Last year, the Wall Street Journal reported that McDonald’s was no longer the world’s largest restaurant chain. No longer will McDonald’s and their Big Macs be known as the largest chain. Rather, Subway will bring it’s iconic green and yellow logo and $5 foot-longs to the top of the list and take claim.
While the general public may find it surprising to hear that McDonald’s was overtaken, should one take a closer look at Subway and the strategy they undertook to get where they are today can serve as a great model for franchise restaurants as far as defensibility against other restaurants and expansion strategies.
Knowing is half the battle
In the mid-80’s, the popular phrase “Knowing is half the battle” was coined by G.I. Joe. While G.I. Joe no longer does PSA’s on television, restaurants that stay ‘in the loop’ are the ones that are most likely to succeed.
If you look at some of the top restaurant chains in the United States for example, you will note that one common denominator amongst them all is that they are constantly getting feedback from their customers on ways to improve the service they provide as well as suggestions on future products. Corner Bakery for example is known for their careful attention to detail when it comes to their customer service and making sure that they are providing the highest quality product possible to its 25 million + customers annually.
In the case of Subway, they were able to effectively stave off competitors like Quizno’s by focusing on adding new food products through customer research and market trends.By introducing toasted subs and lowering prices at the appropriate times, Subway was able to capitalize.
Remember, there is always something new to learn about ones customers and market.
Strategic Partnerships & Worldwide Growth
Another factor that helped Subway grow into the number one restaurant chain worldwide was their strategic partnerships and worldwide growth focus.
In an interview with QSR, Subway’s director of development, Don Fertman, discussed the growth of Subway into 10 international markets that it had identified as having high value for expansion. Subway didn’t stop there though. Fertman goes on to say that:
“in our initial reading of top markets we did not include Russia. Right now Russia is up to 75 stores and our developer there has just announced plans to get to more than 1,000 stores by the end of 2015, quite an aggressive goal. But they’re looking at the economics in the market and they can see that Russia is a much bigger market than was originally anticipated.”
Partnerships have also helped Subway grow and expand. For example, it’s not uncommon to find Subway locations paired up with the popular yogurt chain, TCBY. By identifying chains that would compliment the Subway brand, Subway is able to offer a ‘all-in-one’ experience for customers. One should note though that the focus here isn’t to offer a variety of selections. For example, if you are a coffee shop, you shouldn’t start making pizza because you hear that it’s popular.
Key takeaway: Focus on what you’re good at and build partnerships that make sense for your brand and target market.
Are you a franchise owner? If so, what are some things that you as a franchise owner do to do stay competitive with your competition? On the same note, what does corporate do to help position against competitors? Let us know in the comments below.