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SWOT analysis of Subway

Ovidijus Jurevicius | 16.02.2013

This is Subway SWOT analysis in 2013. For more information on how to do a SWOT analysis please refer to our article.

Company Background

Name Subway
Logo Subway logo
Industries served Fast food restaurants
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Fred DeLuca
Revenue $ 16.2 billion (2010)
Profit N/A
Employees N/A
Parent Doctor's Associates, Inc.
Main Competitors McDonald’s Corporation, Burger King Worldwide Inc., Yum! Brand Inc., Wendy’s Company.

Subway is an American fast food restaurant chain that mainly sells submarine sandwiches (subs) and salads. It is owned and operated by Doctor's Associates, Inc. (DAI). Subway is the largest single-brand restaurant chain globally and is the second largest restaurant operator globally after Yum! Brands.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Subway SWOT analysis 2013

Strengths

Weaknesses

  1. Great degree of subs customization
  2. Largest fast food restaurant chain in the world by the number of outlets
  3. Marketing and promotional strategies
  4. Choice of healthier meals
  5. Partnerships with Britain and American Heart Associations
  6. All restaurants are owned by franchisees
  7. Low startup costs

Weaknesses

  1. Interior design of the outlets often looks cheap
  2. High employee turnover
  3. Services are not consistent from store to store
  4. Too much control over franchisees

Opportunities

Threats

  1. Increasing demand for healthier food
  2. Home meal delivery
  3. Changing customer habits and new customer groups
  4. Introduction of drive-thru

Threats

  1. Saturated fast food markets in the developed economies
  2. Trend towards healthy eating
  3. Local fast food restaurant chains
  4. Currency fluctuations
  5. Lawsuits against Subway

Strengths

  1. Great degree of subs customization. Customers always like to choose and the more choices they can make about their purchase the more satisfied they are with it. Subway is better than any other large fast food chain in providing the choice of meal customization.
  2. Largest fast food restaurant chain in the world by the number of outlets. Currently the comapny operates 38,181 restaurants in 99 countries, more than McDonald’s or any other fast food chain operator.
  3. Marketing and promotional strategies. Subway employs superior marketing techniques and promotional strategies to attract and grow their customer base. The most successful Subway’s promotional offer was to offer footlongs for only $5, which became a new pricing standard of a sub.
  4. Choice of healthier meals. Subway offers a range of low calorie, fresh and nutritious food, which you can’t find in other fast food stores, at least not to such an extent. This Subway strength meets current trend of eating healthier food.
  5. Partnerships with Britain and American Heart Associations. Subway has received certificates from both organizations that it serves health meal options, which is a great reward and differentiates the business from other fast food restaurants.
  6. All restaurants are owned by franchisees. Subway doesn’t own any restaurants itself so it experiences less risk and can focus its efforts on marketing and growing the franchise.
  7. Low startup costs. One of the reasons behind such a high growth rate of Subway stores is the low startup costs. Subway stores are smaller and require less money for leasehold improvements and equipment.

Weaknesses

  1. Interior design of the outlets often looks cheap. Subway restaurants lack the interior design and quality that would welcome everyone to stay and feel more comfortable than in the competitor’s restaurants.
  2. High employee turnover. Subway Sandwich Artists job is a low paid and a low skilled job. It results in low performance and high employee turnover, which increases training costs and add to overall costs of Subway.
  3. Services are not consistent from store to store. The business struggles to ensure consistent services’ quality throughout it stores and so a service in one store may please a customer when another may fail to do that.
  4. Too much control over franchisees. Despite the fact that Subway fails to ensure consistent quality throughout the stores it exerts too much control over its franchisees. This is done through the contracts that are more favourable to the franchisor. An example of such high control is seizeing of franchisee restaurants if the later one is struggling to keep them open.

Opportunities

  1. Increasing demand for healthier food. It’s an opportunity upon which Subway already grows itself and could further introduce low fat, low salt and more nutritious subs.
  2. Home meal delivery. Subway could exploit an opportunity of delivering food to home and increase its reach to customers.
  3. Changing customer habits and new customer groups. Changing customer habits represent new needs that must be met by businesses. So far, Subway has only one variation of restaurants, different to its close competitor McDonald’s, which tries to satisfy and reach previously untapped customer groups by introducing McCafé, McExpress and McStop.
  4. Introduction of drive-thru. McDonald’s already offer only drive-thru restaurants, which is a great opportunity for Subway to jump.

Threats

  1. Saturated fast food markets in the developed economies. The fast food market in the developed countries is already overcrowded by so many fast food restaurant chains and this already proves to be a threat to Subway as it finds it hard to grow in the developed economies.
  2. Trend towards healthy eating. Only part of Subway’s menu offers healthier choices of meals, while the rest menu is rich in salt, contains many calories and is accompanied by soft drinks. Customers who care about their food and well-being may opt out for something else rather than Subway.
  3. Local fast food restaurant chains. Local fast food restaurants can offer healthier food and menu that exactly represents local tastes.
  4. Currency fluctuations. Subway receives much of its income from foreign operations. That income has to be converted into dollars and may affect the company’s profits, especially when the dollar is appreciating against other currencies.
  5. Lawsuits against Subway. Subway has been involved and lost a few lawsuits in the past because of the poor company policies regarding franchisees management. Lawsuits are expensive, time consuming and damages the firm’s brand.