Subway's Business Model & PESTLE Analysis

This assignment analyzes Subway's unique business model which prioritizes combo-stores and franchise ownership in strategic locations over traditional restaurant formats. The analysis delves into a PESTLE assessment of the brand, examining how political, economic, social, technological, legal, and environmental factors contribute to its global success. It highlights Subway's focus on healthier alternatives within the fast food industry and its adaptation to changing consumer preferences.

Running Head: SUBWAY- A CASE STUDY
Subway- A Case Study
Name of Student
Name of University
Author Note

1SUBWAY- A CASE STUDY
Table of Contents
Case Study..................................................................................................................................3
Target Market with Demographic Analysis...............................................................................3
Psychographic Segmentation.....................................................................................................4
Marketing Mix- 4Ps...................................................................................................................5
PESTLE Analysis.......................................................................................................................6
References..................................................................................................................................8

2SUBWAY- A CASE STUDY
16/08/2017
To whomever it may concern,
Subject: Subway- A Case Study
Sir,
This report aims at creating a comprehensive case study of Subway, the renowned American
fast-food chain, and studying its strategies of business. The report target profile of subway
and correlates it to their sales figures. The marketing mix of the brand has been presented to
judge its advertising and promotional policies and a PESTLE analysis has also been
presented.

3SUBWAY- A CASE STUDY
Case Study
Subway, the trading name of Doctor’s Associates Inc., is an American chain of fast-
food outlets which is known mainly for the sale of submarine sandwiches and salads. It was
founded in 1965 when Fred DeLuca opened ‘Pete’s Super Submarines’ in Bridgeport,
Connecticut, with a capital of just $1000 borrowed from a friend. Today, headquartered in
Milford, Subway has about 45,000 outlets in over 100 countries across the world, with half of
the stores in the US. Subway occupies about 60% of the American fast-food sandwich
market, and has a staggering social-media presence with over 25 million fans on Facebook.
As of May, 2017, the brand is valued at US$ 7.1 billion.
Target Market with Demographic Analysis
Although Subway is fairly popular among all age groups for their nutritious and
healthy offerings, the major target market for the brand is the age-group of young adults,
between 16 to 39 years of age, to be rather quantitative. Living up to the brand-motto “Eat
Fresh”, Subway specifies its principal market as “Demanding People Who Know Their
Minds” (Lesser et al, 2013). The trump card of Subway as to attracting its target market is its
tasty yet wholesome food-quality. In 2011, Subway overtook McDonalds as the world’s
largest restaurant-chain with 33,749 outlets, compared to the latter’s 33,737. The following
graph displays Subway’s meteoric rise through the decades, in terms of outlets opened
globally.

4SUBWAY- A CASE STUDY
Psy
chographic Segmentation
Psychographic analysis refers to segmenting the market based on behavioral patterns,
along with social factors at play. Sticking to their USP of providing healthy sandwiches that
taste good, Subway has segmented its target market of age-group 16-39 quite effectively.
Since the products are very reasonable in their pricing, Subway goes really easy on the
pockets of college and office-goers or passers-by looking for a quick grub (Lesser et al,
2013). Subway knows that in this fast and hectic lifestyle, people crave fresh and nutritious
food rather than exotic delicacies. Unlike Burger King, McDonald’s, ,KFC and so on,
Subway provides customers the full liberty of customizing the ingredients of their own
sandwich, from the bread to the seasoning (Atkinson & Palmer, 2012).
Marketing Mix- 4Ps
The 4 Ps of marketing or the marketing mix is a strategic model in marketing that
most of the leading companies use to enhance their sales. It incorporates 4 aspects of
marketing: Product, Price, Promotion and Place (Trapp & Spotswood, 2013). The marketing
mix of Subway is as follows.
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Number of Outlets
Gradient

5SUBWAY- A CASE STUDY
Product: The principal product Subway deals in is the submarine sandwich. However they
also offer cookies, doughnuts, muffins, salads, wraps and so on. The most common offerings
in the global market include the Meatball Marinara, Veggie Delight, Chicken Teriyaki, Italian
BMT, Subway Club and so on.
Price: Subway products are priced in a premium manner as in most countries, they are priced
similarly or a bit higher than those at McDonald’s or KFC. An average foot-long sub costs
around 7.75 dollars, with the Italian BMT at $6.75 and the Chipotle Chicken Melt at $8.25.
However a Big Mac costs only $3.57 But Subway has always maintained their impeccable
product quality which to some extent, requires a higher-pricing (Krieger et al, 2013).
Promotion: Subway employs numerous publicity strategies to market its products across the
globe. Apart from the eponymous ‘eat-fresh’ campaign itself, they had a commercial with the
cartoon character ‘Peter Griffith’ endorsing Subway’s Feast Sandwich. In terms of
multimedia publicity, Subway employs ATL promotions on print media and TV; and uses
BTL strategies like special offers and discounts in the stores to draw customers, like “Sub of
the Day”.
Place: Subway is the largest-operating restaurant-chain in the world, with over 45,000 outlets
globally. To get here, they did not emulate McDonalds or KFC by building restaurants.
Instead, they emphasized on combo-stores and franchise ownerships in optimum locations
like school and college peripheries, in the downtown office areas, airports, railway stations
and so on, where people are health and calorie conscious, looking for nutritious food (Khan,
2014).

6SUBWAY- A CASE STUDY
PESTLE Analysis
Political Factors: Subway has to conform strictly to the safety and health guidelines of the
government in the state and nation that a particular unit/(s) is functioning in. Other factors
like government and non-government campaigns and political unrests in the respective
domain of operations are also kept in mind. All these aspects affect the making of Subway’s
policies.
Economic Factors: Company policy and profits are directly subject to the GDP of the
respective state or nation the franchise is located in. For instance, Subway invariably records
higher profits and hence, larger investments in the European Market, where the countries
have high GDPs.
Social Factors: Societies where the economy is more developed will have busier people,
which means, they tend to eat out rather than cook at home. Hence, USA and European
nations are highly profitable locations for Subway; with a marked shift from junk food to
healthier alternatives like freshly-prepared sandwiches.
Technological Factors: The augmenting trend of online ordering and deliveries has affected
Subway like other restaurant-chains, and it records notably higher profits in areas where, the
company’s online services and store-equipment are more developed.
Legal Factors: Legal regulations are different in the various locations of Subway’s
operations, and the company has to adapt its regional policies in consultation with lawyers
and litigators to stay on the right side of the law.
Environmental Factors: Subway as a brand have always lived up to their goal of protecting
the environment through various eco-friendly campaigns over the years. They have launched

7SUBWAY- A CASE STUDY
a number of eco-restaurants which strictly follow eco-friendly policies like gluten-free bread,
LED lighting, less-polluting equipment and so on.
References
(From : http://shulibrary.sienaheights.edu)
Atkinson, L. F., & Palmer, M. A. (2012). Purchase rates and energy content of nutritionally
promoted and traditional fast foods purchased at lunchtime in Australia–a pilot
study. Public health nutrition, 15(3), 495-502.
Khan, M. A. (2014). Restaurant franchising: Concepts, regulations and practices. CRC
Press.

8SUBWAY- A CASE STUDY
Krieger, J. W., Chan, N. L., Saelens, B. E., Ta, M. L., Solet, D., & Fleming, D. W. (2013).
Menu labeling regulations and calories purchased at chain restaurants. American
journal of preventive medicine, 44(6), 595-604.
Lesser, L. I., Kayekjian, K. C., Velasquez, P., Tseng, C. H., Brook, R. H., & Cohen, D. A.
(2013). Adolescent purchasing behavior at McDonald's and Subway. Journal of
Adolescent Health, 53(4), 441-445.
Tapp, A., & Spotswood, F. (2013). From the 4Ps to COM-SM: reconfiguring the social
marketing mix. Journal of Social Marketing, 3(3), 206-222.