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Fred Deluca has been experiencing a bit of déjàvu lately. When the number of Subway stores operating overseasreached 270 a few months ago, a funny feeling came over the48-year-old sandwich king: He realized Subway's internationalsize is just about the same size Subway was in the United Statesroughly 15 years ago-when it began taking the country by storm.
"Our developments internationally are looking very muchlike what we've done in the United States," says DeLucaexcitedly, "only now I have a very interesting perspective onit all."
Interesting, indeed. If all goes as planned, DeLuca anticipatesduplicating the same phenomenal success Subway has enjoyed in theUnited States and Canada in countries throughout the world. Andhe's well on his way: Subway's zesty salads and sandwichescan now be found in some 27 countries across the globe, with 100new stores opening internationally last year.
"The time is right for us to be entering these newmarkets," says DeLuca. He's setting his sights on addingup to 200 new stores internationally each year until 1,000 foreignoutlets exist, and then "we'll see truly explosivegrowth," he predicts.
Will he reach his goal? Only time will tell-but given thatSubway ranked number one in our Franchise 500 yet again, the answeris most likely yes.
In fact, it seems nothing is out of DeLuca's reach. Whatstarted as one struggling store in Bridgeport, Connecticut, is nowa sandwich empire with $3 billion in annual sales. After a year ofwhat DeLuca describes as "strong and stable growth" thatincluded the addition of an astounding 1,300-plus units worldwide,the soft-spoken entrepreneur is taking on the future as boldly asever.
Sharp Focus
But whether his attention is focused on international waters oroperations at home, DeLuca's role within Subway's Milford,Connecticut-based organization remains the same. "My job is tolead the organization so it can be competitive in the future,"he says. "I have to make sure the ship is always heading inthe right direction."
Sometimes, he admits, this includes some rather unusual roles.While traveling in Georgia recently, DeLuca unexpectedly had someextra time on his hands. So he decided to rent a car for the weekand drive across four states-stopping at every Subway store alongthe way. "My mission was to go in unannounced, buy a sandwich,review the operation, and eat the sandwich." He laughinglyrecalls, "I ate Subway morning, noon and night."
Aside from gaining a few pounds (and finding out most Subwayemployees don't recognize him), DeLuca also gained some ratherinvaluable information. After each stop, he shared his observationswith franchisees, development agents and employees via Subway's1,400-person voice-mail system. His personal store reviews were sowell-received-and so informative-that DeLuca plans to continue theroutine. "A tour like this is really eye-opening," hesays. "While you see some great operations, you also see someterrible weaknesses."
The Home Front
Yet with more than 10,000 stores throughout the United States,Subway's presence is anything but weak. Its recognizableyellow, brown and white signs can be seen along nearly every majorstreet in America. As more and more units open, the real questionis: Where in the United States can Subway expand? As yet, DeLucasays he isn't worried-the continuing popularity of fast food isspurring plenty of opportunity.
In recent years, Subway's U.S. market strategy has focusedon small rural markets. Within the last year in particular, DeLucasays there's been an "explosion of growth in smallmarkets." He sees especially strong potential in theNortheast, where the fast-food market is fairly unsaturated.
Meanwhile, Subway is making big strides in nontraditionalmarkets. Hospitals, convenience stores, stadiums and collegecampuses are some of the sites where franchisees are setting upshop. However, DeLuca says the key to Subway's future isn'tjust opening new restaurants-it's bringing in morecustomers.
In the competitive food-service industry of the '90s,fast-food restaurants are luring customers with meal deals, 99-centburgers and five sandwiches for $5. To tempt more patrons away fromfast-food heavyweights such as McDonald's, Burger King and TacoBell, Subway will be getting tough on price, says DeLuca. In thecoming months, the company's marketing emphasis willconcentrate less on the presentation and variety of its sandwiches,and zero in on value.
"We haven't gotten into the value message in thepast," says DeLuca, "but we see it's expanded themarket even more, so we're going to be doing that in the comingyear."
Customer satisfaction is also at the top of this year'sto-do list. "We've titled 1996 'The Year of theCustomer,' reveals DeLuca. "We want to bring morecustomers into the stores, and when they come in, we want to do areally good job so they come back."
Back To The Future
With a keen perspective on where Subway has been--and where itneeds to go--DeLuca's eye is on the future. Ultimately, hesays, the single most important factor in Subway'sinternational success will be finding quality franchisees. That,coupled with his ability to focus on his long-term goals, willeither make or break Subway's foray into internationalfranchising.
As for the rest, says DeLuca, his plans are simple:"We're going to keep on doing what we've been doing,only a whole lot more of it."
Contact Source
Subway Sandwiches And Salads, 325 Bic Dr., Milford, CT06460, (800) 888-4848, ext. 88.
