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 Doctor’s 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

with 37881 restaurants. wraps among others  It makes your food in front of you and you get to pick what you want . salads. 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.Introduction  A leading sandwich chain.

Paying 8% royalty to the company and a fee into the advertising fund.     Finding locations. Hiring employees and operating restaurants. Leasehold improvements and equipment.Franchisee Model The franchisee is responsible for:  Initial franchise fee. .

Informative publications. Training program. Representative on-site during opening. . Store design and equipment ordering guidance. Operations manual.   Periodic evaluations and ongoing support.Franchisee Model The company provides:      Access to formulas and operational systems.

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

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

000.  Leasehold improvements: Rs 6.Capital requirement General breakdown:  Initial franchise fee: Rs .62.000.40.  Equipment hire-purchase security deposit: Rs

 Training Expenses: Rs 1.000  Supplies: Rs 27000-189000.800-11.000  Opening inventories: Rs  Insurance: Rs 21600-2.40.000-5.000  Outside signs: Rs 64.000-378000  Legal and accounting: Rs 21600-432000 .Capital requirement  Security System: Rs 54000-4.

10000. &surplus capital): Rs 86.400-10.1.000. utility deposits. .  Additional funds(3 MONTHS): Rs 421200-23.70.22. small equip.80.000.68.  These figures are estimates of complete investment in setting up a subway restaurant and operating it for 3 months.000  Estimated Total Investment: Rs 49.Capital requirement  Opening advertisement: Rs 54000-324000  Misc expenses(Business licenses.

 Filling the application form.How to apply for a Subway franchisee  Contact a sales manager via website or by direct calling.  Contact various franchisee in order to experience the restaurants.  Approved entrepreneur is given the franchisee.  Checking qualifications and financial backbone of the franchisee. .  Receive a brochure.

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

Retail Market Strategy Target Market • Young. 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 one’s own Sub . Urban.


weekly & daily targets are allotted • In terms of Sales and COGS (Max 35% of sales) Pricing • Varies across cities. purely as a function of logistics • Avg. Royalty • 8% of revenues is paid as royalty fee • 4. monthly prices are paid to vendors.5% is allocated to marketing funds .Financial Strategy Financial Objectives • Higher Number of bills • Higher Billing Amount Targets • Monthly.

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 .

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 Forecasting • 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.

Merchandise Planning Sourcing • Sauces are provided by a third party vendor • Jalapeños. 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 CLEANSE ICE WASH WASH IN EDIBLE CHEMICAL .

8 hr long shifts • Team meetings happen at 5-6pm . customer interaction • They are also trained to “Up-Sell” . packing. sandwich assembly.HRM Rercuitment • 15 member staff working in 2. 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.

HRM 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 .

making of the sub to billing Atmospherics .Service 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.

Service Atmospherics • 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 Uniforms • All the employees are quite smartly dressed in Black Subway T-shirts .

Service Website • Custom website for India • It includes • Menu • Offers • Restaurant locator • How to Order • Franchise details .

mistake is admitted by the employees (no matter who’s fault it is) • A new Complimentary Sub is served .Service 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.

Thank You .

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