SWOT Analysis of Subway

Summary: Subway SWOT Analysis

The SWOT Analysis of Subway highlights the key factors shaping the brand’s global performance. Subway’s strengths include its status as the world’s largest submarine sandwich chain, with a vast network of franchise locations and strong brand equity. Its menu, which emphasises healthier options and customisation, appeals to health-conscious consumers. The franchise model enables rapid expansion and low start-up costs, while certified sourcing ensures consistent product quality. These Subway strengths underpin its dominant market share and customer loyalty.

However, the Subway SWOT also reveals notable weaknesses. The franchise system can result in inconsistent service quality and store standards. High employee turnover and uninviting outlet aesthetics further undermine customer experience. Critics have also noted a lack of menu innovation and controversies over ingredient quality, such as the use of antibiotics, which can damage the brand’s reputation.

In terms of Subway opportunities, the chain can capitalise on the growing demand for healthier fast food, expand home delivery and online services, and introduce drive-thru options. Diversifying its menu and improving customer experience could attract new demographics and boost market share.

Subway threats include intense competition in a saturated fast-food market, changing consumer preferences, and the risk of market saturation. Local rivals, food supply disruptions, and negative publicity also pose ongoing challenges to Subway’s global success.

Introduction to the SWOT Analysis of Subway

An American company, Subway was founded in 1965 and has seen grown to having stores in over 44,000 locations in 113 countries around the world. Today it’s the world’s largest submarine sandwich chain (Subway 2017a; IBIS World 2017). Subway’s strategy includes finding busy locations, keeping costs low, offering great customer service and operating a franchise system (Subway 2017a; 2017b).

This franchising system means that the company owners do not directly own a single location but collect 8% of revenue from each of these (Forbes 2017). In the USA, Subway controls 60% of the quick service sandwich market in the US and has a strong social media following with more than 25million Facebook followers (Forbes 2017).

Strengths

The size and number of locations of Subway give it a considerable advantage in terms of its visibility and access to its customers. Its franchisees need to source all the raw ingredients from certifiable Subway suppliers.

This certification ensures that suppliers are meeting the quality standards specified by Subway and ensures that franchisees are supplying the appropriate standard required by Subway (Subway 2017d).

For the UK, the European Independent Purchasing Company Ltd oversees all sourcing. They support the franchisees by providing a supply chain for both the ingredients, but also the store equipment and services (Subway 2017d).

Weaknesses

One of the weaknesses of operating a franchise system for the whole business can be in the different levels of customer service and income which may be generated across the different locations.

Furthermore, the growth of outlets has seen a reduction in the sales volume for outlets as competitors offering a lower price point and a higher level of convenience such as a drive through have been able to take some of Subway’s market share (Brandau 2015). A further weakness has been in the menu itself, which has been criticised for its lack of innovation and use of antibiotics by increasingly health conscious consumers (Peterson 2016).

The rapid growth of franchises has also seen some stores start to look tired which may discourage consumers from using the stores.

Opportunities

The opportunities for Subway include improving the customer experience by offering higher levels of convenience through a delivery service, online ordering and payment system and greater variety in the menu choices. Subway also provides considerable opportunities for franchisees by providing a low-cost investment and by operating a variety of locations of varying sizes (Subway 2017b).

The franchise system is also an effective way of utilising the local knowledge of the franchisee and to enter new markets. Furthermore, Subway should use the feedback from its customers to improve the business model as other competitors have been able to financially benefit from these changing consumer tastes (Brandau 2015).

Threats

Subway also faces threats from other fast food industry players. In fact, this shows in its fall from being the world’s second largest fast food retailer to third behind Starbucks, despite Subway’s having more outlets (Peterson 2016). This fall unfortunately owes to its rapid growth and changing customer tastes.

This growth has ultimately led to 911 outlets opening in the USA in 2015. However, with 877 closing, this growth in outlets is not delivering the volume of sales required (down 4.3% in 2015 and down 2.6% in 2014) (Peterson 2016). This threat may be indicating a downward trend in sales and suggests that there is a saturation of outlets in certain markets.

This is a considerable threat to Subway as the failure to address this may result in a further loss of market share to its competitors.

References to SWOT Analysis of Subway

• Angwin, D, Cummings, S and Smith, C (2011) The Strategy Pathfinder: Core Concepts and Live Cases, (2nd ed), Chichester: John Wiley and Sons Ltd, Chichester
• Brandau, M. (2015) ‘What Subway’s sales decline says about the industry’ [online] Available from https://blogs.technomic.com/what-subways-sales-decline-says-about-the-restaurant-industry/
• Forbes (2017) ‘Number 92 The World’s most valuable brands – Subway’ [online] Available from https://www.forbes.com/companies/subway/
• IBIS World (2017) ‘Takeaway and fast food restaurant in the UK: market research report’ [online] Available from https://www.ibisworld.co.uk/market-research/takeaway-fast-food-restaurants.html/
• Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regnér, P. (2014) Exploring Strategy, Text and Cases (10th ed.) Harlow: Pearson Education Ltd
• Peterson, H. (2016) ‘Subway is facing two problems that are wrecking its business’ [online] Available from https://uk.businessinsider.com/subway-sales-are-declining-2016-5?r=US&IR=T
• Subway (2017a) ‘The History of Subway’ [online] Available from https://www.subway.com/en-gb/aboutus/history
• Subway (2017b) ‘Own a franchise’ [online] Available from https://www.subway.com/en-gb/ownafranchise
• Subway (2017c) ‘SubCard’ [online] Available from https://subcard.subway.co.uk/cardholder/home_uk.html
• Subway (2017d) ‘Sustainable Sourcing’ [online] Available from https://www.subway.com/en-gb/aboutus/socialresponsibility/sustainablesourcing