Subway Case Study

Given $500,000, I would choose to invest in a Subway franchise. Apart from being a personal fan of Subway, the franchise offers attractive benefits and support for franchisees, with surprisingly low startup costs for the largest restaurant chain in the world. Considering that Subway has been franchising since 1974, it naturally has a well-established system of support for franchisees. There are over 21,000 Subway franchisees already who took the leap and made an investment, because they realized the potential for growth. These franchises have largely been successful, due to the fact that the food and service offered by Subway locations internationally are both first-class. In fact, the average failure rate of Subway franchises is only about

However, when examining the average time it takes to receive a return on investment, Subway proves to top the list at roughly 3 years. This makes sense given the average startup cost of $200,000 and an annual profit of $70,000. Subway’s competitors fall behind in this important statistic; while Jimmy John’s is close behind with a 3.1 year ROI, Quiznos franchise owners often never receive a return on their investment. With my proposed location in a college campus, the ROI could come even sooner, because my total investment cost will likely fall below the average of $200,000. It is important to note that there other competitors in the fast food market that can reduce the traffic coming into my Subway location. Chains like Chipotle, McDonald’s, Papa John’s, and Taco Bell are rampant across college campuses, but at the end of the day, none of those places offer a quality sub. While a college student may go to Chipotle one day, the next time he/she will likely opt for variety and choose Subway. In addition, Subway boasts healthier food compared to chains such as McDonald’s and Taco Bell, and while the price point may be steeper, those who are inclined towards their health will likely choose Subway a majority of the time. These considerations make Subway beat out most of its competitors, while the few remaining on par will serve as motivation to continually maintain and improve upon the Subway