World of Franchising - SUBWAY & NAASF

A discussion of issues affecting franchisee operators in the Subway franchise system and how the system may be improved. If you have any comments and wish to contribute to this web page; feel free to email the author.

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Location: Canada

My background is in Research and Development (Science) as well as Economic Development (Business). Currently managing my own businesses. My degree; B.Comm, Finance Major.

Thursday, July 08, 2004

It has been some time since my last post as I was waiting for some news from the NAASF Conference. Here is what I got from the News Section on NAASF's own web site:

"Stay tuned to this page for news and details of the NAASF election procedure.

Elections for the 2005 NAASF Board will begin in June, when nominations are open to all members.

Final results of this year's election will be announced this November

I am wondering if they even had a Conference in Las Vegas but I'm sure they did. Maybe nothing happened which was news worthy? I doubt that also. Probably it is just the bored Bored members and staff which have forgotten that they have a web page! Why else would they not use this excellent communication tool? Maybe it is because they have no one in NAASF who is responsible for communications! Come on guys and gals, use the tools which are there for you to communicate with the franchisee community!

I wonder why so many franchisees are apathetic about NAASF?

The other day I received an advertisement for a new POS. It was not one that IPC was working with, as far as I know. On this note, where is the DELL system for the Canadian franchise? It would be nice if either IPC or NAASF would comment on this new POS as promoted through DAI and the fact that Canada still has no special Subway deal with DELL.

We are currently being pressured to offer low price point sandwiches to attract new customers to our stores. A low price package is being promoted by the local FAF board. Possibly similar offers are being made nation wide? The object is to increase customer counts. This is admirable and also necessary as there has been very little growth in customer counts over the past several years. We have been increasing sales with higher priced products, bundling and miscellaneous sales. There is only so much one can extract from the same customer for a sandwich dinner.

Over the years the cost of making a sandwich has steadily increased. there is not one item which accounts for this but a series of events ranging from; labor laws, supply and demand of labor, utility costs driven by the oil industry and environmental concerns, stricter compliance guidelines which result in higher labor costs, repairs and maintenance, more expensive and frequent renovations and upgrades, additional equipment for new products and expanded service, new product mix and complexity of menu items, reduced capacity with four bread per bread form rather than five (20% reduction in capacity), increased vegetable load on sandwiches due to the perception of a bigger bun (food cost increased by about 2 to 3% points), now the new toaster ovens which will further reduce through-put and add to the operating and equipment costs.

Some of the increases are outside the control of Subway but many are not. The problem as I see it is that there is no over all plan as to where we want to go and what will wait us when we get there. No vision and no long term planning at DAI. Has anyone done any study to see what the effect of more expensive sandwiches will do to our bottom line in the longer term? Maybe DAI is going for an upscale, bistro, sandwich restaurant? Will we be serving beer and wine next? How about table cloths and waiter service? Why not, at the prices we are charging the customers will expect more than counter service with subs wrapped in paper.

Lets assume (I know it is dangerous to assume anything) that DAI does not have a plan for an upscale sandwich restaurant. In this case we really do need to start attracting new customers with a more affordable menu offering. We need to get back to basics with some low cost and low priced offerings. Why not have some sandwiches with lower food inputs, less meat, cheese and vegetables on a 'new' deli sub? Make the cost affordable to children and people who don't want to have an after dinner nap after eating our typical foot long sandwich. Set the cost at 50% of a six inch and price accordingly. Now stand back and watch the new customers flock in to your store.

Lastly, lets stop this automatic remodel at 7 years, whether the store needs it or not. With a very high volume store it may be necessary due to wear and tear. A low volume store should not need it any sooner then 10 years. This will substantially reduce the operating cost of the stores.

Take care.


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