics

Kotler (1973) described ‘atmospherics’ as the “intentional control and manipulation of

environmental cues”. They are used to impact the perception of customers and stimulate
their emotional responses by influencing their visual, aural, olfactory and tactile senses
(Yalch et al., 1990). It has been indicated that atmospherics becomes more pertinent if
there is intensive competition, especially if the margins of difference in prices are
minimal (Kotler, 1973). The successful usage of atmospheric variables lowers the
perceived differences which service encounters are commonly associated with, by
enhancing the perception of standardization of services. These variables also diminish
ambiguity within the service encounter process, facilitating the flow and increasing the
efficiency of the service (Hoffman et al., 2002).
Hence examining the atmospherics of Subway is relevant to understand how it
distinguishes itself from the crowd.

4.1.1 Colour
Subway uses green and yellow colours for its logo, packaging and within its store (colour
of menu and walls). Green symbolizes nature and corresponds with the ethos of healthy
eating. Yellow signifies optimism, warmth and freshness which creates a good vibe with

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the customers and corresponds with the usage of fresh ingredients. This colour
psychology attracts consumers subconsciously (O’Connor, 2011).

4.1.2 Scent
The smell of fresh bread and other ingredients that lingers within and outside the store,
entices customers to enter and amplifies their hunger as well.

4.1.3 Taste
Subway thrives on the quality and idiosyncrasy of its sandwiches. Since the customers
dictate step-by-step how their subs are made, they are more likely to be content with the
outcome since it is a culmination of their choices.

4.1.4 Music
Their music (if any) is not glaringly obvious and camouflages with the background as it
is mellow. Music is a common attribute used to optimize the experience of buyers (Turley
and Milliman, 2000) and Subway should take further advantage of this feature. It could
be used to make the queues less cumbersome.

4.1.5 Store Layout

The original Subway stores are quite compact consisting of their main counter, signature
brick-walls and a few small seating spaces. The company however has recently decided
to majorly revamp the design and layout of its restaurants which is further discussed.

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4.2 New Design for Restaurants

After 20 years, Subway has decided to refurbish its restaurants making it more inviting
for its customers. The newer establishments are more spacious, have sleek furniture, use
brighter lighting and vibrant colour schemes. They are less cluttered and maintain the
simplistic vibe of the restaurants. The remodelling was initiated in 85 locations across
the USA within the last two years. Some of its upgraded features include a fresh display
of its vegetable produce, instillation of ordering kiosks (enabling lesser queues) and
newer items on the menu (CNBC, 2019). Incorporating a distinctive architectural décor
might boost admiration of the diners towards the eatery (Wakefield and Blodgett, 1996).
Their view is substantiated as Subway’s ‘Fresh Feature’ movement has had optimistic
outcomes as gross profits have grown by 11% and customer traffic has gone up by 8%
within the newer restaurants (QSRmagazine, 2019). The diagrams below show the
evolution of the logo as well as compares the old stores to the newer ones.

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5. CO-PRODUCTION

The process of consumers taking part or involving themselves in services is known as co-
production (Johnston et al., 2012). Through co-production, consumers avail
psychological benefits as they exercise control which makes them self-confident. It also
helps minimize labour costs (Bendapudi and Leone, 2003). The overall customer
experience is amplified when consumers participate actively since it positively impacts

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their satisfaction levels (Bateson, 1985). Three distinguished levels (Hubbert, 1995) of
customer involvement in a service encounter have been identified. The low level of
engagement only requires the customer to be present. The moderate level necessitates
the customers’ inputs whereas the high level holds the customer responsible for co-
producing the good.

Within Subway, a moderate level of co-production is seen. Consumers dictate what goes
into making their product from start to finish. They essentially create what they consume,
the servers just need to follow their instructions which reduces the need for multiple
waiters which most restaurants require. They enjoy the highest degree of customization
which contributes to their satisfaction. When customers constantly engage in the service
delivery, it influences the perception of time taken to create the product. Hence, this is
advantageous for both the consumers and the business. Another boon for the
organisation is that if the customers are dissatisfied with their sandwich, they tend to
take the blame because they customized the product thereby protecting the reputation
of the business (Binter et al., 1997; Folkes, 1988). Furthermore, the efficiency of the
service encounter is directly aided by the customer intel the company gains through the
process of co-production (Mills et al., 1983).

6. RECCOMENDATIONS

Subway can improve itself by incorporating the following recommendations. To solve

its biggest issue of not having an online presence, the company can begin by tying up its
business with home delivery services such as Deliveroo or JustEat. Although this
eliminates the some of the in-store benefits, it will cater to a wider consumer base. An
aspect that Subway can embody from its competitors is providing a drive-through to
increase ease of sales. The business can diversify its menu, introducing vegan items to
keep up with today’s trends. It is well-known for its classic ‘sandwiches’ but can vary its
products by adding new ones. To identify customer needs, it can utilize the means of
data mining to collect useful information and gain potential buyers.

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Subway has already begun solving its ‘old-fashioned’ store problem by re-modelling its
stores and has integrated high-tech devices such as self-order kiosks. It should however,
be aware of the risks and malfunctions of such technologies as well as within its
potential drive-through services. It should experiment these innovations in a few stores
to examine the hazards. To make queues seem less burdensome, Subway should take
advantage of music and light atmospherics, to distract its customers. Finally, addressing
its franchisee issue, Subway must improve its relations by establishing better
partnerships, developing joint ventures and establishing clear guidelines.

7. CONCLUSION

The factors contributing to Subway’s prosperity over the years has been discussed in the
report in length. Its service delivery has been assessed with the help of Service Encounter
Triad Framework and customer journey and emotional mapping tools. The end-to-end
process of purchasing a Subway is observed and all aspects such as its environment and
human factors which go into co-production have been studied. Based on these elements,
recommendations which are imperative for the growth of Subway are suggested. Overall,
this report thoroughly scrutinizes fundamental aspects of Subway’s service procedure.

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8. REFERENCES

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 Gallagher, P. (2019) Fast food nation: UK consumes more than 100 million
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[Online]. 2019. Salesforce UK Blog. Available at:

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https://www.salesforce.com/uk/blog/2016/03/customer-journey-mapping-
explained.html (Accessed: 4 May 2019).
 Subway (2019) 2019. Available at: https://www.subway.com/en-
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doi:10.1108/eum0000000002577 (Accessed: 3 May 2019).

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9. APPENDIX 1
Countries Subway functions within

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