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Retail and Franchising

Submitted by:Abhay Thakur(111) Rishab Jain(121) Varun Gupta(125)


Fred DeLuca and Dr. Peter Buck opened the first SUBWAY restaurant in the city of Bridgeport, Connecticut, USA, in the summer of 1965. They later incorporated in the name of Doctors Associates Inc. Today, the SUBWAY system is the largest restaurant chain in the world. Focused on making great sandwiches. Many SUBWAY customers have become franchise owners simply because they believe in the product


A leading sandwich chain, with 37881 restaurants, spread across 98 countries out of which 250 are in India Its USP lies in its association with both health & taste

It serves nutritious subs, salads, wraps among others

It makes your food in front of you and you get to pick what you want

Franchisee Model

The franchisee is responsible for: Initial franchise fee.

Finding locations.
Leasehold improvements and equipment. Hiring employees and operating restaurants. Paying 8% royalty to the company and a fee into the advertising fund.

Franchisee Model

The company provides: Access to formulas and operational systems. Store design and equipment ordering guidance. Training program. Operations manual. Representative on-site during opening.

Periodic evaluations and ongoing support.

Informative publications.

Before franchise opens

Training :-Manager of franchise takes part in companys intensive twoweek program. Restaurant/Store design: Franchise is provided with floor plans for specific location. Site selection: Franchise is assisted in evaluating the location for business. Equipment ordering: Franchise receives guidance on ordering equipment package for timely delivery.

After franchise opens

Operations manual: SUBWAY restaurants in-depth manual covers a full range of topics important to running business.
Field support: Local representative will help in getting started and provide ongoing operational evaluations. Franchisee services: A Coordinator serves as main contact person, who is just a phone call or e-mail away. R&D: SUBWAY franchise executive chef, baking specialists, staff nutritionist, and product development team continually strive to make the excellent food even better. Continuing education: Regular newsletters, e-mails and voice-mails, DVDs and additional learning tools are also available.

Capital requirement

General breakdown: Initial franchise fee: Rs 5,40,000-8,10,000. Leasehold improvements: Rs 6,48,000-77,22,000. Equipment hire-purchase security deposit: Rs 1,62,000-35,10,000.

Capital requirement

Security System: Rs 54000-4,05,000 Outside signs: Rs 64,800-11,34,000 Opening inventories: Rs 1,35,000-5,40,000 Insurance: Rs 21600-2,16,000 Supplies: Rs 27000-189000. Training Expenses: Rs 1,08,000-378000

Legal and accounting: Rs 21600-432000

Capital requirement

Opening advertisement: Rs 54000-324000 Misc expenses(Business licenses, utility deposits, small equip. &surplus capital): Rs 86,400-10,80,000. Additional funds(3 MONTHS): Rs 421200-23,22,000 Estimated Total Investment: Rs 49,68,000- 1,70,10000. These figures are estimates of complete investment in setting up a subway restaurant and operating it for 3 months.

How to apply for a Subway franchisee

Contact a sales manager via website or by direct calling. Receive a brochure.

Contact various franchisee in order to experience the restaurants.

Filling the application form. Checking qualifications and financial backbone of the franchisee. Approved entrepreneur is given the franchisee.

Profit Sharing

40% of all the sales are given to the franchiser i.e. subway (value of the material + the subway royalty). For example if the restaurant is able to make Rs. 100,000 as monthly sales then Rs 40000 are given to the subway and rest Rs 60000 for all the expenses and profit margin

Retail Market Strategy

Target Market Young, Urban, Health Conscious
Retail Format Franchise Model Location Upscale areas preferably near residential colonies and offices Sustainable Competitive Advantage Unique association with Health & Taste Lets choose ones own Sub

Organization Structure





Financial Strategy
Financial Objectives
Higher Number of bills Higher Billing Amount

Monthly, weekly & daily targets are allotted In terms of Sales and COGS (Max 35% of sales)

Varies across cities, purely as a function of logistics Avg. monthly prices are paid to vendors.

8% of revenues is paid as royalty fee 4.5% is allocated to marketing funds

Systems & SCM

Information Systems
Sub-shop is installed at point of sales for billing Daily Sales figures are updated & maintained on Spread sheets Past 3 years data is looked-at for sales forecasting on YoY basis Customer Data-base is maintained by callcentre

Systems & SCM

Supply Chain Flow

Breads Sauces Meats DELHI

Amar Agro(Ambala) Vegetables Warehouse for all others

Breads Vegetables Sauces Meats Franchise

Systems & SCM

Supply Chain at local level

Pink Papaya Food franchisee owns vehicles to source from central warehouse and inter outlets Orders are placed on Tuesdays and received on Fridays

Logistics for home delivery

Orders are taken up by the centralized call center From there information is passed onto the nearest Subway outlet The delivery is done by staff members only there are no separate delivery boys Each store has 3 delivery bikes

Merchandise Planning

By taking past 3 years data and comparing it with past 3 weeks data Orders are given for 7 days worth of materials needed and an additional 3 days as buffer Weekends see and over and above 10% extra order

Vendor Relations
Vendors for vegetables are generally wholesellers, who in turn source from various famers These vendors have a long term contract with the company After first few trades, they learn what size and quality of vegetables are taken by Subway

Merchandise Planning

Sauces are provided by a third party vendor Jalapeos, Olives and Pickles are bought tinned packed Meat is sourced from Delhi All the purchasing is done centrally

Store Management

Wash Mechanisms
Each store has a cleaning bay for vegetables





Rercuitment 15 member staff working in 2, 8 hr long shifts Team meetings happen at 5-6pm , where the incoming and outgoing staff discuss

Training Online training of employees is done by the University of Subway Each employee has to complete certain number of modules with specified time A new staff member is trained in cutting, baking, sandwich assembly, packing, customer interaction They are also trained to Up-Sell


Motivation A part of profits on achieve Sales Targets is shared with everyone A monthly dinner and movie night is organized The concept of employee of the month is also practiced to promote healthy competition All the employee are treated fairly, specially in front of the customers

Presentation Techniques
Two bays: one non-veg and the other veg with billing counter in the center Customers and can see what is being made and can also customize their subs The layout allows a sequential flow from ordering, making of the sub to billing


Color: The colors green and brown are predominantly used to signal healthy/hygenic premises Music: There is no one particular genre which is played Lighting: White Lighting is used which is fairly uniform throughout the store All the interior designs and layout are standardized across all stores by Subway International

All the employees are quite smartly dressed in Black Subway T-shirts

Custom website for India It includes Menu Offers Restaurant locator How to Order Franchise details

Principles of Customer Interaction
No arguments with the customer The customer is always right always smile

Service Recovery
In case of service failure such a wrong order, mistake is admitted by the employees (no matter whos fault it is) A new Complimentary Sub is served

Thank You