The History of the Subway Franchise – Top 11 Facts

by FMS Franchise | Articles
9 minutes
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Subway, the world’s largest and most well-known submarine sandwich franchise, has a storied history that spans several decades. Founded by two young entrepreneurs in the mid-1960s, Subway has evolved into a global fast-food giant, with thousands of locations in nearly every corner of the world. This overview delves into the fascinating history of the Subway franchise, tracing its humble beginnings, rapid growth, marketing strategies, and the challenges it has faced along the way.

Table of Contents

1. The Birth of an Idea

The Subway story begins in August 1965, when Fred DeLuca, a 17-year-old high school graduate, partnered with Dr. Peter Buck, a nuclear physicist, to open a submarine sandwich shop in Bridgeport, Connecticut. DeLuca, the son of a hardworking Italian family, had ambitions of attending medical school, but limited funds made this dream seem distant. Dr. Buck, who became DeLuca’s financial backer, suggested the idea of opening a sub shop to help DeLuca earn money for his education.

Initially, they named the venture “Pete’s Super Submarines,” and with a $1,000 loan from Dr. Buck, the first restaurant was established. The idea of serving submarine sandwiches, or subs, was relatively novel at the time, as this type of sandwich was not commonly found in mainstream fast-food establishments.

2. Early Challenges and Innovation

The journey for DeLuca and Buck was not without its obstacles. The first restaurant was located in a less-than-ideal spot, and they had to work tirelessly to attract customers. In these early days, the franchisees faced many challenges, including limited funding, steep competition, and a steep learning curve in the food service industry.

One of the most notable innovations that helped them stand out was the use of a toaster to crisp up the bread for their sandwiches. The warm and crispy bread quickly became a hallmark of Subway’s offerings, setting them apart from traditional cold sandwich shops.

3. The Submarine to Subway: Rebranding and Growth

By 1968, DeLuca and Buck had decided to rename their growing business “Subway” to reflect their focus on submarine sandwiches. This rebranding proved pivotal for the company. The name was not only catchy but also evoked the idea of traveling quickly from one point to another, an association that aligned with the concept of fast food.

As the brand’s reputation for fresh, made-to-order subs spread, Subway began expanding through franchising. This business model allowed them to scale rapidly and bring the Subway experience to a wider audience. The first Subway franchise was opened in Wallingford, Connecticut, in 1974, marking the beginning of a franchising empire.

The franchise system provided aspiring entrepreneurs with the opportunity to own and operate their own Subway restaurants, following the established formula, using Subway’s distinctive recipes and bread-baking techniques. This approach helped Subway become one of the fastest-growing franchises in the United States.

4. Menu Evolution and Health Consciousness

One of the keys to Subway’s success was its ability to adapt to changing consumer preferences. In the 1980s and 1990s, as health-consciousness in the United States grew, Subway capitalized on this trend by positioning itself as a healthier fast-food alternative. They introduced the “7 Under 6” campaign, emphasizing a selection of subs with fewer than six grams of fat.

Moreover, the “Subway Diet,” popularized by Jared Fogle in the late 1990s, brought significant attention to the brand’s health-conscious offerings. Jared claimed to have lost a substantial amount of weight by eating Subway sandwiches, effectively turning himself into a brand ambassador for the franchise.

This emphasis on healthy options helped Subway expand its customer base, appealing to those who were looking for a more nutritious dining option without sacrificing taste. Fresh ingredients, a variety of vegetables, and customization options allowed customers to tailor their subs to their dietary preferences.

5. Global Expansion

By the late 1980s, Subway had established a strong foothold in the United States. It was only a matter of time before the company set its sights on international expansion. In 1984, Subway opened its first international location in Bahrain, and this marked the beginning of a global journey that would take the franchise to nearly every corner of the world.

Subway’s international expansion was marked by both success and adaptation. The company recognized the need to adjust its menu to cater to local tastes and dietary preferences. In India, for example, Subway introduced a range of vegetarian options to cater to the predominantly vegetarian population.

The company also faced challenges in some countries where consumer tastes and eating habits differed significantly from those in the United States. In Japan, where raw fish is a staple, Subway introduced sushi sandwiches. This willingness to adapt and localize its menu helped Subway gain acceptance in various international markets.

6. Marketing Strategies and Partnerships

Subway has been known for its marketing campaigns, which often focus on freshness and health. Their slogan “Eat Fresh” became synonymous with the brand and reinforced the perception of Subway as a healthier fast-food choice.

In addition to its marketing campaigns, Subway forged several strategic partnerships to enhance its brand presence. One of the most notable partnerships was with the American Heart Association (AHA). In 1998, Subway became the first and only restaurant chain to receive the AHA’s Heart-Check certification for heart-healthy meals. This partnership strengthened Subway’s image as a health-conscious restaurant.

Moreover, Subway leveraged endorsements from celebrities and athletes to enhance its brand. Notable endorsements included athletes like Michael Phelps, Nastia Liukin, and Blake Griffin, who promoted Subway’s Fresh Fit menu items. These endorsements not only helped with marketing but also tied the brand to fitness and health.

7. Challenges and Controversies

Subway’s journey has not been without challenges and controversies. In 2015, the company faced a significant public relations crisis when it was revealed that its longtime spokesperson, Jared Fogle, had been charged and subsequently convicted of child pornography and sex crimes. Subway swiftly cut ties with Fogle, but the incident damaged the brand’s reputation.

Another challenge came from increased competition. The rise of fast-casual dining chains, like Chipotle and Panera Bread, offered consumers new alternatives to traditional fast-food options. These competitors emphasized customization, quality ingredients, and a fresh image, which encroached on Subway’s territory.

Moreover, changes in consumer preferences, including the shift towards locally sourced and organic ingredients, posed a challenge for Subway. The brand had to find ways to adapt to these evolving trends without sacrificing its core value of affordability and speed.

Legal disputes have also emerged over the years, including franchisee-franchisor disputes, allegations of false advertising, and issues related to franchise fees. These challenges underscored the complexity of managing a vast network of franchisees and adhering to various regulations and expectations.

Despite these challenges, Subway continued to adapt and innovate. They introduced new menu items, such as flatbreads and the “Rotisserie-Style Chicken” sub, in an effort to keep up with changing consumer preferences and expectations.

8. Digital Transformation

The digital age brought new opportunities and challenges to the fast-food industry, and Subway was quick to embrace technology to enhance customer experience and streamline operations. The company introduced online ordering and mobile apps, allowing customers to customize and place their orders from their smartphones. This not only made the ordering process more convenient but also allowed Subway to gather data on customer preferences and habits.

In 2017, Subway introduced a revamped loyalty program called “Subway MyWay Rewards,” which offered customers personalized deals and rewards based on their purchase history. This program aimed to increase customer retention and drive more frequent visits to Subway restaurants.

The digital transformation extended to the restaurant operations as well. Many Subway locations implemented digital touch-screen kiosks for ordering, reducing wait times and offering a more convenient experience for customers.

9. Sustainability Initiatives

Subway recognized the importance of sustainability and environmental responsibility, launching various initiatives to reduce its ecological footprint. In 2007, they announced their commitment to source only cage-free eggs, a move aimed at improving animal welfare. They also began sourcing some of their meat from suppliers who raised their animals without antibiotics.

Moreover, Subway made efforts to reduce waste and promote recycling in its restaurants. They implemented energy-efficient equipment and sustainable building practices in some locations. Additionally, they aimed to reduce their carbon footprint by optimizing their supply chain and transportation operations.

In the late 2010s, Subway introduced a “Make It What You Want” sustainability program, emphasizing customer choice and transparency. This program allowed customers to make eco-conscious choices by selecting locally sourced and plant-based ingredients.

10. Subway Today

As of my knowledge cutoff date in September 2021, Subway was still a major player in the fast-food industry, with thousands of locations in more than 100 countries. The company continued to innovate and adapt to evolving consumer preferences, introducing new menu items and marketing campaigns.

The challenges faced by Subway, such as increasing competition and franchise-related issues, remained ongoing concerns. However, the brand’s history of resilience and adaptability suggested that they would continue to find ways to address these challenges.

11. The Future of Subway

The fast-food industry is in a constant state of evolution, shaped by changing consumer preferences, dietary trends, and societal values. Subway, like other major fast-food chains, would need to continue adapting to these shifts in order to remain relevant and successful.

With the growth of plant-based and sustainable dining options, Subway may explore more environmentally friendly and health-conscious menu items. Additionally, continued investments in digital technology and online ordering would likely be essential to meet the demands of a more tech-savvy and convenience-oriented customer base.

As the company’s history has shown, Subway’s ability to innovate, adapt, and engage with consumer trends will play a crucial role in determining its future success and longevity in the competitive world of fast food.

The history of the Subway franchise is a remarkable journey from a single sandwich shop in Bridgeport, Connecticut, to a global fast-food giant with thousands of locations around the world. Fred DeLuca and Dr. Peter Buck’s vision, along with their commitment to quality and freshness, fueled Subway’s rapid growth and enduring success.

Over the years, Subway faced various challenges, including competition, controversies, and changing consumer preferences. Yet, the company’s ability to adapt, introduce innovative marketing strategies, and embrace technology helped it maintain its position as a leading player in the fast-food industry.

The future of Subway will undoubtedly involve ongoing adaptation to evolving trends in the food industry, a focus on sustainability, and a commitment to delivering fresh, customizable, and health-conscious options to its customers. As Subway continues to navigate the dynamic landscape of fast food, its enduring legacy and global presence are a testament to the entrepreneurial spirit and determination of its founders and franchisees.

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