Before we dive deep into the SWOT analysis, let’s get the business overview of Subway. Subway is a global quick-service restaurant (QSR) chain specializing in sandwiches, salads, wraps, and other food items. Established in 1965 in Bridgeport, Connecticut, the company was founded by Fred DeLuca and Peter Buck as a single sandwich shop named “Pete’s Super Submarines.” The name was later changed to “Subway” in 1968.
As of September 2023, Subway operates more than 36,000 locations in over 100 countries, making it one of the largest restaurant chains in the world. Subway franchises its restaurants, allowing individual entrepreneurs to own and operate their locations while adhering to the company’s branding and product guidelines.
Subway’s primary product offerings include customizable submarine sandwiches, also known as subs, made with a variety of fresh ingredients, bread, meats, cheeses, and sauces. The company has established its reputation for providing fresh, healthy, affordable food options. In addition to sandwiches, Subway also offers salads, wraps, baked goods, snacks, and beverages.
The company’s marketing strategy has historically focused on promoting a healthier image than other fast-food chains. Its famous “Eat Fresh” slogan emphasizes using fresh ingredients and customizable meals. Subway has also been known for its various promotions and advertising campaigns, such as the $5 Footlong promotion and the former spokesperson, Jared Fogle, who lost weight by eating Subway sandwiches.
Subway faces competition from both local and international restaurant chains, including but not limited to Jimmy John’s, Jersey Mike’s, Quiznos, and Panera Bread. The company has had to adapt to changing consumer preferences and industry trends, such as increased demand for plant-based and sustainable food options, healthier menu items, and digital ordering channels.
Financial Performace: Subway does not provide details on sales figures. However, it provided the following data:
- 9.2% increase in same-store sales compared to 2021, and a 29.1% increase in same-store sales, compared to 2020.
- Double-digit growth in digital sales around the world, compared to 2021, and more than tripled since 2019.
Here’s a SWOT analysis for Subway:
A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of Subway.
SWOT Analysis: Meaning, Importance, and Examples
Strengths
- Brand recognition: Subway enjoys strong brand recognition worldwide, making it one of the most well-known and trusted restaurant chains. The company’s logo, colors, and “Eat Fresh” slogan are easily identifiable, which helps to attract customers. The brand value of Subway worldwide is 14.7bn USD.
- Global presence: With over 40,000 locations in more than 100 countries, Subway has an extensive global presence. This broad reach allows the company to benefit from economies of scale and reach a diverse customer base.
- Franchise model: Subway’s franchise-based business model enables rapid expansion and growth with relatively low capital investment. This model also allows local entrepreneurs to adapt the business to local tastes and preferences while maintaining the overall Subway brand.
- Customization: Subway’s “made-to-order” approach to food preparation allows customers to customize their sandwiches, salads, and wraps according to their preferences. This flexibility caters to various dietary needs and preferences, making Subway an attractive choice for many consumers.
- Healthier options: Subway has historically positioned itself as a healthier alternative to traditional fast food, emphasizing fresh ingredients and customizable meals. This focus on health and wellness resonates with many consumers, particularly those seeking healthier meal options on the go.
- Affordability: Subway’s menu offers a variety of affordable options, making it accessible to a wide range of customers. The company’s famous promotions, such as the $5 Footlong, have also helped to reinforce its value proposition.
- Menu variety: Besides its signature sandwiches, Subway offers salads, wraps, baked goods, snacks, and beverages, providing a diverse range of options to cater to various customer tastes and preferences.
- Adaptability: Subway has demonstrated an ability to adapt to changing consumer preferences and industry trends, such as the introduction of plant-based menu options, digital ordering channels, and store redesigns. This adaptability helps the company stay relevant in the competitive quick-service restaurant market.
Weaknesses
- Declining sales and store closures: In recent years, Subway has experienced declining sales and many store closures. This decline has been attributed to factors such as increased competition, franchisee dissatisfaction, and changing consumer preferences.
- Franchisee dissatisfaction: Some Subway franchisees have expressed dissatisfaction with the company’s management, citing high royalty fees, mandatory promotions, and lack of corporate support. This dissatisfaction can negatively impact the company’s reputation and hinder future growth.
- Inconsistent quality and customer experience: Due to its vast franchise network, maintaining consistent quality and customer experience across all locations can be challenging. Variability in food quality and service standards can harm the overall brand reputation.
- Limited menu innovation: While Subway has introduced some new menu items, critics argue that the company has been slow to innovate and refresh its menu compared to competitors. This lack of innovation may make it difficult for Subway to keep up with evolving consumer tastes and preferences.
- Overdependence on sandwiches: Subway’s core product offering revolves around submarine sandwiches. While this focus has contributed to the brand’s success, it also makes the company vulnerable to changing consumer preferences and trends, such as the growing demand for plant-based or ethnic cuisine options.
- Competition: Subway faces intense competition from other fast-food chains, including both direct competitors like Jimmy John’s and Jersey Mike’s and indirect competitors like Panera Bread and Chipotle. This competition can erode market share and make it difficult for Subway to differentiate itself in the crowded quick-service restaurant space.
- Damage to brand image: Subway’s brand image has been tarnished by several controversies, including the legal issues surrounding its former spokesperson Jared Fogle and concerns over the quality of its ingredients, such as the “yoga mat” chemical in its bread. These incidents have the potential to damage consumer trust and loyalty.
- Digital and technological lag: While Subway has tried to improve its digital presence and technology offerings, it has been slower to adopt digital solutions than some of its competitors. This lag may hinder the company’s ability to attract and retain tech-savvy customers and capitalize on emerging trends in the industry.
Opportunities
- Menu innovation and diversification: Subway can focus on introducing new and innovative menu items to cater to changing consumer preferences. Expanding into plant-based options, ethnic cuisine, or limited-time offerings can help the company stay relevant and attract new customers.
- Health and wellness focus: As consumers become more health-conscious, Subway can further emphasize its commitment to providing fresh, healthy, and nutritious meal options. This may include highlighting low-calorie, high-protein, or vegan-friendly choices on the menu.
- Digital transformation: Subway can invest in enhancing its digital presence and technology offerings, such as mobile apps, online ordering, delivery partnerships, and loyalty programs. Embracing digital solutions can improve customer experience and help Subway stay competitive in the evolving quick-service restaurant market.
- Sustainable practices: As sustainability becomes increasingly important to consumers, Subway can showcase its commitment to environmentally friendly practices. This may include using locally sourced ingredients, reducing plastic waste, or promoting energy-efficient store designs.
- Expanding into untapped markets: Subway can explore opportunities to expand its presence in emerging markets or underrepresented regions, tapping into new customer bases and leveraging its global brand recognition.
- Strengthening franchisee relationships: By addressing franchisee concerns and providing better support, Subway can improve franchisee satisfaction, which may contribute to overall business growth and brand reputation.
- Strategic partnerships and collaborations: Subway can pursue partnerships or alliances with other brands, celebrities, or influencers to create unique promotional campaigns, co-branded products, or special events. These collaborations can help generate buzz and attract new customers.
- Drive-thru and non-traditional locations: Subway can explore opportunities to expand its footprint in non-traditional venues, such as airports, college campuses, or stadiums. Additionally, incorporating drive-thru options in select locations can cater to the increasing demand for convenience and on-the-go dining options.
Threats
- Intense competition: Subway operates in a highly competitive quick-service restaurant market, with competitors like Jimmy John’s, Jersey Mike’s, Panera Bread, and Chipotle offering similar or alternative food options. This competition can pressure Subway’s market share, sales, and profitability.
- Changing consumer preferences: As consumer preferences shift towards healthier, plant-based, or ethnic food options, Subway’s core offerings may become less appealing. The company must continually adapt its menu to stay relevant and cater to evolving tastes and demands.
- Supply chain disruptions: Subway’s reliance on a global supply chain makes it vulnerable to disruptions caused by natural disasters, political instability, or trade restrictions. These disruptions can lead to increased costs or shortages of key ingredients.
- Food safety concerns: Foodborne illnesses or contamination incidents can damage Subway’s reputation and result in lost sales. Ensuring food safety and quality across thousands of franchised locations is a significant challenge.
- Labor issues: Rising labor costs, employee turnover, and labor-related regulations can impact Subway’s operational efficiency and profitability. Attracting and retaining skilled employees is crucial for maintaining consistent service and food quality.
- Regulatory changes: Changes in regulations related to food safety, health, nutrition, or environmental impact can affect Subway’s operations and require the company to adjust its business practices or menu offerings.
- Franchisee dissatisfaction: If Subway fails to address the concerns of its franchisees, the resulting dissatisfaction could lead to legal disputes, brand damage, or reduced growth in the number of new locations.
- Technological advancements: As technology continues to evolve, Subway must keep pace with new developments in areas such as digital ordering, mobile payments, and customer experience. Failure to adapt to technological changes may result in lost market share to more innovative competitors.
- Damage to brand reputation: Any negative publicity or controversy surrounding Subway’s business practices, spokespersons, or product quality can harm its brand reputation, decreasing customer trust and loyalty.
