Subway Franchise

competitionscafe

Only tried the Edinburgh (Hanover Street?) one (once) but i thought it was very average compared to say Pret-a-manger. I saw one for sale on Businesses for sale website recently and was shocked at the high asking price compared to similar businesses - think it was about 130k compared to 40k for an independent sandwich shop up for sale - that's a massive premium to pay for brand name, marketing and support. Not saying it's not worth it but would need careful research.

There are a couple of resale ones here:
http://www.businessesforsale.com/uk/quickSearch.aspx?country=234&keywords=subway

One in Edinburgh, one in London. The London one is 110k selling price, 160k turnover. You would need an annual net profit of over 36k (difficult on a 160k turnover) just to get your investment back after 3 years.

Stonk

competitionscafe wrote:

One in Edinburgh, one in London. The London one is 110k selling price, 160k turnover. You would need an annual net profit of over 36k (difficult on a 160k turnover) just to get your investment back after 3 years.

Interesting. I agree, on those numbers it would take a lot longer than 3 years to get your capital back even in "today's money", before considering inflation, and cost of capital. I personally wouldn't touch that offer with a bargepole, but it depends on your own financial circumstances and ambitions.

I imagine those are prices for an established franchise being sold by an existing franchisee. The price for a brand new franchise from Subway would be lower, I guess. But you do get some idea of what turnover to expect.

competitionscafe

This independent sandwich bar is probably a good comparison (similar turnover and location)
http://www.businessesforsale.com/uk/Prime-City-Centre-Sandwich-Bar-For-Sale.aspx
80k versus 130k for the subway

Although an O'Briens Sandwich Bar (very good city centre location) sold for £105k (assuming they got the asking price) - though turnover at 242k was a lot higher than the 160k for the Subway listed.
http://www.businessesforsale.com/uk/City-Centre-O-Briens-Sandwich-Bar-For-Sale-2.aspx

I ignored inflation and cost of capital for simplicity, but yes I agree - would'nt touch it with a bargepole either at that price - could probably start your own for well under half the subway franchise cost of 130k but obviously without the brand, marketing, etc.

"What is the initial investment in the setting up of a SUBWAY® outlet in the UK and Ireland? The initial investment ranges from c. £100,000 to c. £245,000 for a traditional location and from £45,000 for a non-traditional location. "

Found at: http://www.subway.co.uk/business/faq.asp

I am not knocking franchises - they have a much higher success rate than start-ups for obvious reasons, but at the end of the day the biggest benefactor is the original company, particularly if they take a % of the profits from each franchise. It also enables a company to expand very fast whilst covering (most of) the large costs of such an expansion upfront. I think one of the biggest drawbacks or frustrations for me would be the lack of individual creativity and inititiative involved (which for me is one of the biggest advantages of self-employment) - with a franchise (particularly a catering one) you are tied to following very specific guidelines (menus, ingredients, prices, promotions, etc) so that the customer experience is the same whichever branch they visit. For me one of the major attractions of running a cafe/restaurant/food outlet would be the ability to offer products I thought would sell well, come up with my own marketing promotions and offers, plan menus, source good products and suppliers, implement new ideas - etc ,etc...

The other thing to consider is that if there is a recession then (as well as there being less employed people) perhaps one of the first things people will cut back on will be things like a bought lunch (will make their own at home for a fraction of the cost).

lynzpower

Ive eaten in subway once in london, and once in Mexico, they were both the same taste, i thought they were pretty foul to be honest, the meat in them was processed to hell.

I dont think they are a "cheap" lunch really either, independents do it better than subway, for less. Independent shops can follow the customers demands ( ie organic, fair trade, pomegranite juice, whatever the trends are) muhc better than a franchise ever will.

ac24

ive been quite interested in buying a franchise for a while now, ive looked at subway as a main choice.

the one in my high st opened abou 18 months ago, its always packed out at lunch and usually does well from 11am to 2pm and also probably at around 5pm.

though it is in the high street and closes at 5.30.

would it be better to open a fast food franchise in the high st or elsewhere?

With every franchise ive looked at it seems very very difficult to get your money back in 4 years because the cost of property is huge and then you got to pay royalties and the initial license fee.

iwanttosave_2

ac24 wrote:

ive been quite interested in buying a franchise for a while now, ive looked at subway as a main choice.

the one in my high st opened abou 18 months ago, its always packed out at lunch and usually does well from 11am to 2pm and also probably at around 5pm.

though it is in the high street and closes at 5.30.

would it be better to open a fast food franchise in the high st or elsewhere?

With every franchise ive looked at it seems very very difficult to get your money back in 4 years because the cost of property is huge and then you got to pay royalties and the initial license fee.

Ours is on the high street and is open till 11:30pm on the weekends, as I say BIL manages it, and it has a good turnover getting all the ones coming out of pubs and dont want a kebab

M_Thomson

nej wrote:

I love Subway! Quite rare in the UK unfortunately.

Not true, they already have over 650 stores in the UK and Ireland. They have a target of opening 2010 stores by 2010. They are aiming to have more outlets than Mcdonalds in the UK like they have done in the US and Canada.

daisey_3

Hiya,

I love Subway!!

I guess it depends on where you are thinking of having your site.

Where i live in the northwest in the city centre alone we have 4 Subway's and they are always packed out!

My husband suggested it to me years ago and i didn't think we could afford to do it at that time..... and boy am i gutted i didn't listen to him....:mad: Its too late now

I love the fact that my Sub is being made for me fresh in front of me.

I'm a huge fan !!

would love to know how you get on!! ??

xx

lawford83

HI, I was in the same situation as you 3 years ago.
I was keen on subway,oggyoggy pasties,morris pasties,the real pasty company,wimpys.these were the best i could find in my budget of 40,000 cash and total cost no more than 120,000.
I went for therealpastycompany and have done ok in the first two years,they were the most realistic in my view re turnover ect.
I think the main problems are what price you pay for rent,they want high street locations but max rent and rates of 40,000,not easy to find.
Also wastage is a problem in the pasty shops.


My other franchise is a wimpy bar,it is really hard work but the returns are good and no wastage as all freshly prepared ,also they look for secondry ocations and have lower rents.

I looked at the business for sale sites and wimpys rarely come on the market and also they really are expensive,a good sign.
When you see lots of a brand have lots of resales it puts doubts in your mind.
good luck and don t pay too much rent....