Subway Value Chain Analysis

Topics: Fast food, Subway, Marketing Pages: 5 (1085 words) Published: September 3, 2012
Subway-Porter Value Chain

SUBWAY was started 47 years ago in the year of 1965 by Fred Deluca. Subway is the market leader in the sub and sandwich shops offering a healthier alternative to traditional fast foods. Subway’s annual sales exceeded $ 6.3 billion, while countless awards and accolades have been bestowed its chain over the past 47 years. Subway has more than 33,500 units worldwide whilst its rapid growth has attracted many investments and brought it many competitors such as KFC and Burger king . Recent increase in the health conscious customers increased the share of subway in the market. Subway is the largest chain of fast food restaurants in the world, which has around 1200 restaurants more than Mcdonald’s. The Subway concept of serving fresh made sandwiches on fresh baked bread, made right in front of customers, the way they like it has proven to be a winning marketing strategy in. Subways are famous for their high level of response to their customers. This special quality earned a lot of loyal customers to the enterprise. They have also become popular with health conscious customers in Europe who are searching for higher quality fast food options. Subway’s low initial investment and ability to fit into unusual spaces are other reasons for their success. Without the need for heavy equipments for cooking a Subway restaurant is the perfect business for the small spaces and tight real estate of Metropolitan cities. Their regional office makes the franchise start –process simple and easy. Europe is currently wide open for development. As their brand awareness is rapidly growing, more and more people are becoming aware of Subway as a great tasting lunch option and also as a great way to start their own business within their community. Now let us study about the value chain in subway using Porter model. Porter’s model consists of 2 elements basically. They are 1. Primary elements, 2. Secondary elements. The primary elements of Porter Value Chain model are

* Inbound logistics
* Operations
* Outbound logistics
* Marketing and sales
* Service

The secondary elements are
* Human resource management
* Firm infrastructure
* Procurement
* Technological development

This is how the Porter’s Supply Chain Model looks like:

Now let us try to understand Subway in terms of Porter Value Chain model. a. Inbound logistics:
* Vendors for vegetables are generally whole sellers, who in turn buy vegetables from farmers. * These vendors have a long term contract with the company. * After first few trades, they learn what size and quality of goods are taken away by Subway. * Sauces were provided by third party vendor, with a long term contract. * Purchasing is done centrally in Subways.

* Transportation of raw materials is done by the vendors itself. * Each subway is provided with three bykes for catering.
b. Operations:
* Since subways are fast food chain restaurants, the operations(which turn inputs into outputs) include making of subs, and heating them in the oven(if required). * All these operations are human made and are made in the presence of customers. * Some of its operations include veg-subs, traditional, salads etc., c. Outbound logistics:

* Subways does not have much of outbound logistics as much of its products are made in the presence of customer. * But, in some subways, some of its products are freezed and imported. * Subways also offer soft drinks and water bottles for the customers, so there is a need for space to store these soft drinks(refrigerators).

d. Marketing and sales:
There are various factors which influence success of fast food franchisees, some of them are healthier menu selections, brand consistency, low start up costs, franchisee support, consumer convenience etc,. Subway represents a poignant example of a fast food franchisee

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