Singapore Subway Franchise Business Plan for Angel Investors, BUS357

This report presents a detailed business plan for establishing a Subway franchise in the Paya Lebar Quarter (PLQ) Mall in Singapore, targeting the fourth quarter of 2019. The plan is pitched to Angel Investors, focusing on the high-potential location with a large employee base and consumer traffic. The report outlines the business concept, target market (18-39 year olds with moderate to high disposable income), and market trends within Singapore's booming fast-food industry. It includes a SWOT analysis, marketing strategies (emphasizing the 'Eat Fresh' concept), management design, and legal obligations. Financial projections, including WACC, IRR (67.28%), and required funding (minimum of $0.5 million), are provided. The report also addresses critical risks associated with franchising and proposes alternative courses of action. The report concludes with references to relevant sources.

STARTING
AND
MANAGING A
BUSINESS
by

Executive
Summary
• This report provides a detailed analysis of
opening up a Subway franchise in Paya
Lebar Quarter (PLQ) Mall which will be
opening in the fourth quarter of 2019.
• It is one of the most booming locations for
opening up a food chain as it will include
22,000 employees within seven minutes of
walking distance and other consumers
visiting the mall.
• The main goal of the business plan is to
propose the viability of investment in
franchising Subway and the report has been
pitched to Angel Investors.
• The target consumers of Subway will consist
of population between the age of 18-39
having moderate to high disposable income
and willing to leave a healthy lifestyle by

Business
Concept
• Subway is an American restaurant chain franchise
which sells salads and submarine sandwiches to their
consumers. It is one of the largest single brand chain
of restaurant and the largest operator in the global
market.
• It is one of the cheapest fast food chain for
franchising as it requires liquid asset of $30,000 and
net worth of ranging within $80,000 to $300,000
(Peterson, 2015).
• The company has been working diligently to improve
the sustainability of operations and products at
Subway.
• Subway has their unique selling proposition of eat
fresh to entice the consumers to purchase their
sandwiches as it is appealing towards people’s desire
of eating the best quality food. It helps in
differentiating their products from that of the
consumers (Alberts, 2015).

Goals and
Potential of
the
Franchise
• To reach the break-even point and start
earning within the first two years of
operation
• To achieve a return on investment of 20%
within the first two years
• To increase the market share of Subway by
15% within the first three years
• To increase brand awareness on the social
media platform to reach million followers in
Singapore
• To perform 10 event in the first year to
emphasise and promote the concept of fresh
and healthy eating among the consumers
• To expand franchise to increase capacity of
accommodation in Paya Lebar Quarter (PLQ)
Mall

Target
Market and
Needs
• The target consumers of Subway will consist
of population between the age of 18-39
having moderate to high disposable income
and willing to leave a healthy lifestyle by
developing healthy food habits. The
company also target kids and will use the
same menu for kids widely popular in other
countries.

Market
Size and
Trends
• The fast food industry is highly booming in Singapore
where the industry generated more than S$1 billion in
terms of operating receipts in the year of 2016.
• The insatiable appetite for fast food among the
population in Singapore has helped the growth of the
food and beverage sector.
• Even though the data from the past two decades
show that there has been 10% decline in the overall
food and beverage sector, the fast food sector has
grown by 29% during this period (Lim & Wei, 2019).
• However, the love for fast food in Singapore is still
high where McDonalds have 135 outlets, KFC has 86
outlets, Burger King has 50 outlets, Texas Chicken has
15 outlets and Long John Silver has 25 outlets.
• McDonalds have 40% share in the market followed by
KFC with 13%. Burger King has 4% share and Long
John Silver has 2% share in the market (Lim & Wei,
2019).

SWOT
Analysis
Strengths Weaknesses
Well-known brand in the
global market
Healthy, fresh and tasty food
Low operational cost
Oversaturated market
Lack of concern regarding
health issues among majority
of the population
Huge market share occupied
by McDonalds and KFC
Opportunities Threats
New market for healthy and
fresh food
No competitor offering
similar food products
Improving presence on social
media platform to increase
awareness among consumers
in Singapore
Events to improve awareness
among target consumers
Increase in labour cost due to
the lack of resources and
capital for scaling and
expanding at a rapid rate
Market saturation due to the
presence of big players in the
market

Marketing
plan
• The main product in the Subway menu is the submarine
sandwich along with products such as baked goods
(cookies, doughnuts and muffins), wraps and salads.
• The chain offers variety of sauces to their consumers
counting upto 8 in number, 6 types of bread and
various vegetarian and non-vegetarian options (Kraak
et al., 2017).
• In Singapore, the franchise will be keeping their
traditional menu while opening their franchise in Paya
Lebar Quarter (PLQ) Mall.
• Subway has always priced their products as premium
products when compared to their main rivals such as
McDonalds and KFC.
• The company charges higher prices for the quality of
their sandwiches having a low caloric content. Subway
has always been focused on providing the best quality
of food to their consumers which makes it necessary for
them to keep their prices higher (Kraak et al., 2017).

Promotiona
l Activities
• Subway has been diligent and aggressive with their
promotional strategies and their slogan Eat fresh will
be used while opening up a franchise in Paya Lebar
Quarter (PLQ) Mall.
• It emphasises on the fact that all their products are
cooked from fresh ingredients and freshly baked. The
franchise will use both traditional and digital
promotional content to promote their products in
their market (Kraak et al., 2017).
• ). In case of traditional market, the company will
distribute their flyers, pamphlets and brochures.
Hoardings will be placed at prime locations to attract
the consumers in the mall (subway.com, 2020).
• In terms of online market, the franchise will provide
discount offers to clients by advertising promotional
offers on social media pages. The brand will also
launch a promotional campaign depicting their
concept of eating fresh and living a healthy lifestyle.

Manageme
nt Design
• The major gap identified is the offerings of the
company at premium prices which does not sit well
with the consumers in Asian countries.
• Singapore’s population is highly sensitive to price
changes along with leadership issues which is the
reason that it has been unable to keep up with the
trends in the market (Taylor, 2018).
• The organisation offers fresh and highly quality food
to the consumers but the major aspect of the eating
fast food is the taste and likeability of the product.
• Therefore, the company will have to accommodate
tasty as a factor into their product positioning to
promote that their product healthy, tasty and fresh.
Moreover, due to providing fresh and quality
products to the consumers, developing a local
sourcing is tough for the company which increases
their operational cost (Taylor, 2018).

Legal
Responsibil
ities and
Obligations
• Subway will have to apply for planning permissions by
notifying the local authority about their location of the
store and the operational areas. Subway will also have to
adhere to the code of practice of environmental health
which will ensure that the company follows sustainable
measures to run their product without causing harm to the
environment (Singaporelegaladvice.com, 2019).
• However, there are other legal obligations and
responsibilities to be followed by Subway and they are as
follows:
• Applying for the food shop license
• Sign a tenancy agreement
• Hiring of staffs
• Reviewing the fire certificate of the property owners
• Importing food ingredients
• Setting up local sourcing of food ingredients
• Applying for liquor license and halal certification
• Registering for paying GST

Income
Stateme
nt
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Gross revenue $1,025,00
0
$1,045,50
0
$1,087,32
0
$1,152,55
9
$1,244,76
4
Cost of goods sold $351,250 $358,275 $372,606 $394,962 $426,559
Gross margin $673,750 $687,225 $714,714 $757,597 $818,205
Other revenue [source] $0 $0 $0 $0 $0
Interest income $0 $0 $0 $0 $0
Total revenue $673,750 $687,225 $714,714 $757,597 $818,205
Operating expenses
Sales and marketing $83,000 $84,660 $88,046 $93,329 $100,796
Payroll and payroll taxes $220,000 $224,400 $233,376 $247,379 $267,169
Depreciation $51,200 $52,224 $53,248 $54,272 $55,296
Maintenance, repair, and overhaul $7,500 $7,650 $7,800 $7,950 $8,100
Total operating expenses $361,700 $368,934 $382,470 $402,930 $431,360
Operating income $312,050 $318,291 $332,244 $354,667 $386,844
Interest expense on long-term debt $0 $0 $0 $0 $0
Operating income before other items $312,050 $318,291 $332,244 $354,667 $386,844
Loss (gain) on sale of assets $0 $0 $0 $0 $0
Other unusual expenses (income) $0 $0 $0 $0 $0
Earnings before taxes $312,050 $318,291 $332,244 $354,667 $386,844
Taxes on income 17
%
$0 $0 $0 $0 $0
Net income (loss) $312,050 $318,291 $332,244 $354,667 $386,844
Cumulative income $312,050 $630,341 $962,585 $1,317,25 $1,704,09