Subway Squeeze: No End in Sight for Sandwich Spot’s Expansion
Billy Gray June 11, 2013, 9 a.m.
Normally, Jared Fogle would be the biggest in-store distraction for Subway customers hungry for a hero. But the larger commotion during Thursday’s lunch rush involved Elmo and the Cookie Monster.
Mr. Fogle, the improbable Subway spokesman for 15 years, turned a few heads at the sandwich chain’s 126 West 41st Street branch last week during a press meet and greet. He even posed for a quick picture with the Times Square Sesame Street mascots before the unflappable people beneath those full-body suits removed their masks and chowed down at a corner table.
“Only in New York!” squealed one Subway representative.
That’s a saying one could never apply to Subway, which got its start in 1965 as Pete’s Super Submarines in Bridgeport, Conn., and has since grown to encompass 26,000 American locations. By the end of the year, the chain hopes to have opened an additional 3,000 branches around the world, crossing the threshold of 40,000 international stores. McDonald’s, by comparison, operates roughly 33,000 burger joints worldwide.
“We’re targeting just about everywhere for growth,” said Don Fertman, Subway’s chief development officer. “In North America, I’d say Boston and Philadelphia are the markets with the most potential. Internationally, Brazil, Germany, France and Russia have grown quite a bit and are still growing.”
Could the sub shop chain possibly continue to grow in New York City, where it has 400 stores? “New York is an interesting market,” Mr. Fertman said. “For one thing, the demographics change relatively rapidly. Certain neighborhoods become trendy. Others change and go away. We have sites where the next block over suddenly becomes the place to be, so we’ll move to that block.”
As for the chain’s popularity in a city famous for its ubiquitous corner delis and bodegas, Mr. Fertman listed the same things that propel all fast food (or, as the industry prefers to be called, quick service) restaurants.
“What draws people to us is consistency,” he said. “In the local bodegas and mom-and-pop stores, sometimes a pastrami sandwich at one can be very different from another.”
The yearning for the familiar is perhaps more pronounced for tourists than for harried office workers. “People traveling from all over the country and the world,” Mr. Fertman said, “tend to go with the recognized brand. But we’re pretty strong in residential neighborhoods and not just tourist-heavy ones.”
There are perhaps less pronounced differences between the food offerings at Subway and its rival chains. In Manhattan, the sub behemoth will have a new competitor in Jersey Mike’s, another sandwich franchise with regional roots that will enter the Manhattan market for the first time this summer.
“We certainly look at the competition constantly, “ Mr. Fertman said. “We have the benefit of being first to market in a lot of places. If anything, competitors help us keep on top of our game.”
A less obvious competitor is 7-Eleven. While not, strictly speaking, a sandwich store, the quintessential suburban convenience store has been making inroads locally. “They’re the largest chain in the world,” Mr. Fertman said. “We’re the largest QSR in the world. They have a sandwich program, but that’s not the main destination. It’s a byproduct.”
“Not to mention,” he said, “that we have very high-performing Subway locations within 7-Elevens.”
Mr. Fogle, a longtime brand ambassador, has avoided the nitty-gritty of Subway’s expansion as his once-formidable waistline has contracted. But he may play a more direct part in it.
“I don’t think I could ever go into real estate,” Mr. Fogle said. “I have friends who do it, and there seem to be too many ups and downs. Still, I might be interested in owning a Subway.”