Excuse Me …

What do you have as the sub for the day?

Subway, the food chain restaurants, entered India with their franchise models in 2001, and now they are raking in Crores of rupees. Initially people thought that it is just another “me too” stop shop for food that gives cold sandwich or mummified chicken. But by and large given the crowd who want a change in appetite, and yet mark their supremacy in taste subway has an answer. Almost in all the major airports the time to grab a better sandwich is answered by them. Not only in major malls but also in posh vicinities. 263 outlets are there in 2012 May, and subway wants to expand furiously to more than 500 outlets by 2015.  300 more to come in!

I do not see why Subway should be cautious in expanding, but they should have a solid partnership model that helps to recover initial costs to be done by Subway for its partners. The partnership might be of 50-50 types, or skewed at either of the sides depending on certain factors.

  1. Partnership Model of 50-50 investment- The investments are equal, and so are the profits. Slowly disinvestment is done by Subway leading to a greater share of profits for the partners. This is applicable for Tier III cities. The time line for this expansion is 3-4 years.
  2. Franchise Model- This model works on the initial investment done by the franchise only. The profits are shared in terms of a fixed percentage, or floating on the revenues earned. This is predominant in the Tier II cities. The time line for expansion is 2-3 years.
  3. Company Owned- This is a different proposition. All the management and operational members are actually owned by the company. This is to reduce costs of operations while attaining maximum profits. This can be done in major metros and international airports. This timeline is for 1-2 years or instantly.

Even though the other competitors can replicate the model, but the brand name of Subway in India, quality of the sandwich made, special offers, customised offers like sub of the day, unique feel good factor in the outlet, and an efficient process of making the sandwich is overwhelming in its own. Whatever happens, there should not be any dent on its quality and image, although the initial investments might be high.

Some of the pointers that can give Subway a thought are-

  1. Localize the menu by taking into account what is the statistical image for any particular menu, and improve on that type. By this, I mean that Subway can find a product variation within vegetarian type of food for unique types, like paneer tikka masala, gobhi manchurian masala, paneer chilli and so on, a mixed Indian flavour in the sandwich.
  2. Ham, Beef and Pork should be limited to much selected outlets. Not many people do like subs of that type. Localize the thought, work towards making it more friendly menu.
  3. Introduce two sub of the day instead of one. The day with maximum customers like Saturday where sales are maximum, introduce 3-4 special subs of the day but at incremental prices than the one sub of the day.
  4. Add pastries and cakes as a full meal for the day. Cakes or pastries along with cookies can be insourced from outside.
  5. Do not cater only to Pepsi or Coke. Do not enter to any agreement on contract for a single line of supply with the cold drinks. People have different tastes.
  6. Some of the local drinks that got popular can be introduced into the system like lime, and litchi per say.
  7. Do invest in brand image building in Tier II and Tier III cities by entering festivals like food festivals, tie up with pastry shops and small restaurants to promote the idea first.
  8. Somehow I feel that the old age in Tier III need a different perspective on Subway, and that needs to be worked out through promotions.
  9. Invest in different types of breads; non-availability of Honey Oat or any other bread does not serve the purpose.
  10. Suggest people or customers with the best option. After all people do not come here for food only, but also for customer experience and brand association. Hence, preserve the brand equity.

So, the approach in different demographics, sex, religion, geography, caste, or appetite can create a stable sale independent of the initial cash flow. Patience is definitely a virtue.


Leave a Reply