10 Mar 11 Subway beats McDonald’s to become world’s top restaurant chain
Subway has surpassed McDonald’s to become the world’s largest restaurant chain in terms of units, the sandwich company confirmed March 7.
Subway had 33,749 restaurants around the globe at the end of 2010, said company spokesman Les Winograd. McDonald’s had 32,737 at year end, according to a February regulatory filing from the burger giant.
A McDonald’s spokeswoman said in a prepared statement that her company “continues to be focused on our business, and serving our customers. Our business continues to be strong and we are growing by being better, not just bigger.”
As of March 7, Subway had 34,218 locations globally—all of which are owned by franchisees. About half of the company’s unit growth is overseas, Winograd said. Subway now has more than 1,000 locations in Asia, and it just opened its first store in Vietnam. Other high-growth nations include Brazil, Mexico, India, China, Russia, and France.
“A lot of our growth has been in non-traditional spaces that our competitors might not touch,” said Winograd. “We have really unique ones, like on a riverboat in Germany, a church in Buffalo, car dealers, bowling alleys, and casinos. We’re not just in strip malls.”
How a sandwich franchise ousted McDonald’s
This week, it was announced that Subway has overtaken McDonald’s as the largest fast-food chain on the planet. The sandwich company has 33,749 restaurants to the burger giant’s 32,737, a lead of more than a thousand. In the UK, it’s a similar picture: not only was Subway the country’s most successful sandwich seller in 2010, but the company has more stores on these shores – 1,350 – than any of its fast-food rivals, including McDonald’s.
In 2000, the chain only had 25 outlets in Britain – so how, and why, did Subway so quickly rein in McDonald’s, for so long the symbol of global capitalism? One answer is a change in its business strategy. For many years, Subway focused its efforts on north America – where it was founded in 1965 by then high-school student Fred DeLuca, who had no background in fast food, but who wanted to raise money for college. This all changed in the last decade, when Subway realised it was missing out on a huge international market. “A population of 60 million indicates there are many [British] consumers who have not yet tried their first Subway sandwich,” DeLuca ominously told the Guardian in 2005 – a situation I imagine he hopes has almost been rectified.
Subway’s success is also down to the way its low-cost franchise model has proved attractive to local investors. “That’s a huge part of the secret,” says Trevor Haynes, who, as area development manager, heads up Subway’s UK operations. “Our restaurants aren’t company-owned: they’re franchise-owned. We’ve attracted entrepreneurs who’ve enjoyed taking control of their own destiny.” Though all Subways must be laid out the same (with limited seating and gloomy lighting, it appears), the franchise-owner has full control of their outlet’s recruitment strategies, local promotions and opening hours.
For the punters in the street, Subway’s appeal is three-fold. First, it’s inexpensive. “It’s a bigger option than Pret, and it’s a lot cheaper,” says Tom, 23, a publisher who works locally. “I come here for the sub of the day, it’s just £2.29.” For Wayne, 20, who works in a pet shop, Subway’s draw is in the variety it offers to customers. “There’s so much on offer,” he tells me – and he’d be right. You have a choice of four breads, and scores of different meats, cheeses, sauces and salads. “I think if you worked out all the total combinations,” claims Haynes, “there’s a couple of million of them.” James, 19, Wayne’s reticent friend, has a third reason to eat at the chain: “Other [fast-food] places don’t sell sandwiches, so it’s much healthier.”
Subway is often seen as the healthy fast-food chain because its primary product, the sandwich, seems so much more virtuous than a burger – and perhaps Subway itself, with its slogan “Eat Fresh”, likes to play up that perception. But it’s a bit of a moot point…