Do the Math

Subway is the No. 1 franchise in Entrepreneur's Franchise 500. . . for the 11th time. That translates to more than 17,000 locations in 75 countries. Are you impressed yet? We are.

He speaks easily and calmly when he finds out his franchise system has claimed the top spot on our Franchise 500® for the 11th time. His unassuming demeanor and easy confidence shine through in his conversation--it's easy to forget I'm speaking to a business legend. But as I consider that Fred DeLuca, co-founder and president of Subway Restaurants, has managed to build the largest fast-food franchise in the United States while keeping the company entrepreneurial, I am in awe. DeLuca has been at the helm of the company from the first sandwich in 1965 to the 17,388 restaurants in 75 countries that Subway had at press time.

Still, humility echoes in his answer when I ask DeLuca how he's maintained that day-to-day involvement with Subway, even with its extraordinary growth. He's quick to note the team effort that factors largely in his company's success. "We have all the leadership working hard, working together as a team to improve the organization. It's kind of like getting everybody rowing in the same direction," he says, "That's provided me a great assist--it's not really me running the company so much as a whole team working together to move things in the right direction."

DeLuca speaks especially proudly about the five families of Subway: franchisees on the advertising board, the franchisee association, franchisees in the purchasing co-op, development agents and company representatives. They meet about every four months to discuss the direction of the company, says DeLuca. The system advisory council, in fact, was instrumental in creating the strategic plan for domestic growth just a few years ago. "We had never actually had a written strategic plan," notes DeLuca, "so we put one together."

Humility aside, the 54-year-old DeLuca does acknowledge that it is somewhat unique for such a large company to be privately owned, and for its founder to still run the day-to-day operations. But he's very matter-of-fact about it. "I've been fortunate. I've somehow been able to learn what I needed to learn along the way," he says. "I don't have any interest in cashing out or leaving the business or doing something else. I know a lot of people at some point in their business careers decide [to do that], but for some reason, I've never had that feeling."

He has had the feeling, however, to grow the company. And this feeling has led him to do something amazing. In 2002, Subway reached a milestone--they surpassed McDonald's in number of locations in the United States. As it stands, Subway has around 14,000 U.S. units, while McDonald's has about 13,000. "What's really exciting is to keep up with the growth in our segment of the business," DeLuca says. "Back when we started, people didn't even know what a submarine sandwich was. Now we've got a product that's sold across the country. The consumer demand for it is growing quite a bit."

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This article was originally published in the January 2003 print edition of Entrepreneur with the headline: Do the Math.

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