QSR September 2022

GROWTH

To optimize its presence in the U.S., Subway is ridding itself of a development-first mindset and opting for an experi ence-oriented approach. To Rafferty, that means focusing on operational excellence and ensuring locations are in the right image, location, and format to best meet guests’ needs. “It’s all about delivering Subway in a way that our guests really want to use us and taking it away from just that sort of singular focus on development,” Rafferty says. Subway was built upon commitment and investment from thousands of small franchisees who own one or two restaurants. Rafferty says those operators will always be part of the brand, but as the chain optimizes itself, it feels there’s a better oppor tunity to team up with multi-unit partners. The development executive believes that’s the true unlock for Subway’s next level of growth, and it’s a two-pronged strat egy. Among the existing base, there are stories of franchisees expanding from one or two stores to 10–20 or even 50 in some cases, Rafferty says. Subway is pushing for more of those occur rences, with young, entrepreneurial franchisees acquiring more from those operators approaching the sunset of their careers. At the same time, Subway is seeking greater engagement from new franchisees. For a long time, the brand prohibited operators from owning any other concept. Rafferty can’t speak to why the company reached that decision decades ago, but he does know exactly why it’s time to move on. The industry vet eran notes many in Subway’s leadership team have worked at other restaurants and have experienced success, and one of the most common drivers of those triumphs is diverse perspectives

from operators, including demonstrated expertise in growing a brand and building in a particular market. “I like to think that they’ve sort of seen the movie, and they wrote the book in some cases on how to scale a brand in a par ticular market,” Rafferty says. “They bring that operating expertise, building great teams to deliver a great guest experi ence, they bring development expertise. And development can be very different market to market, but if we’ve got somebody who’s been successful scaling a brand like ours in ‘Anytown, USA,’ we can have some conf idence that they’re going to be able to do the same with our brand.” Upcoming development is no longer about the numbers, Rafferty explains. It’s about improving what Subway already has. Meaning, the most likely way for large multi-unit opera tors to enter the business is through acquisition and not building a certain number of restaurants. After purchased units are appropriately remodeled or relocated to better trade areas and performing at a higher level, then there can be talks about expanding the portfolio through new unit development. “What we are doing is bringing all the great tools that are available to us today through market planning and data science to identify what is the best opportunity in a particular market or in a particular trade area when you’re as established as we are,” Rafferty says. “We’ve got to really think hard about relo cating some assets where the trade area you may have moved on a little bit. We use the experience of our teams and our fran chisees—I call that sort of the art of it—but we have science to it. So it’s a mix of art and science.”

SUBWAY IN JULY UNVEILED THE “SUBWAY SERIES,” OR 12 NEW SIGNATURE SANDWICHES THAT CAN BE ORDERED BY NAME OR NUMBER.

SUBWAY

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SEPTEMBER 2022 | QSR | www.qsrmagazine.com