Ask me about Subway

[wrschultz]

My favorite by FAR is 12" meatball on herb and cheese with provolone, parmesan, and oregano.

[orange]

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I love subway, but why do they never have a drive thru? I'd eat there a whole lot more if they did.

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I used to work at a subway, worked there for about a year and 1/2 my junior year in HS. My subway had a drivethrough, it was hell on saturdays.

Most of the newer subways were built nicely, clean. My subway, however, was not. It was really old, hadn't been renovated in a while. Needless to say, I think some of our equipment was a bit old.

[BradleyT]

I go to Subway a lot and have been to many different ones in different cities and states.


Why is it that every time I want brown mustard I have to use the phrase "just a little bit of brown mustard"? Do workers not understand that mustard is not a condiment that is to be piled half an inch thick on the entire sub like mayo? I see people ahead of me in line and just cringe when they ask for mustard and it's like 6 full stripes of it covering the sub. In fact I hear a lot of people say, "woah, that's enough" as the worker is getting ready to make another 2 passes across the sandwich.

[TwoOuter]

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as far as i know subways everywhere sell for 50% of the sales for the previous year.

that is including rent, but keep in mind that most owners invest several hundred thousand on building the location, and that takes a long time to pay off.

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Wow- that's way more than I was thinking. But if it's 50% of prior year's sales, that would imply an existing location so no construction costs?

If you could clear around $100k per year on a $400k investment it seems like a pretty sweet deal.

I appreciate the info. I've always wondered about franchises. A friend is looking into one of those Hawaiian Barbecue places that have been popping up around the SF Bay Area recently. He was told it would be about $125k to get in but it sounded like long hours for a highly-variable return (these places are not well-established yet- they do sell spam though so who knows [img]/images/graemlins/shocked.gif[/img])

[TwoOuter]

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It can take between $75,000 and $225,000 to open a location. All Subway locations are franchised and the franchisor spends its time supporting the franchisees and ensuring the quality of the product/service. There's a one-time $15,000 franchising fee and an 8% royalty fee.

I would say an average location pulls down no more than $750,000 in annual revenue. Assuming a 25% margin, which I think is pretty optimistic, you're looking at a 17% share for the owner after royalties. That comes out to $127,500. I'd be surprised if owners had that much net income per location. I would guess more in the $50,000-100,000 range.


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Thanks for the breakdown, DG. Although the upfront costs are substantial, I can see where a great location would be a pretty decent moneymaker.

I imagine that all inventory is provided by the franchisor, which takes care of one huge headache. No advertising costs, minimal maintenance compared to other fast food places... it seems like a very good investment. I know I'm glossing over the nightmare of dealing with employees, the 16 hours days, etc. but it's definitely an interesting concept.

[edfurlong]

How much of a concern is something like a food poisoning outbreak being linked to a Florida Subway or something along those lines? It seems like a real longshot that could make your life difficult. How do franchises deal with that kind of thing?

[MrFeelNothin]

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Arnie,

Whats the best/worst part of your job?

I had a friend who managed a Subway store. He always stole tons of food from there and basically stocked his fridge with the meat and ate it constantly. Do you ever grab a quick box of Subway turkey goodness and take it home with you? How often?

Ever met Jarred? Whats your opinion of his fat ass?

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The best part of my job is the free food, i rarely go to the grocery store. I don't take a bunch a stuff home and stock my fridge, but I do enjoy takeing whatever i want when i want, plus my friends/family enjoy it too. The worst part of my job is makeing the numbers look good for the owner. The food cost is affected by my stealing [img]/images/graemlins/mad.gif[/img]

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Seriously, go [censored] yourself. I suppose you also pull the ol' charge the customer for a sub but ring it in as a free water trick.

Owners could pay you better if 75% of the managers didn't end up being fired for stealing.

I hope your owner gets with the times and installs the videocameras with live streaming capablities. Back to Burger King for areinitz.

[Evan]

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This is very interesting- thanks for sharing your knowledge.

1. Do you know how much it costs to buy a franchise in your area?

2. When you say that costs run about 70-75% of revenue, is that excluding rent? So if you're an owner, pulling in say 30% of sales, what (if any) costs come out of your 30%? These guys can't be pocketing $4k a week?

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as far as i know subways everywhere sell for 50% of the sales for the previous year.

that is including rent, but keep in mind that most owners invest several hundred thousand on building the location, and that takes a long time to pay off.

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Wtf, they sell for 1.7x earnings? That is very hard to believe.

[MrFeelNothin]

You can pack way more stuff into a hinge cut and it stays together better if done correctly.

Plus its faster, and since so much business is done during lunch rush, time required for each sub is a big consideration.

[MrFeelNothin]

Toasting was probably a response to Quiznos, but Quiznos is not considered Subway's major competitor in most places. They have their advantages but they kind of appeal to a diff. market, if you want a cheap, QUICK sub, you go to Subway. (unless there is a Jimmy Johns nearby [img]/images/graemlins/grin.gif[/img])