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Subways 8 Small Business Success Factors – Jared Isn’t One Of Them

Saturday, February 9th, 2013

Have you heard the story of how Subway repositioned itself and had enormous success all due to Jared Fogle? If you have, I’m here to tell you it’s all hype – and missing most of the facts. There are 8 small business success factors behind the huge success of Subway (but 1 of them isn’t Jared Fogle).

But first, why are so many people on this Subway bandwagon in the first place? Well it’s a great example of repositioning. But that’s about it. What really stinks is the red herring small business owners are getting from this advice.

All of a sudden you have small business owners in every niche asking themselves ‘Can I reposition my business as a weight loss business?’ Or any other benefit driven hybrid business to possibly become more successful. Ignore that, a good sales system can succeed without a hybrid proposition.

You shouldn’t believe everything you read.

I’ve been reading a lot of marketing books lately and a number of them have been using a popular illustration about the fast food business, Subway. These books explain just how Subway successfully transformed itself and had enormous success due to their marketing campaigns repositioning the business from being a ‘fast food outlet’ to a ‘weight loss service’.

Here’s what Mal Emery’s book titled “Your Marketing Sucks and You Know It” says;

Subway is one of my favourite examples. Here we go, we’ve got like a massive bread roll full of a whole pile of sauces and cheeses and stuff and they are trying to tell us we’re going to lose weight when we eat it. I mean they have positioned themselves and they own it as the Jenny Craig of the fast food industry and it’s sensational.

FWIW – I don’t think Mal has ever eaten a Subway roll after that description.

However, something started to stink – I don’t know what it was exactly but all of a sudden, while reading his chapter on Subway and after reading similar stories on the subject in different books, I started to smell BS.

Let me break down the hype.

Apparently, as many marketers are suggesting, Subway positioned themselves as a weight loss fast food service. Most of us recall those ads on TV with Jared. We probably also recall how McDonalds were under attack for an obesity epidemic and we put the two together and think ‘yep that makes good sense’.

But there’s a problem – the timeline here is all wrong.

In fact, the timeline on the success of Subway (if you believe Mal Emery) is also very wrong.

Take a look at the official Subway Timeline (This information has been copied from Subway.com and re-printed here for ease of reading);

1965 - Fred DeLuca and Dr. Peter Buck team up to open their first submarine sandwich shop in Bridgeport, Connecticut. Originally called “Pete’s Super Submarines,” they sell 312 sandwiches the first day. The average cost of a sub was between 49 cents and 69 cents.

1966 - Partners DeLuca and Buck form Doctor’s Associates Inc. The name is derived from Dr. Buck, who holds a Ph.D., and the fact that DeLuca hoped to earn enough money in the sandwich business to pay his college tuition and eventually become a medical doctor.

1968 - The SUBWAY® name is used for the first time.

1974 - The first franchised SUBWAY® sandwich shop opens in Wallingford, Connecticut.

1975 - The chain’s flagship sandwich, the classic BMT, is first introduced. It is named for the Brooklyn-Manhattan Transit system, but later it is referred to as “Biggest, Meatiest, Tastiest,” in advertising campaigns. The first SUBWAY® restaurant located outside of Connecticut opens in the state of Massachusetts.

1976 - The first SUBWAY® restaurant in Florida opens in Ft. Lauderdale. The Training Department is established at SUBWAY® headquarters in Milford, Connecticut.

1977 - The “Snak” sub sandwich is introduced. The name is later changed to the “6-inch.”

1978 - The first SUBWAY® location on the West Coast opens in Fresno, California

1980 - The SUBWAY® chain introduces its New York City transit-system-themed mural as a décor item in a restaurant in Ithaca, New York.

1981 - SUBWAY® restaurant number 200 opens in Renton, Washington.

1982 - The SUBWAY® chain opens its 300th location.

1983 - SUBWAY® restaurants begin introduction of freshly baked bread at U.S. locations. The SUBWAY® chain is ranked number one in the sub sandwich category for the first time by Entrepreneur magazine.

1984 - Party Platters and the SUBWAY® Club sandwich are introduced. The 400th Subway restaurant in the United States opens in Dallas. The chain ventures into the international arena and opens a unit in the Middle Eastern nation of Bahrain.

1985 - Steak and Cheese and Wheat Bread are added to the menu. The SUBWAY® restaurant chain celebrates the opening of the 500th unit, and the opening of the first restaurant in Puerto Rico.

1986 - Breakfast menu is introduced at SUBWAY® restaurants at participating locations. The first SUBWAY® restaurant in Canada opens in St. John’s, Newfoundland.

1987 - SUBWAY® restaurants now number 1,000 locations with opening in Anderson, Indiana. The chain opens the first locations in the state of Hawaii and in the Bahamas.

1988 - Cold Cut Combo is introduced. The chain’s 2,000th location opens in Kaneohe, Hawaii. First Australian location opens in the city of Perth. Entrepreneur magazine lists the chain as the number one franchise opportunity for the first time in their annual Franchise 500 rankings.

1989 - The 3,000th SUBWAY® restaurant opens in North Muskegon, Michigan. The SUBWAY® chain now present in all 50 U.S. states. First SUBWAY® restaurant opens inside a grocery store. A SUBWAY® restaurant has a cameo appearance in the Mel Gibson film, “Lethal Weapon 2.”

1990 - The SUBWAY® restaurant chain reaches its goal of 5,000 restaurants with an opening in Texas. The first SUBWAY® restaurant opens in Mexico.

1991 - The first SUBWAY® kid’s meal is introduced, known as the Kids’ Pak™. First SUBWAY® restaurants open on a college campus and in an amusement park. First SUBWAY® network TV commercial airs. SUBWAY® products are featured in the motion picture “Terminator 2: Judgement Day.”

1992 - The SUBWAY® chain participates in its first school lunch program. First Subway restaurants open in Japan and Saudi Arabia.

1993 - The first SUBWAY® restaurant opens inside a convenience store. The SUBWAY® brand is featured in scenes in the films “The Coneheads” and “The Beverly Hillbillies.”

1994 - Restaurants and Institutions magazine gives the SUBWAY® restaurant chain the top ranking in their consumer choice survey for the sandwich category. SUBWAY® restaurants open for business in Austria, Brazil, Iceland and Russia.

1995 - The chain celebrates its 30th anniversary with the opening of the 11,000th location. The SUBWAY® chain becomes a supporter of the Produce for Better Health Foundation’s National 5-A-Day program. SUBWAY® chain begins first motorsports sponsorship with an Indy race car. SUBWAY® restaurants open in China, Costa Rica, Ecuador, Egypt, El Salvador, Honduras, Ireland, Jamaica, New Zealand, Spain, Switzerland and Taiwan. The SUBWAY® brand is featured in scenes in the movie “Ace Ventura–When Nature Calls” and on TV in the animated series, “The Simpsons.”

1996 - The SUBWAY® restaurant chain opens its 300th international location. SUBWAY® shops arrive in Colombia, Denmark, Guatemala, Kuwait, Martinique, Nicaragua, Philippines, Singapore, South Africa, Turkey, United Kingdom, Uruguay and Venezuela. The motion picture, “Happy Gilmore” features numerous scenes at a SUBWAY® restaurant.

1997 - SUBWAY® chain introduces the “7 under 6” menu, featuring seven sandwiches with 6 grams of fat or less. SUBWAY® restaurants open in Bolivia, Lebanon, Malaysia, and Panama.

1998 - The chain opens its first restaurants in Italy, Norway, Pakistan and the United Arab Emirates. Convenience Store News reports the SUBWAY® chain is the most preferred fast-food partner among convenience store executives.

1999 - The 14,000th SUBWAY® restaurant opens. For the first time ever, SUBWAY® commercials appear on network television in the U.S., every week of the year. The first SUBWAY® restaurants open in Germany, Qatar, Sweden and Zambia. The SUBWAY® float entered in Tournament of Roses parade wins the Governor’s Trophy for the first time.

2000 - Men’s Health magazine reports the story of Jared Fogle, a young man who lost 245 lbs. by eating SUBWAY® sandwiches for a year. He eventually becomes an icon for the brand and appears in a long running series of television commercials. SUBWAY® restaurants open in Finland, Netherlands, Poland and Tanzania. Fred DeLuca’s book Start Small Finish Big–Fifteen Key Lessons to Start–And Run-Your Own Successful Business is published by Warner Books. The SUBWAY® chain makes the biggest changes to its menu to date by introducing a line of sandwiches featuring four gourmet sauces and seasoned breads. The SUBWAY® brand is featured in the film, “Saving Silverman,” which stars actor and former SUBWAY Sandwich Artist®, Jason Biggs.

2001 - The chain reaches 15,000 restaurants worldwide. Cucumbers are added to the SUBWAY® menu. The first restaurant opens in Croatia, France, India and Oman. The SUBWAY® chain is the winner of the gold award for the sandwich category in the Restaurants and Institutions Choice in Chains Award and receives the MenuMasters Award for best menu/line extension from Nation’s Restaurant News. The SUBWAY® brand is mentioned on TV shows such as “Friends”, “Jeopardy”, “Saturday Night Live”, “The Tonight Show” and “The Late Show with David Letterman.”

2002 - The Wall Street Journal reports that the SUBWAY® chain has surpassed the number of open and operating McDonald’s restaurants in the U.S. SUBWAY® restaurants reach the milestone of 16,000 locations worldwide. That record is broken several months later when the chain opens its 17,000th location. The SUBWAY® chain opens its first restaurants in Belgium and Bulgaria. The SUBWAY® chain becomes the national sponsor of American Heart Association’s American Heart Walks. The SUBWAY® chain’s Tuscany Décor is rolled out marking the first complete interior and exterior revamp the chain has ever undertaken.

2003 - The 20,000th SUBWAY restaurant opens. Research firm, Sandelman & Associates’ Quick Track National Study rates SUBWAY® highest among national fast food chains and the leading chain based on the availability of healthy/nutritious food. The SUBWAY® chain wins Silver Skillet awards from Restaurant Business magazine. First SUBWAY® restaurants open in the Czech Republic and Luxembourg.

2004 - The 22,000th SUBWAY® restaurant opens. A SUBWAY® restaurant opens inside the True Bethel Baptist Church in Buffalo, NY, where the pastor, who is the franchisee, uses the restaurant to teach job skills to area residents who are in need of a helping hand. SUBWAY® restaurants open for the first time in St. Kitts, St. Martin, Hungary, Grenada, and Chile. The SUBWAY® chain launches its FRESH Steps childhood obesity initiative.

(We skipped these years for brevity)

2011 - With more locations than any other restaurant chain worldwide, the 35,000th SUBWAY® restaurant opens, including the 8000th non-traditional SUBWAY® restaurant. The chain received the first ever “A” in the Eat This, Not That! Restaurant Report Card, as well as top honors from Zagat. Five more Eco Restaurants open, bringing the total up to 14, with other locations incorporating eco elements.

The Jared Success Story Timeline is Wrong

When you look at the timeline above it becomes obvious that Subway was a successful business well and truly before Jared appeared. The year before Jared came on the scene Subway had successfully opened 14,000 stores.

But the repositioning was a stroke of genius and added to the success of Subway right?

WRONG.

Well at least, the timing and sentiment of the Jared campaign was actually ‘before its time’. You see, the marketing with Jared began in 2000. However, the real hype about fast food causing an obesity epidemic (which makes the repositioning of the business more relevant) started in 2003 when the first legal claim against McDonalds was made.

It also wasn’t until 2004 that the first time director Morgan Spurlock made his documentary Super Size Me. That movie alone would have enhanced the positioning of Subway, ahead of one of its rivals McDonalds – and probably in a more profound way that any Subway commercial given the independence of the film.

But did the Jared marketing help the business? That question is a little harder to answer, and most claim Subway grew by 18% year on year after Jared, however, take a look at what Subway did for the first time in 1999 - For the first time ever, SUBWAY® commercials appear on network television in the U.S., every week of the year. The year before Jared came along Subway started advertising every week on TV. Surely that has to account for some measure of success?

The Real Subway Small Business Success Factors

Like me, you may not have realised how successful Subway was before 2000. But the good news for all of us in business is that we don’t need some tricky form of marketing to make it big. The repositioning might have helped a little, but it’s very clear that the small business success factors and fundamentals of Subway was and is the real reason for the Subway chains success.

Marketers want to push their agenda of ‘great marketing’. Sure, I personally like the way Subway repositioned itself – it was a compelling campaign right? But for all of us running a business it’s almost irrelevant. Because the real reason behind the Subway success lies in the core business fundamentals.

You need to review a bit of the history of Subway to find the key ingredients to their success, both in the past and today;

Back in 1965, Fred DeLuca set out to fulfill his dream of becoming a medical doctor. Searching for a way to help pay for his education, a family friend suggested he open a submarine sandwich shop. The first store was opened in Bridgeport, Connecticut in August, 1965. Then, they set a goal of having 32 stores opened in 10 years. Fred soon learned the basics of running a business, as well as the importance of serving a well-made, high quality product, providing excellent customer service, keeping operating costs low and finding great locations.By 1974, the duo owned and operated 16 submarine sandwich shops throughout Connecticut. Realizing they would not reach their 32 store goal in time, they began franchising, launching the SUBWAY® brand into a period of remarkable growth which continues to this day.

So, here’s what you need to think about as a business owner if you want to replicate the success of Subway;

1. Set Goals for your business no matter how big or small you are.

I find it interesting that Subway really was birthed out of a goal that was set back early in 1965.

Setting goals should be a key ingredient in your business. Ryan and I recently discussed setting goals in a recent podcast – have a listen to it and follow the 7 action steps to setting and achieving goals for your own personal life and for your business.

What’s also important is they stuck to that original goal and did what they had to do to achieve it. I love this illustration as ‘scrambling’ is often a great pathway to success. It’s where you know you absolutely must do something to make things happen and you start looking beyond your normal operations for answers.

Most business owners scramble when their money is running out. But the art of scrambling is powerful – and setting non-negotiable goals will help you look for new opportunities.

2. Find something consumers want and make it or provide that service.

It’s a fairly obvious statement, but the fact is Subway sandwiches are popular because we’ve all grown up on sandwiches. They’re fresh, tasty and convenient. For every business it’s important to make sure you’re able to build a product or develop a service that people want and are prepared to pay for.

For me I have 3 favourite Subway rolls, the steak and cheese, turkey and ham and BMT. They are the same every time I order them. Consistency brings me back time and time again.

I have another Japanese restaurant that I’ve been visiting for 25 years – they have the same menu and their food has been the same year in and year out. The owner, Francis told me one of his secrets for success in surviving for 25 years is the limited menu.

“Having a smaller menu helps our cooking systems, and we can control the quality easily. Some people ask us why we don’t have more chicken choices on the menu – but our one chicken dish is our best seller. Customers have been ordering that 1 chicken dish for 25 years” says Francis.

3. Learn the basics of running a small business.

Do yourself a favour and get to understand the basics of everything your business does and needs to do. I’m not suggesting you need to become an expert, what I am suggesting though is that you quickly fill the gaps in your understanding.

  • Learn basic accounting.
  • Understand advertising and marketing.
  • Find out from your local chamber of commerce what your legal requirements are to your staff.
  • Learn how to develop and build systems quickly and efficiently.

All of those basics will hold you in good stead as you start to grow your own business.

4. Sell a well made, high quality product.

Subway believe in what they do. They know they’re selling fresh bread, fresh ingredients and have a range of sauces for anyone’s personal flavour requirements.

There’s nothing better than having a product you absolutely believe in. If you don’t, I’d suggest you find a different business.

Having a well made product will augment your growth as you’ll win work by referrals and repeat business plus your marketing just becomes a whole lot easier.

5. Provide excellent customer service.

Subway is all about getting in and out quickly with what you want. A simple smile at the start of the food service line and an ‘enjoy your day’ when you leave within minutes holding what you want has been a recipe for success for this food chain giant.

People often discuss creating a point of difference. This is one area often forgotten where you have the opportunity to differentiate yourself from your competition. If you’re friendly, honest, quick to call back and just make your customers a priority you’ll drive your competition out of business.

6. Keep your operating costs low.

I personally bang on about this one a lot. There’s nothing worse than having a high break even point. It causes financial stress on the business, you have little room for error and any slip in the economic conditions will send your cashflow into the red.

Where you can, keep your costs as low as possible. That means considering recurring costs very carefully. Things like rent and staff wages are big money items. A little negotiation can go a long way into lowering those numbers – helping you stay in the black and stay sane.

7. Get in front of your prospects (location location location).

Subway is on a lot of street corners and in popular shopping malls. Where ever you prospects are, you need to do what you can to get in front of them.

Right from the early days of the Subway business the owners realised they needed great locations in order to make their business a success.

For some of us, that’s not necessarily a physical location. If you’re like me and operate a mobile consulting business or have a 100% online business, you need to work out where your customers are trying to find you. Hint: Google is probably a good place to start.

No matter what you do, get in front of your potential customers or you’ll sink.

8. Build and refine good systems

In order to successfully franchise, Subway had to have good systems. Here’s some of the systems they needed to create;

  • An assembly line to make the sandwich.
  • A hiring system (to keep costs low).
  • A baking system to make their bread fresh each day.
  • A fresh food supply system.
  • A health and safety system to ensure compliance.
  • A pricing system.
  • A customer rewards system.
  • A franchise system.

Every small business needs good systems. Develop them as thoroughly as you can to ensure quality control which adds to customer satisfaction.

Subway has previously and is still being selected as one of the best franchise business opportunities available today – and Jared hasn’t been seen on Subway ads for years.

Here’s your Typical Business Tweet – just click it to share it on Twitter:

“Ditch the gimmicks. Get down and dirty with these 8 fundamentals and you’ll be ready for success” – via @typicalbusiness

NOTE: I have no financial connection or business association with Subway in any way. This article is purely an independent look at the operation and success of Subway as a business based entirely on freely available information online.

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