Well ! beautifully elaborated. :) Thanks for these insights.
I own three Subway restaurants. I don`t want to make anyone mad, but some things posted here are either wrong or misleading. First off, I have been involved with Subway for 17 years, since 1989, and it is a good company.
The average store in the US does a little shy of $8,000/week. So for easy round numbers lets say the average store does $400k/year. It is relatively easy to pull 20% profit if you keep an eye on the business. I averaged 22.63% for the first quarter this year and I was in my stores an average of 10 hours or less per week so 20% is not that hard. But for the following estimate, lets use 20% average profit.
If you have a store that is merely average you should profit in the ballpark of $80k/yr.
Now lets say you were lucky enough to get a great location and you store does $15k/week (the area I am in has several stores that do this and much more in sales so it is very possible), well you should be making in excess of $150k per year.
Now, one or two stores are not going to make you a multi-millionaire, but you can make a comfortable living without much of a time investment.
Now lets switch gears. I`m not sure what article in Entrepeneur Magazine said Subway was rated one of the worst franchises? I would love to see a link to this article? Entrepeneur Magazine rated Subway the #1 franchise in their Franchise 500 for 2006. This was the 14th year Subway was rated #1.
Yes, Subway franchisees must purchase the food from one distributor, not from "the parent company". These prices are not "inflated". Infact, it`s just the opposite. IPC (Independent Purchasing Cooperative) was formed to negotiate prices and ensures all foods/supplies meet "Gold Standard" qualities. Some food distributors don`t want Subway`s business because the pricing leaves so little room for distributor profits. With over 26,000 stores we have tremendous buying power.
If you purchase a subway you do not have the rights to a certain territory. Subway does not have "regional managers", but does have "development agents" a.k.a. "DA". Development agents` "sole mission in life" is not just to open new stores. Yes, as their company given titles suggest they do focus on developing their given markets/territories. There have been some unhappy franchisees when stores were opened close to their existing store and sales were negatively impacted. However, this is not the norm. It depends on the DA. Most DAs are very conscious of their existing franchisees. DAs have contracts with Subway`s parent company, Doctor`s Associates Incorporated. Per their contracts, they must maintain a certain level of sales average in the market. Therefore, they can`t just go putting Subways on every corner to meet the development numbers they need. They have to be smart in their development.
If you are considering Subway, talk to existing franchisees in the area and ask about their satisfaction with the DA of that area. Development Agents are also expected to ensure franchisees are operating within company guidelines by having field reps that inspect stores monthly. They do much more than just open stores.
Again, I`m not writing this to offend anyone who posted above. I just want to make sure that anyone considering Subway has accurate information. I hope this helps.
I appreciate all the comments here. As a potential franchisee I was wondering what would be the financing options. Do I need to come up with 100% of required cash? Can I finance some of it via a Bank or the franchisor? I know in any kind of business, if Bank believes that you worth to be lent, they will open up the financing option but I would like to hear people’s experience.
13 years ago I began working in a QSR as a delivery driver then a restaurant manager, and worked my way up to a middle manager in corp America. I have a BS degree in IT and an MBA and recently stepped back to look at my future. I've decided that it may be time to venture out of the corp world and become a franchisee since my current role supports franchisees and their technology. I have a coworker who is interested in partnering up who could provide the net worth as I come with the experience and education. We are looking at subway as an opportunity to get into the franchise business and growing. We both want to move out of the corp world and work for ourselves.
1.how do we get started?
2. We are looking to keep working our current positions and open a restaurant (is this possible)?
3. Our 5 year goal is to take all profits from the first subway and put them towards a second. Take profits from first and second and put towards a third, then once opening up the 3rd, become full time franchises and resign from corporate America.
4. By our 10th year we would like to own 5-10 stores
how much of this can happen? Is there an average net profit number from subway that can give us some kind of idea what we are looking at? Is subway the right choice?
Hey guys, I am a 23 year old table games dealer and real estate agent. I have always had a very entrepeneurial mindset and I am hoping to start some kind of business within 3-5 years. The reason I got into real estate 2 years ago is to start investing in real estate so that I have some equity to leverage against or pull out to put towards starting a business. Anyway, I have wondered if a franchise is a way I would want to go and Subway and Dunkin Donuts immediately come to mind. I was wondering if you need a lot of cash for starting these types of businesses or if any types of business loans are available? For instance, if it is estimated to cost say $185k to start up a subway, would I need that in liquid assets and/or equity or could I look for some type of SB loan to cover some of the cost?
Thank you SubwayOwner
I am seriously looking into buying a Subway Franchise and after seeing many of the previous posts before yours, I was concerned that I might be making the wrong move, and believe me I realize Nothing in this world is garenteed and Location is a Big thing with Subway. I am willing to put in the $ & time I just want to try to make sure if I do that I get 1/2 a chance at being successful and possibly getting another one. But I think you gave me a little hope that Possibly it may turn out to be a good decision.
Thanks Again: Bizmikey
If you have a store that is merely average you should profit in the ballpark of $80k/yr.
I had forgotten about this board until I stumbled across it again today...
There has been some good information given here as well as some very wrong information. If you are going to post on a site like this, please consider that a lot of the people reading your words may be considering whether or not to make one of the biggest financial decisions of their lives, possibly risking their family's life savings. If you are not 100% positive the information you are going to post is correct... THEN DON'T POST IT!
I have been in Subway for nearly 22 years. Some of this will be redundant from earlier post, but I hope the following will help:
1) Subway has nearly 33,000 locations in 91 countries. They keep selling locations because they make money.
2) The Subway franchise agreement prohibits a franchisee from owning another business that primarily sells sandwiches, and of course that would include Quiznos.
3) There are NO territorial rights with Subway*. Subway has "Development Agents" (aka DA's). These Development Agents employ field reps that inspect stores on a monthly basis to ensure stores are operating according to company standards. DA's also decide where new locations will open.
*Some DA's are much better than others. If you are planning to get into the system. Go talk to several franchisees in that area and ask about the DA.
4) Talk to current Subway franchisees in the area you are considering and ask lots of questions about their experience. Subway's parent company, FWH (Franchise World Headquarters) formerly DAI, and their Development Agents will never discuss specific numbers for liability reasons. This is why it is import to talk to current franchisees.
5) $5 Footlongs are not causing franchisees to go broke or "lose their shirts". In fact, the opposite has happened. Nationwide average unit volume is now close to $10k/week.
6) There is no minimum hours requirement per corporate. Corporate does not know or care how many hours the franchisee is in the store as long as it is operating in full compliance.
7) Commercial real estate is hurting right now. If you are looking at opening a new store, you should be able to negotiate a very reasonable lease along with some build-out help from the landlord to help reduce initial costs. It is possible to open a store for under $100k!
8) 20-25% profit is very possible, 35% is very unlikely.
9) Franchisees are not required to buy food at inflated cost from the company. In fact, it is the exact opposite. Independent Purchasing Cooperative (IPC) negotiates very favorable pricing on behalf of Subway Franchisees. Subway has considerable buying power.
10) Subway, like any other large company, has its challenges. Overall, my experience has been very positive. However, that's not the case for everyone. Keep in mind when reading negative posts, people who are posting them are often either not informed or disgruntled because of a bad experience.
11) If you don't like following rules or directions from others, then franchise ownership is probably not for you. Subway has a proven system. It is not perfect, but if you follow the system and operate in compliance, your chances at success are very good.
Again, I hope this helps. Good luck in your endeavors!
I am researching Subway financials for my boss who is looking to open one in our town. Is there a place to get ballpark rough estimates for what is reasonable for sales, expenses, etc? I've found some things that break expenses as % of sales, which is fine, but just wanted to get a feel for whats a good range for sales to start out in.
Thanks in advance.
Subway Owner-I know this post is nearly 6 yrs old, but if you are out there, or another subway franchisee, would like to know a little more, going to the seminar this week. When you say you pulled 20% profit, do you mean for your buisness or in your pocket? assuming some of profits after labor/costs you put into development, emergencies,etc. that come up.
There was an article in Entrepenuer magazine a few issues ago talking about the different franchise options, Subway was rated one of the worst.
Subway has "regional managers" whose sole mission in life is to open new stores, in fact they get penalized on their checks for failing to open X # of stores every year. There seemed to be no loyalty base whatsoever in keeping or protecting any kind of territory.
I remember reading that as a franchise owner, you are required to buy all your supplies and food products through the parent company at their inflated prices.
Hi, I'm in New Orleans and presently a self employed contractor with my own building and thinking of investing into the Subway Brand. 1st, I just newly renovated the building from scratch from Hurricane Katrina damage, but unfortunately didnt build out to Subway specifications, so the new building would have to be practically ripped up, moving bathrooms, walls tearing up new ceramic and so on, but I figure since the building is mine with a very minimal mortgage, I can do my own buildout at a fraction of the cost, and I would not have to pay myself rent, but I do not want to work full time in the store because my schedule is pretty demanding as it is. So do you think it can be successful with only working there 10-12 hours per week and keeping my construction company running full time? Secondly, is it possible to buy the franchise, do the buildout and then soon after sell the franchise and just benefit off the rental portion? Is this just a pipe dream or could turn out to be a decent investment? Just trying to find out if it would be worth tearing my newly constructed building apart and gambling on a new franchise with no restaurant experience except Taco Bell 20 years ago as a 16 year old (lol). Thanks
i stumbled on this post doing some other research, and though it is probably pretty much dead i have to put my 2 cents in here. i am in the deli biz, but am not a Subway or Quiz owner. in fact i am an indie, own more than one location, but that is not important.
everyone of the questions here has to do with what one can make? or how much does X franchise make?
if you get in this biz you will here: your food cost should be x%, labor x%, have to pay x% in royalty/marketing and so on. while these percentages are important, and they REALLY ARE IMPORTANT, they are not the key. i have friend that has a pizza franchise and he is always complaining about his food cost. my response is always, "do you want 30% food cost or net $1mil a year?" and the yahoo always responds i need that 30% food cost.
its not about % its about $. and the questions in the post are about $, but believe it or not you have to use % to get there.
Let's use the $5 sub mentioned a while back. Ok $5 a sub. Here is what you need to consider. 30% for food, 13% for rent, 5% for utilities/insurance, 2% misc expense, 16% employees, 10% taxes (maybe a little much)...that leaves 24%. so of that $5 sub you have $1.20. This is the high number, cut it in half for the low number ($.60)
now what do you want to make a year. lets take a stab at $50k. Thats not much, but in this economy some people would kill for it. so with a little math that is roughly 83,334 total sales or 229 per day...
can you get 229 people in a day. say you are open 10to10, how about 19 an hour.
this is how you need to think about the biz. its not the gross number, or the net number. it is taking your average ticket and putting butts through the door.
but i think like an indie, and if you are looking at a franchise you have to add in the royalty and marketing.
this is business...not money trees.
One reason for the $400 K net worth might be to ensure you have financial resources enough to carry the store for the first year or two until you get a client base established.
---The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.
"In the multitude of counselors there is safety"
Anyone looking to open up a franchise needs one very important thing: check your emotions at the door.
You need not be deluded with "fact" thrown around on the internet. Seek professional advice.
I am a franchise owner in the western, NY area. Got lucky with my first store and was thinking about expanding quickly by buying an existing location. Rather than think I knew all the answers because I hit one home run, I contacted Fayaz and got some serious straight advice.
Not only did I get advice about the stores I was thinking about purchasing, but I got a lot of extra tips about the system as well that helped me significantly.
It's not free, but it is a good value.
Can someone tell me what is the TOTAL cost of opening a subway, lets say i can have 180 to 260k, is that enough for a start, and the money will be from a friend, a close friend, but im still not sure is that enough for a start. Im talkin about a subway in UK, not USA, so thats about 130 to 170k.
If there is someone from UK or know something about a subways in UK pleas post me more info.
And im not from UK, im a foreigner but i am from EU