Editor's Note:
"Overseas Headlines" is an overseas column launched by Chuangbang, serving the majority of entrepreneurial people and providing them with professional, enlightening and practical overseas information.
By sharing excellent industry hot articles, the column helps entrepreneurs open up new ideas, gain insight into global market trends, and grasp the secrets behind large enterprises. Entrepreneurship should not be blind, open your eyes to see the world, in order to find a new landscape.
When it comes to fast food brands, the first thing that comes to mind is definitely McDonald's and KFC.
In fact, in terms of the number of stores around the world, Subway's expansion is actually more dramatic.
Founded in the 1960s, Subway had nearly 42,000 stores worldwide at its peak, more than any of its competitors, with McDonald's having just 39,000.
However, after half a century of success, Subway's growth has been challenged.
In 2019, Subway closed more than 1,000 stores in the United States, while McDonald's closed only 68 during the same period.
So, what does the future hold for the sandwich giant? Can it recover from this difficult time?
This issue features the medium website's article "Subway Is Dead and It Knows It" by Liam Hunter-Bailey.
In 1965, Fred DeLuca, a 17-year-old entrepreneur, started his own sandwich company in Connecticut.
With the support of investor Peter Buck, Pete's Super Submarines was officially launched and renamed Subway two years later.
At first, Subway's new approach was welcomed by Americans.
Subway's advertising slogan at the time was "sandwiches should be like this", and people thought it was a place where quality food could be bought at reasonable prices.
DeLuca and Buck also founded another company called Doctor's Associates Inc. of the company, focusing on franchising business, carrying out business expansion.
It turned out to be a success, and they began to slowly open more restaurants with the help of franchisees.
Over the next decade, the two achieved their goal of opening 32 restaurants.
By 1981, there were more than 200 stores in the United States. After becoming experts at running a company, they set their sights on the wider field.
In December 1984, they opened their first Subway store in Bahrain outside of North America.
The authors say that when it went international, Subway began to expand rapidly, opening its first British restaurant in Brighton in 1996.
DeLuca and Buck realized that other fast-food restaurants had little reputation for health, so they decided to take advantage of this and advertise Subway as a high-quality fast-food restaurant that is good for health.
Subway pioneered the concept of an open kitchen where consumers can walk into the kitchen, get in touch with fresh ingredients, and then choose what they want and watch the sandwiches made in front of their eyes.
Not only do customers like Subway's business model, but so do franchisees.
Subway is one of the cheapest fast-food restaurants, typically costing between $120,000 and $270,000 to open a store — compared to McDonald's, which averages around $2.2 million for a franchise.
It can be said that Subway has made it very easy to open a restaurant, the number of stores has soared, and the brand has become globally famous.
In the 1990s, in just 10 years, subway stores worldwide grew from 5,000 to more than 13,000; Growth of more than 260%.
As obesity increased in the U.S. and U.K., people began to see the sandwich company as a place to get healthy food, rather than junk food like McDonald's or KFC.
In this period of about 10 years, in a classic advertisement of Subway, an obese man successfully lost weight by eating Subway, and he and his old and fat jeans lingered in people's minds.
The authors say the recession that followed had a devastating impact on many businesses around the world.
People are starting to look for cheap restaurants instead of healthy eating. Subway quickly changed its advertising strategy, introducing a new $5-a-foot promotion starting in March 2008.
By August of the following year, the event had generated $3.8 billion in sales for Subway, while rival McDonald's was on the brink of recession.
Over the next few years, though, as the economy slowly recovered, Subway's competitors also began to recover.
Many new sandwich companies enter the market, offering the same fresh food.
Subway, which used to adapt well to changes in the market, is starting to become less aggressive.
Its business model has been relatively stable, selling the same products all the time.
Its competitors, on the other hand, are changing menus almost every month, introducing new dishes to attract new customers.
What's more, chains like McDonald's began to capitalize on the emphasis on healthy food, and after 2010, they launched salads, fruits and other healthier options.
Slowly, Subway began to lose its unique selling points, and its popularity gradually declined.
Around 2015, Subway began to feel the negative impact of the unchanged business model. It continued to reduce the cost of opening stores until several Subway stores were seen on every street corner.
In Manhattan, for example, it's easy to find at least three Subway stores wherever you go.
Profits plummeted, and Subway was forced to begin closing stores around the world.
In 2016, 359 stores were closed in the U.S. alone, the first time the company closed more stores than it opened.
This trend continued, with more than 800 and 1,000 stores closed in 2017 and 2018, respectively.
With such statistics, Subway seems to have begun to decline.
To help itself, subway initially renovated a large number of restaurants, creating a more modern, cleaner look and brighter, more open atmosphere with neon lights, as well as free WiFi and USB ports.
It also experimented with launching new products, investing more than $80 million to develop new menus.
In 2019, the chain launched a new cheese and garlic bread that became one of the best-selling products.
Is it too late?
The authors say that Subway was once the unquestionably king of low prices for fresh food, but now the market is becoming more and more competitive, and competitors such as McDonald's are still thriving during the epidemic and have also launched innovative menus.
It is very difficult to recover from the downturn that Subway is currently in. The need for it seems to have gone.