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Subway is routinely rated in the top ten of franchise opportunities, according to a number of different measures. Considering the number of successful restaurants you’ve probably seen dotting the countryside, you’re not the first to recognize how well a business owner can do operating under the flag of one of the most popular fast-food restaurant in the world. Let’s consider some of the advantages of investing in such a franchise, as well as identify some of the possible shortcomings, so that you can better determine whether it’s right for you.
With a start-up cost as low as $100k, Subway has one of the lowest initial investments of any successful nation-wide food franchise. It’s easy to see why: the sandwich shops require very little equipment and often very little space, sometimes operating in tiny rooms with an oven, a couple of refrigerators and a few toasters. No grills or stoves to worry about, and no expensive foodstuffs to store. You can get started in the business much more easily than you would with nearly any other similar venture.
That also means Subway can keep prices low and customers satisfied, which translates into high volume and a dependable business model. Brand recognition is high, and it penetrates into most communities across the country – the food is affordable, appreciated, and innocuous enough to be sold almost anywhere.
It’s not hard to understand why the failure rate for the franchise is relatively low – consistently under 10%, which is dramatically better than even its closest competitors, like Quizno’s or Blimpie’s.
Although the investment is low, the return is limited, as is the potential for growth. You’ll likely have to keep managing your investment in a fairly direct way for a long time, because moving up quickly isn’t really in the cards.
Moreover, just making your monthly nut will require high volume – the sandwiches go for around $5 a piece, so obviously you’ll need to move quite a lot of them to make any kind of real money. You’ll need to aggressively market your drinks and chips to widen your profit margin, and the cost-conscious consumers of Subway may not always oblige you. Subway operates mainly for the business lunch crowd, and they’re generally trying to get in and out as quickly and cheaply as possible.
Recently, Subway has tried to make inroads with its line of breakfast foods, but it faces stiff competition from the likes of McDonald’s, which is deeply ingrained in the public consciousness as the place to go for fast food breakfast. Most other major chains don’t bother with that market, but Subway recognizes that its strength is in its volume, and it may improve your chances as well – as long as you’re willing to put in the extra hours.
Owning and operating a Subway franchise can be a good decision in your pursuit of financial independence and stability. By most measures, it’s a relatively safe bet, and can be undertaken even by those with modest means. But keep in mind that your success will depend on plenty of hard work, a little risk, and a lot of luck.