Fast Food and Subway

Topics: Fast food restaurant, Fast food, Franchising Pages: 6 (1522 words) Published: May 2, 2014

Introduction of SUBWAY Company

In today’s busy world, more and more young people are spending more money in the fast food. Fast food is a perfect choice when you are in hungry and hurry. It is quick, tasty and save time. Subway is certainly a good choice in the fast food franchises that is known for being a healthier option for those looking healthy food. It’s has always provided better choices to customers and as an established nutritional leader in the quick service restaurant

The founder of the Subway chain, Fred DeLuca and Peter Buck, started running their restaurant business in Bridgeport, Connecticut in August, 1965. This year, Subway chain is the largest food chain in the world after McDonalds and Starbuck. Subway has restaurant chain in the world with 40,855 restaurants in 105 countries and territories on January 1, 2014.

PEST analysis of SUBWAY

1. Political
As Subway is managed by following the political rules such as tax policies, environmental protection laws, employment laws and other political rules, the business license can be applied easily in other countries.

2. Economic
Subway has a very good advantage as it has set up with low cost. Subway always has enough material and needs to make its products in its business because subway has fully supports from its major suppliers. Besides, Subway has other main economic factors such as growing market of healthy food and also the complete facilities set up of Subway to prove that subway is in good economic conditions.

3. Socio-cultural conditions
New generations and white collar class that live in a busy life have become a good advantage to subway too. This factor has increases subway’s market and profit because of the speed of food and services. Moreover, most of people are willing to spend more money to buy higher standard, better quality things especially on food.

4. Technological
Due to the higher and advanced technology is developed day by day, many innovations and developments such as computer ordering system, drive-thru service and other technology are very useful to subway to invest and utilize. By investing and utilizing in these new innovations, speed and efficiency of Subway’s services will be raised rapidly.

Competitive environments

1. Intensity of rivalry among competitors
There are many competitors within the same industry; the intensity of rivalry is fierce because the supply is more than the demand. This means that a customer can choose any food whether a burger at McDonalds, a sandwich at Sunset Boulevard or a hotdog at the local hotdog stand follow by his demand. The slowdown in market growth also increases the intensity of rivalry between the competitors in same industry because companies have to fight over the same customer. This means that franchises such as these two have to compete with each other to fight over the same customer.

2. The Threat of new entrants
Fast food business is easy to start up due to the entry barriers are low. For setting up a fast food business is relatively low depending for Capital required. There are many fast food suppliers are privately owned such as hotdog stands, bakeries or kebab houses, are prove the point that is not difficult to start up a own fast food business. These successes of businesses naturally change significantly.

3. The threat of substitutes
There a many substitutes for eating fast food such as home cooking, fruit or fine dining. In this case, substitute attractiveness would depend on the buyer’s willingness to substitute, meaning if the consumer is willing to buy a burger instead of a sandwich. The attractiveness will also depend on the relative price and performance of the substitutes.

4. Suppliers
Since Subway is one of the largest franchises in the world, it should hold a considerable bargaining power in relation to its suppliers. It is able to set demands 45 on suppliers to comply with, and due to its many franchised restaurants, it can buy in...

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