No Sub-Stitute

The Home Front

Yet with more than 10,000 stores throughout the United States, Subway's presence is anything but weak. Its recognizable yellow, brown and white signs can be seen along nearly every major street in America. As more and more units open, the real question is: Where in the United States can Subway expand? As yet, DeLuca says he isn't worried-the continuing popularity of fast food is spurring plenty of opportunity.

In recent years, Subway's U.S. market strategy has focused on small rural markets. Within the last year in particular, DeLuca says there's been an "explosion of growth in small markets." He sees especially strong potential in the Northeast, where the fast-food market is fairly unsaturated.

Meanwhile, Subway is making big strides in nontraditional markets. Hospitals, convenience stores, stadiums and college campuses are some of the sites where franchisees are setting up shop. However, DeLuca says the key to Subway's future isn't just opening new restaurants-it's bringing in more customers.

In the competitive food-service industry of the '90s, fast-food restaurants are luring customers with meal deals, 99-cent burgers and five sandwiches for $5. To tempt more patrons away from fast-food heavyweights such as McDonald's, Burger King and Taco Bell, Subway will be getting tough on price, says DeLuca. In the coming months, the company's marketing emphasis will concentrate less on the presentation and variety of its sandwiches, and zero in on value.

"We haven't gotten into the value message in the past," says DeLuca, "but we see it's expanded the market even more, so we're going to be doing that in the coming year."

Customer satisfaction is also at the top of this year's to-do list. "We've titled 1996 'The Year of the Customer,' reveals DeLuca. "We want to bring more customers into the stores, and when they come in, we want to do a really good job so they come back."

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This article was originally published in the January 1996 print edition of Entrepreneur with the headline: No Sub-Stitute.

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