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SUBWAY: What Do Franchisees Make on $5 Footlongs?

Discount promotions like Subway’s $5 Footlongs sub campaign provide are attractive to consumers and great for the franchisor… but what about the Subway franchise owner who foots the bill?  According to Smart Money, Subway franchisees make a “Profit of roughly $1.20 a sandwich.”

Product discounting is one of the hottest topics in franchising.  Here’s why:  Franchisors make money off the gross sales of their franchisees, regardless of franchisee profitability.

Some franchisors make additional money marking up ingredients and food products to their franchisees.

Public franchisors benefit from higher sales – and stock prices – that are not tied to franchisee profitability.

SmartMoney.com surveyed franchisees from different franchise chains regarding the cost to them of some current and recent promotions. The Smart Money article points out that franchisees generally bear the brunt of a promotions’s cost, including the food, labor, rent and utilities, among other things.

Here’s the Smart Money finding for Subway’s $5 Footlongs sub campaign:

Subway

Promotion: $5 Footlongs – The chain offers any regular sub for $5. (Which subs getting this price tag will vary by store.)

What they normally charge: $5.89 (12-inch turkey sub)

Promotion Price: $5

Bottom line for restaurant: Profit of roughly $1.20 a sandwich

The $5 Footlong is a catchy marketing slogan but the discounting on the turkey sub isn’t as deep as some other big fast food promotions. For Subway operators you can still eke out a decent per item profit — and hope the diner is thirsty for a large, high-margin soda. To make the footlong turkey sub, the ingredients cost $1.65 at a New York location. Mack Bridenbaker, a Subway spokesman, declined to discuss the economics of hosting the company’s $5 footlong promotion.

RELATED POSTS:

SUBWAY: What Do Franchisees Make on $5 Footlongs?

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McDONALD’S: What Franchisees Make on a $1 Burger

BASKIN ROBBINS: Franchisees Lose $1.45 per Scoop on Promo

QUIZNOS: Franchisees Lost $2.25 per Sub on Giveaway

BURGER KING Franchisees Sue Over $1 Cheeseburgers

WHAT DO YOU THINK OF SUBWAY’S PROMOTIONS?  SHARE A COMMENT BELOW.

Are SUBWAY Franchise Owners Happy?

Are you familiar with the Subway franchise opportunity?

Are Subway franchise owners happy?  Why or why not?

Please share your thoughts and opinions below.

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In the 30 years since it launched its much-hyped Franchise 500, Entrepreneur magazine has named Subway the #1 franchise 16 times.

According to Entrepreneur’s Subway Hits the Spot, “…In late 2008, the company surpassed the 30,000-restaurant mark. It has 1,600 stores scheduled to open this year. Another 2,400 franchisees have bought in and are waiting in line to open. And it’s on pace to overtake the king of fast food, McDonald’s, in outlet numbers within five years.”  Despite a disastrous economy, Subway CEO Fred DeLuca says 2008 was Subway’s “best year ever.”

DeLuca claims their secret to success is the value Subway provides to their franchisees and the simplicity of the concept:

“We work hard to be extremely efficient,” he says. “We give great value for our franchisees: They can build a store for well under $200,000. And we have extremely simple operating systems. The preparation is mostly done in front of the customer. That simplicity is really what attracts our franchisees. You see it, and you can do it”.

Detractors claim that the hype has been bought and paid for, that the Subway franchisor is tyrannical and the system is designed primarily to make money for the franchisor at the expense of Subway franchisees.

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A SUBWAY FRANCHISE?  ARE SUBWAY FRANCHISEES HAPPY?  WHY OR WHY NOT?

logo:  Doctor’s Associates

SUBWAY: Send Jared to Gitmo! Parody Press Release

What have we started?  Yesterday, we posted a story about the lawsuit filed by U.S. serviceman Leon Batie, Jr. against Subway for allegedly seizing his two Subway franchises and reselling them for (their) profit while Batie was busy fighting in Afghanistan.  A reader comment suggesting Subway spokesman Jared Fogle be detained at Gitmo until Batie’s issue is resolved.  That prompted a satirical article by Sean Kelly at Franchise Pick (SUBWAY: Send Jared to Gitmo!) with an invitation to sign a petition.

By this morning, a satirical press release was circulating on the Internet and, reportedly, aboard U.S. Navy ships at sea:

UNFORTUNATELY, THE INFORMATION CONTAINED HEREIN WAS INSPIRED BY REAL EVENTS. USE OF THE SUBWAY LOGO & TRADEMARKS IS FOR SATIRICAL PURPOSES ONLY.

SUBWAY® RESTAURANTS ANNOUNCES KIDNAPPING OF JARED
SUSPECTED RETAILIATION FOR UNLAWFUL SEIZURE OF SOLDIER’S STORES WHILE DEPLOYED TO AFGHANISTAN
(Milford, CT) June 25, 2009 — The SUBWAY® restaurant chain announced that its longtime spokesperson, Jared S. Fogle, 31, was kidnapped early this morning when two U.S. Army Blackhawk helicopters descended on his mansion in Indianapolis, Indiana and eight U.S. Army Rangers raided his home, nabbing the famous skinny man.

Also captured in the raid were Fogle’s famous size 60 pants, which sources say he now uses as a night time “blanky” for emotional comfort.

The motive behind Fogle’s capture was revealed when the U.S. Army General David Patraeus held a press conference to announce that Fogle was transferred to a military brig in Guantanamo Bay, Cuba. “Subway brought this action upon itself when it violated the rights of Lt. Col. Leon Batie, Jr., a former Subway franchisee who was deployed to Afghanistan when Subway unlawfully seized his two Subway stores,” said Patraeus. “We’re gonna keep him at Gitmo and make him eat Big Macs until certain demands are met and Subway makes it right.”

Subway’s egregious conduct against Batie was revealed by the Dallas Morning News and has since become an international story around the globe. According to the original article, one of Batie’s stores was sold through an insider deal to OPM Ventures, LP, owned by Subway executives Mark Holubec and Roger Dalton. The two work for the Dalton Gang, Subway’s Texas development agent. Their transaction ultimately yielded the two Subway executives more than $100,000 profit while leaving Batie with a six-figure mountain of debt.

Batie, an Army reservist, became a Subway franchisee in 2002 and bought a second store in 2003. He was living the American Dream and was in the process of opening a third store in March 2005 when he received his deployment orders for Operation Enduring Freedom. For the next year, Batie lived in a mud hut in Afghanistan and was awarded the Bronze Star for bravery during combat. In March 2006, Batie was on two week R&R leave when he learned that Subway had terminated his store leases without a required court order.

The U.S. Servicemembers Civil Relief Act bars anyone from terminating an active-duty service member’s installment contract, including leases, without a court order. Ignoring federal laws, Subway unilaterally terminated Batie’s leases and seized his stores without obtaining court approval and without properly notifying Batie of its intentions.

“For Subway to take my businesses without ever notifying me was just wrong,” said Batie. “I want to make sure that if ever there’s another reservist that’s in a similar situation as mine, the franchisor … doesn’t trample over their rights.”

Subway received the Army’s demand this afternoon, which must be met before Jared and his pants are released. The demand includes a very large cash sum for Batie with an official apology from Subway, and a free “Five Dollar Footlong” for all active and retired members of the military. If Subway refuses to comply, the Army is threatening a call for global boycott of Subway and further kidnappings of Subway’s agents and executives.

To support Lt. Col. Batie, call and email Subway at the contacts provided at the top of this page and tell them they are wrong to trample on a soldier’s rights while he is fighting terrorists on foreign soil.

The satirical Press Release links back to the SUBWAY: Send Jared to Gitmo! post, where you can show your support for Reservist Batie by leaving a comment.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.