|Privately held company|
August 28, 1965 (as Pete's Super Submarines)|
Bridgeport, Connecticut, U.S.
Fred DeLuca |
|Headquarters||Milford, Connecticut, U.S.|
Number of locations
|44,852 restaurants in 112 countries|
|Suzanne Greco, President/CEO|
Subway IP Inc. (stylized as SUBWAY) is a privately held American fast food restaurant franchise that primarily sells submarine sandwiches (subs) and salads. It is owned and operated by Doctor's Associates Inc., doing business as Subway IP Inc. Subway is one of the fastest growing franchises in the world, with 44,852 restaurants in 112 countries and territories as of September 11, 2016. The United States alone has 26,646 outlets. It is the largest single-brand restaurant chain and the largest restaurant operator in the world.
Subway's international headquarters is in Milford, Connecticut; five regional centers support Subway's international operations. The regional offices for European franchises are located in Amsterdam (Netherlands); the Australian and New Zealand locations are supported from Brisbane (Australia); the Asian locations are supported from offices in Beirut (Lebanon) and Singapore; and the Latin American support center is in Miami, Florida.
In 1965, Fred DeLuca borrowed $1,000 from friend Peter Buck to start "Pete's Super Submarines" in Bridgeport, Connecticut, and in the following year they formed Doctor's Associates Inc. to oversee operations of the restaurants as the franchise expanded. The holding company derives its name from DeLuca's goal to earn enough from the business to pay tuition for medical school, as well as Buck's having a doctorate in physics. Doctor's Associates is not affiliated with, nor endorsed by, any medical organization. In 1968, the sandwich shop was renamed "Subway".
The first Subway on the West Coast was opened in Fresno, California, in 1978. The first Subway outside of North America opened in Bahrain in December 1984. The first Subway in the United Kingdom was opened in Brighton in 1996. In 2004, Subway began opening stores in Walmart supercenters, and surpassed the number of McDonald's locations inside U.S. Walmart stores in 2007.
Since 2007, Subway has consistently ranked in Entrepreneur magazine's Top 500 Franchises list. It ranked #2 in 2012. It also ranked #2 on the "Fastest Growing Franchise" and "Global Franchise" lists. At the end of 2010, Subway became the largest fast food chain worldwide, with 33,749 restaurants – 1,012 more than McDonald's.
Subway's core product is the submarine sandwich (or "sub"). In addition to these, the chain also sells wraps, salad, and baked goods (including cookies, doughnuts, and muffins). While some menu items vary between countries and markets, Subway's worldwide signature sub varieties include:
- Chicken Pizziola
- Chicken Teriyaki
- Chicken Tikka
- Chipotle Chicken
- Italian B.M.T.
- Meatball Marinara
- Roasted Chicken
- Spicy Italian
- Steak & Cheese
- Subway Club
- Subway Melt
- Veggie Delite
- Veggie Patty
Subway also sells breakfast sandwiches, English muffins, and flatbread. In 2006, "personal pizzas" debuted in some US markets. These are made to order (like their subs) and heated for 85 seconds. Breakfast and pizza items are only available in some stores. In November 2009, Subway signed a deal to serve exclusively Seattle's Best Coffee coffee as part of their breakfast menu in the US.
A 2009 Zagat survey named Subway the best provider of "Healthy Options" (in the "Mega Chain" category). Subway was also first in "Top Service" and "Most Popular" rankings. It placed second in "Top Overall", behind Wendy's.
Subway's menu varies between countries, most significantly where there are religious requirements relating to the meats served.
In 2006, the first kosher Subway restaurant in the United States opened, in a suburb of Cleveland, Ohio in the Mandel JCC of Cleveland. Former Subway spokesman Jared Fogle attended the opening. A press release stated, "With slight modifications, such as no pork-based products, and the use of soy-based cheese product, the menu is virtually identical to that of any other Subway restaurant." Other openings soon followed, briefly making Subway one of the largest U.S. kosher restaurant chains. At their peak, 12 kosher Subway locations were open in the U.S, including Kansas City and 5 in New York. As of 2011, only five remain: Cleveland, Miami, Los Angeles and two stores in Maryland. Franchisees who failed noted a lack of support from the parent location in advertising, higher costs of kosher food and supervision, the inability to remain open on Saturdays, and that customers who do not keep kosher prefer the original menu and prices.
Subway opened its first restaurant in India in 2001 in New Delhi. Subway restaurants in India do not serve beef and pork products in deference to Hindu and Muslim beliefs respectively, and sell an extended vegetarian range due to the large number of vegetarians in the country. There are 395 Subway restaurants in 68 cities of India as of January 2013. On September 4, 2012, Subway opened its first all-vegetarian outlet on the campus of Lovely Professional University (LPU) in Jalandhar, Punjab. On March 6, 2013, Subway opened its second all-vegetarian outlet also offering Jain food in Paldi, Ahmedabad.
In the United Kingdom and Ireland, Subway has reduced salt content across its entire range by 33% and has committed to further reductions, in line with government targets. Subway's range of "Low Fat" subs is endorsed by the charity Heart Research UK.
Subway uses the advertising slogan "Eat Fresh", and focuses on how their sandwiches are made from freshly baked bread and fresh ingredients, in front of customers to their exact specifications, by employees whom Subway calls "Subway Sandwich Artists".
In November 2007, Subway's US commercials featured the cartoon character Peter Griffin (from Family Guy) promoting its new Subway Feast sandwich. Subway has also used "instant win" games, based on the game Scrabble.
Subway ran a product placement campaign in the US TV series Chuck since its first season. As ratings dwindled in the second season, a campaign to "save Chuck" was launched for fans, encouraging them to purchase a footlong sub from Subway on April 27, 2009, the date of the season finale. Tony Pace, Subway's marketing officer, called it the best product placement the restaurant chain has done "in several years."
Jared Fogle was a national spokesman for the company in the US starting in January 2000, giving talks on healthy living and appearing in advertisements. Fogle first came to attention in his native Indiana by claiming that he lost over 200 pounds in part by eating at Subway. From 2008, he was featured less often as the company marketed with more emphasis on their "5 dollar footlong" campaign. Subway attributed between one third and one half of their growth from 1998 to 2011 to Fogle, the equivalent of a tripling in size. Subway cut ties with Fogle on August 18, 2015 amid expectations that he would plead guilty to child pornography and child molestation charges, which were confirmed the following day. He has since been sentenced to more than 15 years in federal prison.
In December 2015, following the removal of Fogle from its marketing, Subway introduced a new marketing campaign, "Founded on Fresh". The campaign focuses upon Subway's establishment and early history, and features Fred DeLuca, as played by his son, Jonathon. The new campaign downplays the use of jingles and celebrity endorsements (besides "targeted" sports marketing), in favor of focusing upon the qualities of its products, and specific products. Chief advertising officer Chris Carroll explained that the focus on fat, calories, and weight loss were "what fresh used to be", and that the new campaign would focus more on the sourcing of Subway's ingredients, such as its phase-out of antibiotic-treated meat. Carroll also explained that the new strategy was being developed prior to the controversy involving Fogle.
In 2008, Subway began to offer all foot-long submarine sandwiches (excluding premium and double-meat varieties) for five dollars, in the continental United States and Canada, as a "limited time only" promotion. "Five Dollar Footlongs" quickly became the company's most successful promotion ever. Upon the initial promotion's completion, customer response prompted Subway to create a permanent "$5 Footlong Everyday Value Menu" that offered some footlong sandwiches for $5. As of 2011, there has been a monthly rotating $5 footlong. Which subs are permanently priced at $5 varies by market.
In October 2011, a similar promotion was launched in the United Kingdom. Customers can buy one of nine subs and any drink for £3 (for a six-inch sub) or £5 (for a footlong). On November 1, 2014, Subway discontinued the five dollar footlong promotion, replacing it with the $6 six-inch select with a drink and a choice of cookies or chips.
Participating Subway restaurants in the U.S. and Canada offer a "Subway Card" to customers, which functions as a stored-value cash card. In some states and provinces, the card also functions as a "Subway Rewards Card", allowing customers to earn points for free food and sandwiches. Unlike in the "Sub Club" program, no other purchase is needed when redeeming points, and registered cards can be replaced if lost or stolen. Subway runs periodic promotions in which it gives away free subs to customers who pre-load a Subway Card with certain dollar amounts, usually listed at mysubwaycard.com.
All stores in the United Kingdom and Ireland participate in the Subcard system, offering customers points with each purchase at a store, which are redeemable for subs and snacks. Unlike in the US system, these cards cannot be used to store cash. The program was rolled out in Germany, and other parts of Europe from 2012.
Hepatitis A contamination
In September 1999, at least 32 customers in the north Seattle area contracted hepatitis A after eating food contaminated with the virus at two Subway outlets. The virus, which is spread by eating or drinking food or water contaminated with infected feces, infects the liver causing nausea, vomiting, diarrhea, fatigue and fever. Subsequent investigations found that staff failed to adhere to thorough hand washing and the use of plastic gloves during food preparation. A class-action lawsuit on behalf of 31 victims was resolved for $1.6 million. The most seriously affected victim—a 6-year-old boy—suffered acute liver failure and required a liver transplant. He was awarded $10 million in an out-of-court settlement in 2001. A previous outbreak of hepatitis A in 1996 had also involved a Subway outlet in the Seattle area, although no legal action had resulted.
In April 2015, the Arkansas Department of Health issued a warning to the public that customers who had eaten at the Subway outlet in Morrilton, Arkansas, may have been exposed to infection after an employee tested positive for the virus.
On February 2, 2007, KNXV-TV (with the help of the Arizona Department of Weights and Measures) reported that three of Subway's "Giant Sub" sandwiches, nominally each 3-foot (91 cm) long, were actually 2 feet 8 inches (81 cm), 2 feet 8.25 inches (81.92 cm), and 2 feet 8.5 inches (82.6 cm) long. The maximum variance in length allowed in Arizona is 3% (1.08 inches (2.7 cm), for a three-foot sub). The report also showed the boxes designed to store these sandwiches were 2 feet 10.75 inches (88.27 cm) in length; shorter than the maximum allowable variance. In response to the report, Subway stated they were reevaluating their advertising, training and packaging materials with regard to the specific or implied length of Giant Subs, and were advising their franchisees to only discuss with customers the approximate number of expected servings and not a specific length of measurement.
In January 2013, an Australian teen, Matt Corby, complained on Facebook that Subway's "footlong" sandwich was only 11 inches (28 cm) long, rather than 1 foot (30 cm). Subway responded by saying, "With regards to the size of the bread and calling it a footlong, 'Subway Footlong' is a registered trademark as a descriptive name for the sub sold in Subway Restaurants and not intended to be a measurement of length."
In 1995, Subway Sandwich Shops, Fred DeLuca, Peter Buck, and Doctor's Associates Inc. were held liable for breach of contract. An Illinois jury awarded more than $10 million in damages to Nicholas and Victoria Jannotta after finding lease and contract violations. The plaintiffs claimed the defendants had misrepresented the asset value of Subway Sandwich Shops (a leasing company used by Doctor's Associates for franchising purposes) while negotiating a 1985 lease agreement.
The U.S. House of Representatives' small business committee studied the franchise industry from 1992 to 1998. Dean Sagar noted, "Subway is the biggest problem in franchising and emerges as one of the key examples of every abuse you can think of." In 1989, the U.S. Small Business Administration refused small business loans to Subway franchise owners until Subway removed a contract clause which gave it power to seize and purchase any franchise without cause. The Dallas Morning News reported Subway had seized American soldier Leon Batie Jr.'s Subway stores in 2006, while he was serving in Afghanistan. He had been deployed to support Operation Enduring Freedom in March 2005, three years after buying his first restaurant. Batie alleged Subway had violated the U.S. Servicemembers Civil Relief Act. He filed a federal lawsuit against Subway, which was dismissed. He then filed suit in state court, in Dallas County, Texas. Both parties settled on "mutually agreeable" and confidential terms in January 2010.
United Kingdom VAT treatment
In October 2010, Subway franchisees in the United Kingdom lost a high court appeal, against paying standard VAT on all toasted subs, as required by HM Revenue and Customs. Thus, in the United Kingdom, a toasted sub attracts VAT, whereas a cold sub, eaten off the premises, does not. Competitors such as Quiznos & McDonald's do not pay VAT on similar food.
In March 2012, Chancellor of the Exchequer, George Osborne announced plans to close the loophole that allows Subway competitors to offer hot food without paying VAT. This legislation was expected to come into force from October 2012 onward, but the government withdrew plans to charge VAT on originally hot food being allowed to cool naturally on 28 May 2012. In June 2012, Subway launched the "Toast the Tax" campaign to put pressure on the government to drop VAT on toasted sandwiches, as it has done for hot savouries.
Casey's trademark case against Subway
On January 31, 2011, Subway lawyer Valerie Pochron, wrote to Casey's General Stores, a chain of Iowa-based convenience stores, demanding the small chain to cease using the term "footlong" in advertisements for its 12-inch sandwiches. Subway threatened to sue. Consequently, in February 2011, Casey's General Stores Inc. filed a petition in a U.S. District Court in Des Moines, seeking a legal declaration that the word "footlong" does not violate Subway's rights. Casey's further sought a declaration that the word "footlong' is a generic description of a sandwich measuring one foot. Before serving its complaint on Subway, Casey's voluntarily dismissed its action, ending the litigation.
Subway's trademark application for "footlong" has yet to be approved by the federal government. Subway has attempted to register it with the United States Patent and Trademark Office twice. They filed on November 8, 2007 and June 4, 2009. A&W, Pizza Hut, KFC, Taco Bell (all of which are Yum Brands restaurants), Long John Silver's and other restaurants are opposing that application.
Subway made alterations to its bread after food blogger and activist Vani Hari gathered more than 50,000 signatures in a petition drive. Subway removed azodicarbonamide from its bread. Before Vani Hari's petition, Subway had used azodicarbonamide as a bread conditioner, to whiten the dough and allow sandwich bread to bake more quickly.
In August 2015, Vani Hari again petitioned Subway in conjunction with Natural Resources Defense Council, Friends of the Earth, the Center for Food Safety, U.S. Public Interest Research Group to commit to buying meat produced without the routine use of antibiotics and to provide a timeline for doing so. In October 2015, Subway announced they would transition to chicken raised without antibiotics in 2016 and turkey within the following 2–3 years, and would also transition beef and pork raised without antibiotics by 2025.
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