Subway's Journey: Navigating Success and Crisis in the Fast Food Industry

Q1. Identify the main reasons for the success of Subway over the years covered in the case-study.

Subway is the US based restaurant and food chain, which is efficient to provide quality products to the customers at affordable price. The company is successful to gain high competitive advantage over other competitive firms in the USA. The company is also efficient to manage their business by utilising latest technology and strategic planning where franchisee and the partnership business also influence the organisation to expand their business across the US. The chain has the history over more than 50 years and recently, the company is operating across 45000 restaurants in 131 countries across the globe (Simi and Matusitz, 2017). Hereby, the major success factor the organisation to the strong supply chin through which it is successful to expand their business across the international market. Over the 50 years, the company is operating in the global food chain industry where Subway is efficient to gain high market share due to their products variety and quality. Rapid expansion over the years is hereby one of the major success factor of the business, for which Subway is efficient to strengthen their customer's base and ensure future sustainable development. The company provides healthy and wholesome food as per the customer’s choice and preferences, where the sandwiches are made of fresh vegetables, freshly baked bread as well as meat and fresh ingredients which are effective to make the quality sandwiches for maximising the customer’s values (Subway, 2020a).

The variety of products is another success factors through which the company aims at enhancing their performance in the market and gaining high competitive advantage over their competitive firms. On 2017, the company is efficient to expand their business over 25835 locations where McDonald’s only had 14000 locations as well as according to the research; Subway restaurant had 18.55 shares, where McDonald’s had 11.3% only. Hereby, the major successful factors are the food variety and rapid expansion of the market, where the company is successful to strengthen their customer’s base for long run. the franchise start-up fee in US was US$ 15,000 and the franchisee incurred an expense of about US$ 250,000 to lease space which also influence the company to expand their business through franchisee and other business expansion and market entry strategy such as direct expert, setting up physical stores etc. the company also focuses on expanding their business through introducing innovative options to improve their strategy for setting up the business in the market and in this regard, the company focuses on product diversification strategy by launching the breakfast option of snacks and drinks. The product diversification strategy is also hereby beneficial for the company achiev future success and retains loyal and long run customers (Subway, 2020a).

The marketing campaign arranged by the company is also effective to establish the brand and improve brand image and the campaign is related to men’s health, childhood obesity which further raise awareness among the customers as well as improve trust and loyalty among the old and new customers group across the international market. The marketing tactics through company website design and social media advertisement are also successful for Subway to promote their products and achieve future sustainable development (Simi and Matusitz, 2017). In 2017, the company came up with revitalisation plan where the introduction of new decor, a self-service counter, ordering kiosks digital menu displays, and overhauled menus, packaging, and uniforms are effective for Subway to improve their brand image and attract the customers across the international markets. As the customer’s demand for the fast food items is increasing, the activities related to supply chain management, revitalisation planning and marketing promotional activities are successful for Subway to retain the long run customers and strengthen their competitive position in such an intense competition in the global food chain industry.

Q2. Identify the main reasons for the crisis at Subway over the years covered in the case-study.

In the recent era of globalisation, there are several issues for which the company Subway is suffering through different challenges which further deteriorates the performance of the company in the market. The major reason of the crisis at Subway is low food quality, where the company is suffering from delivering high quality food items to the customers. Due to food storage, there is lack of fresh food delivery ain the market which deteriorate their performance. The customers are not satisfied with such food items and as per their opinion; the company should focus on the previous business model of supplying the fresh baled and fresh products to the consumers across the globe. In this regard, the franchisees are also not happy with the activities of the company, where they would like to close the business with Subway due to lack of management of product quality (Schmid and Gombert, 2018). This further creates negative brand image where the organisations fails to meet the food quality standard and it further dissatisfy the customers in the market. Due to bad food quality and lack of management of the product diversification, the company face high competitive threat as well as the threat of substitute products as there are many other competitive brands who are operating efficiently such as McDonald’s and KFC.

On the other hand, another major issue is high employee turnover as the staff members and the managers are also not satisfied with the business model of the company and they start leaving the job due to better opportunity. 25 years ago, the company was successful to hire more than 56 teenagers at a time, but in 2017, the number was less than half of it, which indicates that the company fails to retain the employees and staff at the market. Workforce participation is less which deteriorate the brand values and the quality of the operations. Due to lack of employment and absence of experienced staff members at the company, the organisation faces difficulties to run their business operational activities and manage their global supply chain. The suppliers and the distributors are also not happy with the workplace and it hampers the smooth working pace at Subway (Loijens and Grunert, 2017). Hereby, lack of manpower is one of the major challenges which raise the risk for Subway to sustain in the intense competitive market. In the recent era of globalisation, the multinational corporate firms focus on hiring cheap labourer to generate higher profitability, but the company also fails to retain the old employees as well as hire the teenagers and less experienced staff at lower cost.

New leadership style is also not efficient to tackle the stakeholders including franchisee. The new CEO fails to manage the business activities as well as it is difficult for her to manage their stakeholder including the staff members, managers, supplier and distributors as well as the franchisee which further deteriorate the values of the company. There is no such effective leadership style and commitment practise to retain the lead stakeholders and franchisee and it further raises the issue of losing the franchisee as well as high staff turnover. As well as, there is problem related to product quality and the high price of the products. There is increasing competition due to high presence of the competitive brands, where it becomes difficult for the company Subway to manage their operations and retain the customers for long run due to low food products quality and higher price of the products. Hence, recently, the firm is going through the crisis and it is necessary for Subway to develop further strategic planning to tackle the issue for securing future sustainable development (Taylor, 2017).

Q3. Recommend strategies that subway could follow to regain market share.

In order to sustain in the competitive market of global restaurant and food chain industry, it is mandatory for the company Subway to improve their business strategy and secure future sustainable development. First of all, the company Subway needs to manage their food quality, where to satisfy the customers, the company should develop fresh products and sandwiches. Utilising fresh baked bread, fresh ingredients and vegetables as well as fresh meat are mandatory to develop the final products as per the choice and preferences of the customers. In the recent era of globalisation, the people across the globe are concerned about calorie intake and healthy food product consumption and thus it is mandatory for the company to maintain its food quality standard and introduce a variety of food and snacks items with low calorie. For retaining the strong customer’s base in near future, apart from the tradition products of Subway, the company should introduce the low calories products for the health conscious customers. It is the role of the company to enhance public health and thus the introduction of low calorie products further attracts the customers across the international market. Apart from that, the company should focus on pricing policy in order to retain the old as well as new customers. The premium pricing policy must be implemented where the price for the products is necessary to be set at lower to gain competitive advantage and create values for the consumers (Kumar and Perepu, 2020). Setting lower price gives the customers the opportunities to make effective purchase decision for the organisational products. Moreover, the target and segmentation strategy must be including properly in Subway to retain the customers, where the purchase intention for their products is high. In this regard, the company must segment the customer’s base on the basis of their choice and preferences towards food, age, gender and economic status. The organisation Subway in this regard must target the medium and high economic class, both male and female and the age group between 18 years to 45 years, where there is high intention to make effective purchase decision for the products of Subway.

On the other hand, the company should manage the franchisee efficiently to expand their business and or this the CEO must create value for the franchisee by providing high return on investment as well as empower the, in the organisational decision making behaviour, so that they can share their opinion and express their views for the benefits of the business. For managing the suppliers and the distributors in order to strengthen their green supply chain and food chin across the globe, it is mandatory for the company to maximise wellbeing of the suppliers and distributors by providing them high incentives and rewards, enhancing communication and building strong corporate relationship which further helps the company to retain the experienced suppliers in long run (Sheiko, 2018). In order to manage the operational efficiency and maximise the organisational excellence, the employees are the major stakeholders and in this context the organisation Subway needs to create values for the employees and managers who are important to run the business smoothly and proficiently. For managing their performance and motivating them to work at Subway, the company needs to give them proper salary, encouraging their creativity at workplace, sharing the important information with them, managing safety and security of the staff, maintain suitable organisational culture and empowering them in the workplace which further provides a scope to the company to manage high employee turnover and strengthen their employee base in long run.

Reference List

Kumar, K. B. S., and Perepu, I., 2020. Subway – the World’s Largest Fast Food Chain on a Downward Spiral. IBS Center for Management Research.

Loijens, L.W.S. and Grunert, K., 2017. Challenges of augmented reality in the food sector. In Augmented reality for food marketers and consumers (pp. 87-95). Wageningen Academic Publishers.

Schmid, S. and Gombert, A., 2018. McDonald’s: Is the Fast Food Icon Reaching the Limits of Growth?. In Internationalization of Business (pp. 155-171). Springer, Cham.

Simi, D. and Matusitz, J., 2017. Glocalization of subway in India: How a US giant has adapted in the Asian subcontinent. Journal of Asian and African Studies, 52(5), pp.573-585.

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