Subway, which is one of the biggest and fastest-growing chains of fast food in the globe, also has its niche in India. Having just launched its business model based on sandwiches, Subway has successfully positioned itself as a business that targets people who are aware of the need to consume healthy food but lack the time to cook. As the world’s largest democratic country, India has the world’s second-largest growing urban population, and changing the trend in food consumption from traditional. The Subway franchise offers an opportunity for potential business people to start a business under the brand name, and fix a proven business model.
Currently, Subway has thousands of outlets in operation; therefore, Subway runs its outlets with quality food, good customer relations, and operational excellence. Due to its requirement of comparatively low initial investment and the possibility to expand the business easily, it is considered a good opportunity for investing in the field of food and beverages.
As with any fast food franchise, opening the first Subway outlet in India should involve an analysis of the first costs, location, possible risks and expenses. This article focuses on the capital requirements to open a Subway, its profitability, assistance rendered by Subway and how to get franchised by this company. No matter if you are a first-time business owner or experienced entrepreneurs owning multiple franchises, this guide is going to help you along the major steps to owning a subway franchise in India.
Why Invest in a Subway Franchise?
The idea of franchising at Subway is famous due to its high rate of return on investment. The increase in the market demand for healthy fast food makes subs very appealing to the consumers of India making it ideal for franchisees. There are several reasons why investing in a Subway franchise is a smart business decision:
1. Branding and Recognition
Subway is one of the largest fast food outlets around the globe and operates in over one hundred countries. Its brand image and positioning strategy represent a healthy, hi-tech and modern eating facility where customers can eat foods that are freshly prepared and quickly served. In India, the brand has experienced consumer awareness to grow rapidly as more and more people switch to healthier and personalized meals. First, as a franchisee, you get to utilize the brand’s recognition to get customers long before the store is even set up.
2. Low Initial Investment
Compared to other fast food chain franchises around the world, Subway’s entry cost is relatively small. The total investment that is required to open a Subway franchise in India is between ₹10 lakhs and ₹20 lakhs based on the size of the store and location of the store. This lower financial risk also makes Subway uniquely appealing to anyone enterprising enough to consider opening their restaurant but who cannot afford the heavy investment needed to bring a large chain restaurant brand to a location.
3. Proven Business Model
Subway has a franchise system that was developed and has shown potential for success in various countries; however, India itself. The company supports its franchisees with detailed operating instructions and guidance to guarantee that they maintain quality and similar experience and performance. This proven and frequently disclosed business model minimizes the risk inherent in starting up a new business.
4. Health Conscious Mindset
The importance of Subway in a country such as India is that first of all fast foods are always perceived to be unhealthy foods. New awareness on healthy lifestyles and dietary choices is creating a market for Subway’s products, easy to customize low calorie options. Shift in the consumption pattern is one of the major factors which greatly benefited subway in increasing growth opportunities for franchise partners in India.
5. Full Service and Training
Subway provides its franchisees with wide ranging services that include training, marketing and business consultation. Thus, as a franchisee you will acquire all those tools, resources, and knowledge which you will need to manage your business. This extensive assistance gives franchisees the ability to thrive since it eliminates most problems associated with food kiosk operations.
6. Scalability and Flexibility
The franchise structure of operation means that growth to additional levels is possible for Subway. When one outlet is successfully established, the company could proceed to multiply, either in the same shopping area or in another different part of the city. In the same way, the operation modes of Subway stores include the traditional restaurants, kiosks and mobile food carts that allow various forms depending on the target audience and the area.
Location, commitment and operations discipline, Subway franchise business can be a very good opportunity for success and profitability. It has got a very powerful brand name and concept coupled with low investment and support, thus falling under the right business model.
Here are the details of Subway Franchise Cost in India
For Subway to open its franchise India there is initial investment which may differ from place to place for the size and format of the store. Here’s a breakdown of the costs involved:
1. Franchise Fee
The initial franchise fee for the Subway outlet in India is normally between ₹3 lakhs to ₹5 lakhs. This comes as a one time payment to Subway in return for access to its brand name as well as operational and financial support. The fee also includes training and initial support of the outlet’s management upon establishment.
2. Total Investment
Subway franchise business cost varies from ₹10 lakh to ₹20 lakh to bring an outlet in the market. This consists of the cost of the franchise that is required for consideration as the fee for the franchise, the construction cost of stores, equipment, inventory, costs of signs and other expenses towards establishment of the stores.
Location and size of the store are among the main considerations that define the cost of a product in the end. For instance, opening a store in a strategic area such as a mall or a busy business complex might attract a high level of investment capital primarily because of the rents and strategic positioning charges.
3. Store Construction and Setup
The total investment estimated includes fitting out and interior decoration which ranges between ₹5 lakhs to ₹ 10 lakhs depending upon the area of outlet. There are the design team members that are going to help the franchisees to follow particular requirements and guarantee that the store matches all the necessary requirements of Subway when it comes to preparation, storage, and serving of the products.
4. Equipment and Fixtures
Kitchen equipment and fixtures also forms part of the fixed investment and their cost is another large portion. This comprises preparation tables for sandwiches, oven, refrigerator among other must-have equipment in a kitchen. Such costs can range between rupees three lakhs to rupees five lakhs.
5. Inventory and Initial Stock
These will cover costs like initial stock for a Subway franchisee, where he has to buy stocks of breads, meats, vegetables and sauces, and even packing materials among other things, before he can start operations. These initial costs of inventories may vary from ₹2 lakh to ₹3 lakh of the business organization.
6. Ongoing Royalties and Fees
Subway des Downloads of 8% of monthly gross sales for the use of the brand and its supporting operational systems and services. Further, franchisees also give 4% of each month’s sales to Subway’s advertising and marketing fund.
7. Location and Rent
As for location costs they are highly sensitive to geographical location. Premium places in metro cities will be expensive in terms of rent and setting up a store which may cost from ₹50000 to ₹5 lakhs per month depending upon the traffic intensity of a particular region.
8. Miscellaneous Costs
Other burdens, such as the cost of personnel, electrical, water, and telephone, for the promotional campaigns during the initial period of operation will also be required.
In total, the outgoing investment for a Subway franchise in India is moderate and indeed appears to be on par or even slightly lower than that of the key competitors in the fast-food market. This makes Subway Strategies the best choice for rookies who are developing their initial business in the food service sector.
Explore more franchise opportunities by reading our blogs on KFC Franchise Cost, Starbucks Franchise Cost and Wow Momo Franchise Cost.
Profitability and ROI
The structure of the business that Subway has as a franchise is very favorable to generating pretty good levels of profitability. International presence and popularity, the increasing trend of healthy foods even in the fast foods sector and the franchise model with the least complexity give the brand an advantage of performing well for its franchisees. The profitability and return on investment (ROI) for a Subway franchise in India depend on several factors:
1. Revenue Potential
The amount of outlets in subways provides constant cash flow, this is because many people walk past subways every day. Every outlet in Subway can sell between ₹5 lakhs to ₹15 lakh every month depending on the place where it is situated. Places such as business districts requiring manpower or strictly budgeted stores in food marts are best because they record high traffic.
2. ROI Timeline
This store will begin to yield a return on investment within 2 to 3 years of its establishment from the franchisees’ perspective. Due to the brand awareness and customer base, the business model incurs a relatively shorter payback period than most of the food franchises.
3. Profit Margins
Subway franchisees enjoy high-profit margins, especially given the low cost of goods sold (COGS). Being that most menu items sold are made from fresh ingredients, serving only sandwiches to go, overhead costs are hence kept to a minimum. The owners of organizations can earn between 10 percent to 20 percent of profit on the monthly sales depending on location and franchiser efficiency.
4. Scalability
When you have been in operation for some time of operating your first Subway outlet there is always the possibility of opening other outlets. Depending on its franchise type, the subway chain is unique because each franchisee is afforded the potential to measure up his returns through the opening of many outlets in a given region.
Subway is famous for its operational strategies and franchisees should ensure they deliver the best services as postulated by this company’s concepts to be able to create a good business that would quickly become very profitable.
Assistance from Subway Franchise
One of the most important advantages of the Subway system is an increased level of support provided to a franchisee. This support extends to the pre-establishment and establishment stages of the business as well as the day-to-day operations and marketing.
1. Training Programs
Training of the franchisee and their staff is carried out diligently by Subway. This training entails all the areas of managing the business such as; preparing the Sandwich, stock control, customer relations and undertaking store operations. Unit franchisees are sensitive to Subway’s standards and the procedural way of doing things after being trained both online and physically.
2. Ongoing Operational Support
Subway also offers constant support in aspects concerning the supply chain as well as the running of stores, and dealing with constrained organizational purchase groups provides franchisees with a support team for inventory control and problem-solving for technical glitches.
3. Marketing and Advertising
Even in its advertising and other promotional activities, subway’s marketing department coordinates with franchisees for the outlets.Direct promotions and national advertisement coupled with local marketing techniques assist in creating traffic to Subway stores. The nature of franchising also means franchisees will make an input towards a national marketing fund which will guarantee marketing consistency.
4. Product Development
New products are always appearing in Subway and there are always new options changing in Subway as well. Companies pass these updates to franchisees because they assist the latter in adjusting to new conditions and demands.
5. Franchisee Network
Subway has a good chain of franchises, which allows the owners of shops to compare their experience and results. He can listen to the success stories of other Subway owners during conferences and meetings.
Strong support is also one of the primary factors that positively impacted Subway and it also greatly contributes to the profitability of its franchisees.
How to apply for a Subway Franchise?
If a person wants to start a Subway restaurant then getting a franchise is not very complicated but it involves quite a planning. Here’s a step-by-step guide on how to apply for a Subway franchise in India:
1. Research and Self-Assessment
For Subway, prepare your research predating the application process and ascertain whether you would like to commit to the business model. In attempting these evaluations, you should consider your impact on weight and personal experience in the food service industry to make you the right Subway franchisee.
2. Submit an Application
Applications can be made online on the Subway website or one can contact the franchise development department. The end application will need to input name, contact details and email address, employment details and financial information, and a statement detailing interest and desire to own a Subway outlet.
3. Initial Screening
Often Subway will only consider a candidate based on relevant factors concerning the requested franchise such as; financial capacity, and decent experience among other factors relating to the franchise model. The company may ask for a check of criminal record and other paperwork at this step.
4. Site Selection
After approval of your franchise application, you will have to sit with the Subway team and decide on the appropriate site for your outlet. Some of these insights that will be considered at this stage include convolution traffic, accessibility and geographical location of competing stores.
5. Franchise Agreement
Last of all, choose the final site of your franchise store and then you enter into a franchise agreement with Subway. This document contains details of your franchise and its provisions such as the amount of the initial franchise fee, amount of royalty fees and others.
6. Store Setup and Training
Subway will also help in planning and fixture the store to conform with their specifications. You will also undergo a broad induction process to enable you to professionally run your outlet.
Using these guidelines, therefore, anyone with aspirations of owning a Subway franchise should be able to secure this business venture and start a new company in the fast food business.
Challenges to consider before buying Subway Franchise
Having a Subway franchise is a very fulfilling business venture to have though it has complications that it comes with. Here are a few you should consider:
1. Competition
The various fast-food joints which operate in India are closely competing with one another; with foreign fast-food chains as well as domestic operators. From the case analysis, it is clear that Subway’s success has to stem from the continued focus on the health angle as its USP, and avoiding convergence with other fast food brands.
2. Initial Investment
While the investment when starting Subway is relatively lower than most fast-food franchises, it still needs a lot of capital. Rent, franchise fees, cost of equipment and other inventory to be purchased also matter. Further, especially for retailers, having facilities in strategic places may lead to high costs of rent and establishment.
3. Location Sensitivity
Seasoned investors will agree that the location of an outlet determines the extent of business Subway outlets are not an exception. Setting the store in an area of little traffic or an uninhabited area will produce less traffic and therefore fewer chances to sell the products that you are selling; this makes it very important to ensure that the store is set in a busy area to get much traffic.
4. Operational Challenges
It entails operating, organizing and supervising several employees for a commercially successful fast food chain such as Subway. The franchisees are to guarantee quality food products, cleanliness and excellent customer satisfaction levels. These operational demands can be however difficult, particularly for first-time business fulfillers.
5. Supply Chain and Inventory
The ingredients used in Subway’s products have to be fresh at all times as this is one of its core competencies. It means that supply delivery, an inconsistent supply or even stock-outs can hamper the capacity to serve the customer at the store. Most of the franchises have preferred this type of operation since they require adequate control of stock and reduced wastage.
Conclusion
Thus, purchasing Subway would be a fairly good investment for those wanting to enter the fast-food market of India. Combining globalization which already signifies its name globally, makes Subway the most preferred eatery that provides healthy and flexible meals. The cost of starting this business is relatively low as compared to the other international fast foods and it should entice any would-be entrepreneur.
Furthermore, Subway offers detailed support to its franchise partners which entails training, marketing support as well as operational support at all times to enable them to prepare for success. Yet the crucial aspect of location is still paramount, and these specifics have to be discussed regarding the characteristics of the flow of people and competition. Of course, this can be achieved where the franchisees concern themselves with following the tested business model of Subway alongside benefiting from its strong support structures.
Owning a Subway franchise is possible in India provided one is willing to dedicate his/her time and resources to the business and venture In the long run, it is a profitable business venture.
FAQs
What is the Subway Franchise Fee in India?
Franchise fees and stores range between ₹ 10 lakh and ₹ 20 lakh, followed by inventory and equipment.
How much does a franchisee pay for royalty to Subway?
Monthly rent costs are 8% of sales and 4% goes into a national advertising fund.
Which type of training does Subway offer?
Training available at Subway includes all the aspects of store operations including serving of sandwiches, communication with customers and restocking.
How much time does it take for a Subway franchisee to make a break even?
Average payback period in franchising can last from two to three years though it largely depends on the province of site and its sales result.
Where can one get the Subway franchise?
You can apply online via Subway’s website or reach the franchise development department via phone call or post. The process of application comprises site selection and a franchise agreement.
