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.

Friday, February 04, 2005

I wanted to post these comments for some time but just never got around to it. They are very important as they come from one of our employees and reflect a view which is not often heard by our community but is very important:

"Ok, I'm only a manager, but I am in the store everyday.

1. Eliminate the Sub Club Card. Don't replace it with an electronic loyalty card. Just get rid of it. If I feel the need to reward MY loyal customers, I can handle it locally.

2. Quit introducing products that don't meet the 33% food cost guidelines. It is hard enough to meet food cost goals as is. The products you introduce that start out over these goals only make it harder to do my job.

3. Give the owner's back their 1%. I have seen nothing from DAI in the past year to justify the franchisees' faith in authorizing this money. Let's see: Menu boards that had to be replaced because they were wrong (value meal numbering goofed up), Changing sandwich names to satisfy Atkins(after years and years, the club sandwich is suddenly Turkey breast, Ham, and Roast Beef: this helps my throughput how? Same with the Subway Melt Nobody had any trouble ordering these sandwiches before we changed their names.) Expanding Salad line only to reduce it when it didn't work. Getting rid of sauces that were popular ie. red wine vinegar and dijon horseradish. How many more months until I get a menu panel to replace the one which still adveritises the Dijon Turkey breast, Ham, and Bacon Melt. They sent out little sticker disclaimers to protect themselves after we changed the tuna formulas. Who cares? I don't have any customers who bring their binoculars with them to study the menu board. Do they really think people can see that fine print from across the counter. oh I know let's make it a compliance issue to have to have take out menus in the store, then change the menu so we can't order them and have them be accurate. Yeah that works. Here's a favorite of mine. Customer says "What's the difference between the Chipotle Cheese Steak and the Cheese Steak?" Employee says "the sauce." Maybe the employee should add that according to the corporation, the Chipotle Cheese Steak only has select ingredients on it. But that would only hold up the line and reduce throughput. Why are we wasting a menu line listing both sandwiches? Does anyone have two separate buttons on their register for these different sandwiches? I could go on and on, but you get the point, I hope.

4. Relax the hours of operation policy. Welcome to the real world. Some stores are in locations that do not benefit from extended hours. They were conceived and planned with specific goals in mind and by making them stay open longer, you are only hurting the franchisee. Maybe DAI should work on an individual basis to help the franchisee to evaluate their daily break even point and set their hours to maximize their profit potential. Each location is different and should be evaluated in that regard. Yes, I do realize that the rent is the same for the space whether you are open or not, but there are lots of others factors that affect the bottom line of a store: Labor, Power, Safety, and Security among them.

5. Which leads me into: Discounts and specials: 2 for $7.99, 3 for $9.99, 3 for $10.99, 3 for $11.99. Thanks for increasing my food costs. and my employee turnover rate. Yes you can produce more sandwiches with the same number of employees, but they don't stay happy for very long. In my view, all these discounts tell our customers is that our sandwiches are not worth what we normally charge for them. Coupons, why pay full price when there is always a coupon out there somewhere? Yes, I know that these things are supposed to drive customers into the store. But I spend months afterward having to listen to the customer who really liked when we had that special. Why wouldn't he? It saved him 3 or 4 bucks a pop sometimes. And the customer never understands that they can't get a value meal discount in conjunction with a special. Wouldn't it be better to be able to reduce or prices across the board knowing that we did not have to price items higher to account for all the wacky specials out there."


These comments were buried deep in the bowls of the NAASF web site but should be read by all franchisees.

To this I could add a slew of my own concerns. I can say this though; coupons do nothing to drive sales after the coupon is finished. If they are supposed to attract new customers, why do our customer counts go back to ‘normal’ a few weeks after the coupons are done? They only serve to drive sales with lower prices. At the end of the day your profits suffer as your staff turnover goes up, wear and tear increases and your food and labor cost rise.

I introduced the DA to an electronic gift card as I’m tired of our current Mickey Mouse™ system. The system is available Canada wide through our biggest supplier of electronic card products. In other words it can be implemented by Subway in our total market. I’m holding my breath waiting to get approval to try this in my store.

During my last field inspector visit I was told that my hours of operations were barely within the required hours. I’m open from 6:30 am to 11 pm every day. Only exceptions are Thursday and Friday when I’m open later and on Sunday when I’m open a bit later. By my count I’m open about 119 hours per week. This is barely within required hours? I know, we should really be open 24-7 so that DAI may collect royalties on the last sub we sell. My labor cost has gone from about 17% to 22% over the past two years. This took place even though my sales have grown by over 20%. Maybe my labor cost should be 25% to satisfy DAI goals. I should really be closing early on most nights as there is no justification to stay open after 9 pm in my market. The only exception is three days at the week end.

Take care.


1 Comments:

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9:43 PM  

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