Subway Franchise

[BeMarketed]

Hello there

I am interested in opening a Subway franchise. Some people on this forum have previously stated that they have had or know of problems with the Subway franchise's.

The most important aspect as to why I believe my Subway franchise would be succesful is the location, which I believe to be excellent. The shop I am looking at has parking 10m away, is 5m and on the same side as a train station with overground and underground links and is behind two well used and popular bus stops. The shop is also directly in the path of the route from the station to a university of around 6000 students.

The location of my shop would be in a poorer part of London and having spoken to the landlord he has offered me the shop rent free for the duration of the time in which I will be fitting the shop out.

The shop has A1 usage which is all that is needed for Subway to operate, but does need fitting out and doing up.

The problem of finding capital will be my biggest challenge as will proving to Subway that I am a capable Franchisee with only a few years experience and a degree to my name. The cost of the actual franchise is only £10,000 however the amount that Subway require you to have is £75,000. Will the Enterprise Finance Guarantee allow for a franchise?

Does anyone have any thoughts or suggestions about opening a Subway franchise?

 

[luvbusiness]

If your convinced of the location then good.How you describe it sounds good to me and should get good footfall.I like some of the Subway stuff but generally dont go in there because really it is a sandwich shop and tend to spend my takeaway budget on more exotic things like chinese food or pizzas.
Round my area I dont think I see that many people in their shops.But maybe your location could be a good find.

 

[benjamin_c]

Does it have to be a subway? Why don't you just have an independent sandwich shop? if you do the research and have the shop design right you should do ok, and you will be able to choose your own prices and menu, and not have the franchise costs. I don't like franchise models at all. it's like paying to be employed as a manager in my opinion.. I'm sure others will disagree though and may be able to offer more constructive advice on the matter. Good luck

 

[altwebdesign]

location is very important.
Theres one in my town, high street, prime location, schools and businesssess, parking. . .been empty for about 6 months!

 

[Jon236]

That location sounds identical to a Subway branch in Ealing (West London) I know of. It shares a lot of the same characteristics including the train station (under and overground), parking, university, multiple bus stops (not just two!), as well as being literally a hop and a skip away from the high street. The area is reasonably affluent although no more so than anywhere else.

However, the Subway shop has always been pretty much DEAD whenever I've walked past it.

I'm not sure if a) people are over the whole subway fad b) people can't afford a five quid sandwich in a recession or c) people get their subways when I'm not looking. But SERIOUSLY think about this properly. It's not the brand it used to be a couple of years ago, and it's a lot of money to plough in with no real guarantee it'll even make you your money back.

 

[altwebdesign]

That location sounds identical to a Subway branch in Ealing (West London) I know of. It shares a lot of the same characteristics including the train station (under and overground), parking, university, multiple bus stops (not just two!), as well as being literally a hop and a skip away from the high street. The area is reasonably affluent although no more so than anywhere else.

However, the Subway shop has always been pretty much DEAD whenever I've walked past it.

I'm not sure if a) people are over the whole subway fad b) people can't afford a five quid sandwich in a recession or c) people get their subways when I'm not looking. But SERIOUSLY think about this properly. It's not the brand it used to be a couple of years ago, and it's a lot of money to plough in with no real guarantee it'll even make you your money back.

I can probably walk past 2-3 in a 20 minute period and they always seem to be empty also!

 

[eutrans]

If you think you have the ideal location others will have possibly thought this too, so I would be asking why their isn't a Subway there already????????

I agree that the independant sandwich shop would be a better avenue, at least your hand's are not as tied.

I think part of the issue with Subway is-
a) You can normally get a better sandwich with proper ingredients for less money without looking too hard.

b) Staff- I think it must be contractual that the staff must be as miserable as possible. It must be in the training manual that they just grunt at you.

Good luck in whatever you decide to do.

 

Subway are widely regarded as one of the top 3 fast-food franchises. They have had mucch of their success on the back of student spend (you will find one near to most University campuses). does yours conform to this?

Funding will be a problem for you - in fact you will be exceptionally lucky to get 50% on an unsecured basis. The rremainder will rely on fall-back guarantees..

 

[KM-Tiger]

They have had mucch of their success on the back of student spend (you will find one near to most University campuses). does yours conform to this?

If the success relies upon location, why do you need the franchise?

 

If the success relies upon location, why do you need the franchise?

Because Students clearly buy into the Subway thing, just as people buy into McD's...

 

[BusinessRookie]

Does it have to be a subway? Why don't you just have an independent sandwich shop? if you do the research and have the shop design right you should do ok, and you will be able to choose your own prices and menu, and not have the franchise costs. I don't like franchise models at all. it's like paying to be employed as a manager in my opinion.. I'm sure others will disagree though and may be able to offer more constructive advice on the matter. Good luck

Personally I would go to a Subway ahead of a standard sandwich shop. Reasons why:

Guaranteed taste, quality and service
Standardised pricing
Brand loyalty

I dislike a lot of small sandwich shops as the quality varies so much, and I see less value in a £2.50 sandwich from a small shop (which is a white filled roll) as opposed to freshly baked baguettes with a variety of fillings for a similar price at the lower end.

Go Subway - eat Fresh!

 

[Hombre]

I know someone who put his life savings into a Subway franchise. Don't do it !!

 

[Ccinodino]

Going down the franchise route IS a credible option as it will give you the backing of a recognised brand, and all the support of a tried and tested system. you obviously understand this from your comment regarding McDonalds. I noticed on a business for sale website yesterday that there were over 500 independent cafe/sandwich shops currently for sale in the UK.

Apart from spotting a location for a Subway, is there a reason why you are considering a fixed location? Have you explored the mobile franchise market, where you take the business to the customer and therefore reduce your exposure considerably. I think Cafe2U are the largest in this sector and seem to be growing at quite a rate. They specialise in Espresso based coffee, but sell sandwiches and hot food as well. I am not sure what the cost is but certainly less than launching a fixed business.

With regards to funding you are far more likely to get finance launching a franchise business than an independent as the banks can see proven successes.

I hope all that helps - good luck!

 

I know someone who put his life savings into a Subway franchise. Don't do it !!

With respect this kind of advice is really of no value. People fail in all types of business whilst others succeed. Failure can be down to any number of factors, though the normal default is to blame everyone else.

Without knowing individual circumstances you cannot make a judgement. One thing you MUSTdo is speak to a range of franchisees (not just the names they offer you) to get a balanced view.

 

[Vacman2000]

Your landlord will not be able to negotiate with you as the head lease will be held by Subway, if your DA looks at it and they think it will not fit the bill, you cannot get it
Rember location, location, location
Buy the book
Start small finish big
by Fred delucer?
Owner of subways

 

[Hombre]

cafe2U want £60,000 off you. Not only that but like all franchises they want weekly % of t/o and you will have to 'buy' additional areas.

You have to really ask yourself: what benefit is a franchise in this type of market when you can do it yourself.

G'day mate.

 

[Vaheed Akhtar]

Hi,

I currently own 2 independent Sandwich shops and I would strongly recommend you look into creating your own brand. The Subways thing is now slowing down and people tend to prefer something that's had a bit of work gone and imagination that gone into it. Franchises can be great, if you sell the right product. The likes of McDonalds, KFC and Domino's Pizza will always do well (if managed right) because they are big players. Subways, for all their stores etc - their average shop turnover is only around £3k per week (last time I looked into it) £3k per week may sound great with such high Gross profit mark-up's - but once you add the franchise fee's and stock fee's (which you have to buy from them) then you're not looking at much of an income.

At least if you're independent, you don't have to rely on TV campaigns and promotions set by the company in order to help yourself. When you're independent you sell whatever you want and what suits your customers needs and requirements. Soup has the biggest markup of any type of food - and I'm not even sure if Subways sell soup?!?

The other point I would like to add is that people, including students, will eventually get tired of your menu and it's out of your hands to change it. Being independent - you can quickly think of something new and push it out every month and it keeps people intrigued and they will come back to see what new things you are doing.

A £3k per week independent Sandwich shop will have a higher Gross margin and net margin - and depending on how you manage the place - you're looking at a good income from that.

 

[Hombre]

Vaheed, If you have the time I would appreciate your considered view on running an independent but 'high quality offer' mobile capuccino van selling sandwiches too. Route would include business parks/industrial estates/call centre parks/edge of town etc, etc.

I have bounced it off a few mates who run sandwich shops and at first they raise an eyebrow but after I have explained the business plan they all look interested - then again maybe they want to supply me with the food!!

i.e. Definitely NOT a Cafe2u franchise.

 

[bluestagstudio]

I agree that Franchises are usually pretty horrible models to get involved in but you're effectively buying a licence to use their brand and if you're in an area where 6000 people identify with that brand then it could make good sense...providing there's nobody else in the area.

Subway is expensive though and I think you would be totally reliant on the student market (who are nowhere near as skint as is made out, many of them have loans and jobs) to fund living off takeaways and subs...

I'd run a survey targeted at the students to see whether they would see value in a Subway in the area. I'd ask them where they buy their takeaways from now and why.

As someone rightly pointed out you can't change Subway - it is what it is and if your market want something different to that then you could be in a shizzle.

There's a great little independant sandwich and coffee shop in the heart of Cathays (student city in Cardiff) that must make an absolute killing - keep meaning to get their accounts - and they've gone totally their own way, responding to what students want.

Hope that helps?

Cheers,
Matt.

 

[Vaheed Akhtar]

Vaheed, If you have the time I would appreciate your considered view on running an independent but 'high quality offer' mobile capuccino van selling sandwiches too. Route would include business parks/industrial estates/call centre parks/edge of town etc, etc.

I have bounced it off a few mates who run sandwich shops and at first they raise an eyebrow but after I have explained the business plan they all look interested - then again maybe they want to supply me with the food!!

i.e. Definitely NOT a Cafe2u franchise.

Hi Hombre,

I'm not an expert at van sales as mine are shop based only - but I have done quite a bit of research into getting a van to expand one of my businesses. There are minefields and downsides - but the advantages are far greater. For a start, you're saving money on rent/rates of that a property would demand. It's essential that you get your marketing spot on - but the issue you need to address from day one is the quality of your food. As we all know, van food does have a bit of a iffy reputation. You said your friends may supply you the food -make sure you actually find out what sort of reputation they have in the areas, because selling for other people will be hard work to start with - without having the added weight of shifting stuff which may have a mixed reputation.

You also need to consider what your menu would be and where the sandwiches will be packed. Will your friends do this leg work for you, ie buying ingredients, making the sandwiches, packing them and labelling them? who will take charge of the liability if there's a problem with the sandwich? what percentage will they take (I'd imagine quite a high one, if they are doing the leg work)

Personally, I wouldn't rely on anyone else to supply me my bread and butter (pardon the pun! he he ) Do it all yourself and that way you will always have full control of your business. Earlier, I spoke about pitfalls and problems - one of your problems is going to be to work out where you will make and pack your sandwiches. Most people who have sandwich vans also have a shop or unit - which is to food hygiene standards. Your most cost effective way would be to use a part of your house which has specifically been designated for your business. You could call the local council and ask for someone to come out and assess your plans. They will advise you in the best possible way because they are the one's you need to please.

I'll give you an example. I rent a shop with a flat upstairs. The flat has access through the shop - as the previous tenant was sick of the tenants upstairs. I called the local council and told them of my plans to pre-pack sandwiches in order to sell them from a Van. They paid me a visit and they were very helpful with ideas and suggestions.

Your most important component will be your vehicle - as this will be your equivalent of my shops. Do allot of research as there are many verities out there. I've seen some of them you open from the side - but your produce re-sale is limited. A old Mercedes sprinter Ice cream van (the yellow ones) are ideal ! You can sell all sorts in one of those. People love soup. people love hot and cold sandwiches. people love coffee. Your options are endless with a big van.

Hope this helps -

Vaheed1

 

[Hombre]

Vaheed, your comments have been most helpful and tie-in with the research I have undertaken so far.

I am very fortunate in that I have three pals who run their own separate sandwich/deli shops so all three are able to supply me sandwiches/paninis etc..I get your point about DIY sandwich prep. and gross/net margins but under 80:20 principle I am happy for them to supply me and give me best price.

Thanks again, Vaheed, your input is most appreciated.

 

[Vacman2000]

I have been a subways franchisee, so if you need any help, just ask.

 

[BeMarketed]

Hi Vacman. Looks like we share similar business tastes, I also run a leaflet distribution company.

Just wanted to know a few things. Is there in your opinion potential to make money? How many customers were you getting on average per day? What sort of profit margin did your shop average?

 

[Vacman2000]

Yes most good locations make about £1200 per week, after expenses, if they have good managers and good sandwich artists, that is there official titles. But you must be a hands on owner.

 

[Draugen]

The most important aspect as to why I believe my Subway franchise would be succesful is the location, which I believe to be excellent. The shop I am looking at has parking 10m away, is 5m and on the same side as a train station with overground and underground links and is behind two well used and popular bus stops. The shop is also directly in the path of the route from the station to a university of around 6000 students.

As Vacman says, even if you think the location would work, if your DA doesn't, they won't let you open it. It isn't as simple as finding a location and opening a store, in my experience, most buy the franchise first and then find the location.

The location of my shop would be in a poorer part of London and having spoken to the landlord he has offered me the shop rent free for the duration of the time in which I will be fitting the shop out.

Takes three weeks max for a Subway fitout, so that's negligable.

The cost of the actual franchise is only £10,000 however the amount that Subway require you to have is £75,000. Will the Enterprise Finance Guarantee allow for a franchise?

£75,000 is pie in the sky. It's going to cost you in the region of £140,000 - £200,000 to open a new store. You will need security for this in the current climate.

My advice, if you really are passionate about owning a Subway store, look at existing stores for sale. Some are duds, but I've seen some pretty good deals over the last twelve months or so.

 

[Vacman2000]

Fit out costs with cash in hand and stock probable up now close to the £120K

Subway holds the head lease for 25 years, every franchisee pays an addition 20% in case other franchisee default on the lease.

All food (and anything else) products have to be purchased through subway.

They are marking up all the way

Food cost can be as high as 28% if you are an absentee owner

However you can open a subways in side a petrol station. Walmart, or some other no tradition locations, then the lease are handled diffrently but I was not involved in anything like that, but I can get any information on that if you needed to.

 

[Naughty Vend]

Maybe it's me but there's no pride of ownership these days and there should be, there should be drive in your heart not passion on your balance sheet if you want to be a business owner...

The immediate advice you've been given OP; pay someone else to do the work for you, it's gonna cost £120,000.00 to fit out, the percentage is and so on. Whilst these are all factors in a business if you are a zombie then do not expect your business to be anything else, get your sleeves up and buy some tools... buy some drywall and fixtures... use your imagination and be different enough to be alive. You could fit out a sandwich shop for 25% of that cost all day long if you think about ways to do so. And for goodness sakes don't buy someone else's problem when it's a franchise, the limited variances in business model following a manual mean that if the franchisee was that bad then the site reputation isn't worth the piss in a tramps cup.

Subway, they are just too American to work in every location and there are far too many ethnic variations in the UK. Some react and some don't to these facts but remember some are trends, for example Baguette Express use Halal meats and don't make a big thing about it... there's a Master Franchisee on these forums whom may comment and to boot the product is far more "European" and has had time to enter our cultural diet. The Subway adverts demonstrate that they are aware of the problems in this regard altought it is marketed well.

Buying a franchise is not a solution or easy way, it's still a business but just run following a certain template which has been proven to work elsewhere under an established brand. Do you need that?

 

[ramycoo]

Dear All,

First of all thanks for the very useful info's.

I am planing to have a Subway franchies here in Manchester.

But i need some info regards the needed qualifications that Subway request from the franchise.

I have some experience in management field but far from the restaurant and retail. it is in the telecoms and IT.

also i need to know an avaerage cost about the fixed and running cost to open the restaurant.

Thanks in advance. and Happy New Year.

Regards
Ramycoo

 

[Vacman2000]

Hi there
Have you been to New York, Bic Drive for the exame yet?