Streetside Supremo Subway To Overtake McDonald’s
I thought that I was walking around in circles recently when I noticed Subway outlets every time I turned a corner, and sometimes even before I turned the corner. But this wasn’t a recurring case of deju vu. Subway – home of the not-so heart healthy $5 foot long sandwich – is on the cusp of overtaking McDonald’s to become the most ubiquitous fast food giant to grace the world.
Subway which opens an astonishing 40 stores a week (no that’s not a typo!), had 31,771 locations as of Monday and is fast approaching McDonald’s current total of 32,158 sites. According to an Advertising Age report it is only a couple of months before Subway races ahead. But the folks behind the Golden Arches aren’t worried;
McDonald’s has slowed its expansion efforts in most countries during recent years to focus instead on existing-store profitability. Spokeswoman Lisa McComb said simply, “Our focus continues to be on our customers around the world.” And with Subway adding about 40 stores a week, surpassing McDonald’s in terms of locations, “was inevitable,” Mr. Lombardi said.
But quantity doesn’t always count for everything. When it comes to overall sales, Mickey D’s is still king. The average US McDonald’s had in the region of $2.3 million in sales in 2008 while your local Subway lagged behind with $445,000. And then there is the huge disparity in their respective advertising budgets. According TNS Media Intelligence, Advertising Age writes, Subway’s $375 million 2008 US ad budget was eclipsed by McDonald’s $815 million.
So what’s the key to Subway’s phenomenal growth? Advertising Age cites low start-up costs and an easy to grasp menu for novel franchisees.
[Subway Development Director] Mr. Fertman noted that Subway always racks up franchisee applications in a down economy, when laid-off workers, disenchanted with the corporate world, decide to try their hands restaurant ownership. It doesn’t hurt that the franchise ranks are packed with success stories. Hardy Grewal, who has about 1,000 Subway restaurants under his control, got his start in 1989. His wife was bored, so he bought her a Subway. He quit his job in 1991 because she was earning more.
I also reckon that Subway’s success is probably a lot to do with their “eat fresh” mantra. Though the quality of ingredients leaves something to be desired, that customers can see their sandwiches being constructed in front of them and the fact that they can customize their meal is a huge draw. In fact, we are seeing more and more fast food enterprises offering this highly visual on-site customization – think Chipotle. You want mild salsa, no guac and extra cheese on your burrito? You got it? When was the last time you requested a Filet O Fish without tartar sauce and didn’t receive a raised eyebrow, sigh of irritation and a 20 minute wait in response?