Subway becomes world's largest restaurant chain

The sandwich empire has used creative locations and a healthy image to expand internationally.

By Kim Peterson Mar 7, 2011 1:37PM
Credit: (© Tim Boyle/Getty Images)

Caption: Subway restaurantThere are now more Subway restaurants in the world than McDonald's (MCD) locations.

Subway had 33,749 shops by the end of last year, The Wall Street Journal reports, while McDonald's had 32,737. That makes Subway the largest restaurant chain in the world. The sandwich giant has 600 locations in the Los Angeles area alone.

And so McDonald's loses a title it has held since the early 1970s, when extensive advertising and a massive growth spurt helped it become the largest fast-food chain. But McDonald's appears to be a gracious loser in this case. We "are committed to being better, not just bigger," a spokeswoman told the Journal.

How did Subway do it? By adopting the same strategy that propelled McDonald's decades ago. It spends heavily on advertising to stay in the American diner's consciousness. And it has expanded rapidly through the same franchisee model that McDonald's favors.

Post continues after video:
Subway kiosks pop up in a wide variety of places, including gas stations and courthouses. And in the economic downturn, the company has emphasized value. Case in point: the $5 foot-long. Offering a foot-long sub for $5 generated $3.5 billion in sales in 2009, Bloomberg reported, reviving Subway at a time when other fast-food restaurants struggled.

Entrepreneur.com lists several reasons Subway has become so successful.

1. Tell a great story. Subway found a great one in Jared Fogle, its spokesman who weighed 425 pounds as a college freshman. Now Fogle is running marathons. Although Subway doesn't use Fogle as much anymore, he helped cement the chain in the American mindset as a healthier alternative to other fast-food restaurants.

2. Use a flexible brand. Sandwiches can be branded in many different ways to change with the times. Subway now emphasizes fresh food and value.

3. Good locations. Subway gets into hospitals and other locations that other fast-food chains can't. A Big Mac in a hospital? Forget it.

4. Good relations with franchisees. Subway seems to have a good relationship with its franchisees, as opposed to shops like Quiznos, where years of bad blood and lawsuits divide the franchisees and the parent company.

VIDEO ON MSN MONEY

113Comments
Mar 7, 2011 7:18PM
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I have NEVER heard so many people complain about a $5 sandwich of which YOU choose what goes on it. There's no "I would like a cheeseburger minus the pickles and mustard" and hope they remember to take them off as other food chains are well known to forget. Or not care I should say. If you feel like being a fat as s for the day and want to engorge your sandwich with Mayonnaise and lots of cheese then so be it. Don't blame a food chain for you not being a healthy eater.  The choice is yours, they put what you want on the bread (of your choice)  in front of you for cryin out load. I'm sure the workers won't "sneak" something in there when your not looking. Since they now have so many locations, jog yourself their.  Be healthy on your own instead of pointing the finger so much!

Mar 7, 2011 4:29PM
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I love how you people say subway isn't cheap. Show me how you can make a foot long sandwich with lunch meat, lettuce, tomatoes, cucumber, black olives and cheese on fresh bread baked that day for $5? and without letting the rest of the head of lettuce, cucumber going to waste?? its not possible unless you are a baker with a vegetable garden. Its just another excuse for your fat butt not to go to subway.
Mar 7, 2011 9:44PM
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I am a longtime franchisee, and I love the business. 
It is true that Subway is the largest franchise in the world. But ask a franchisee. The atmosphere is becoming toxic, in that we are at the point of eat or be eaten. You must develop or your fellow franchisee or Development agent will. Subway's current  development model is one store per 10,000 people. Just a few short years ago it was 1 per 15,000, then 1 per 12,000. The rules are changing so fast that a franchisee doesn't even know the rules.
Personally I have developed a small town along a freeway to 1 per 5200 people. Well beyond Subway's current model. But, they are proposing another store in this town. This proposed store is between Subway corporate and another large corporation. There will be no local franchisee. One of my locations is within feet, not miles of this proposed store. This new store will effectively put me out of business.  Yes Subway is the biggest, but if you look at Starbucks recent contraction of non profitable stores, there is a point of diminishing returns. And I fear that it is the franchisee not the corporation that will pay the price.

Mar 7, 2011 4:01PM
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Hey Chad,
I'll decide how  to spend MY money. You decide how to spend YOURS. I'm not going to nag you about how you waste money on items I consider wasteful and overpriced.
Get over yourself already.

Mar 7, 2011 8:32PM
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I love the fact that people are complaining about the amount of meat put on the sandwiches.  Did any of you think that when you make your own sandwiches you might be over doing it a little on the meat?  Also if you do some research and look at the nutritional value of subway, quizno's, and jimmy johns I believe you will find that subway is the healthiest choice by far.  as for paying $5 for a foot-long sandwich, think of it as a $5 investment in your health vs. spending $5 on 5 different items from a value menu that consists of items completely covered in grease. 

Mar 7, 2011 8:01PM
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I have always preferred Subway over anything else. period. Local McDs now charging for substitutions. No onions? = 30 cents.

Interesting philosophy = If the food won't go bad/rotten sitting out, should I be eating it? Compare the two places. You might be amazed.

Mar 7, 2011 4:10PM
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I kind of liked Quiznos but they've definitely gone down hill lately in portions and quality. It's hard to even find one in my area that's still in business. Go Subway!!!
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The quality of subway has deteriorated as thier popularity has increased. I stopped eating there a couple of years ago after several bad sandwiches (and employee attitudes) in different locations. Im still a firm believer in quality foods and pleasant employees and it is in those types of establishments that I choose to spend my hard earned money.
Mar 7, 2011 9:39PM
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No McD's in hospitals? I beg to differ...a hospital in Canton, Oh has one. Nothing like polishing off a Big Mac before going to visit the relative who just came through a quadruple bypass...LOL
Mar 7, 2011 4:23PM
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I'm interested in knowing the weight and health of all below who are so critical of Subway's food.
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I've NEVER had my subway SKIMP on toppings.  With a deal the other day I got a ham sandwich and I had to actually pull off some meat at home and saved it for my own ham sandwich, and I didn't get extra. And if I feel the current person isn't putting enough tomatoes or pickles or onions. I ask them for more- no charge.
Mar 7, 2011 6:17PM
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@Courtney Child, You've got to be kidding me, Burger King's fries good? Compare it to a local fast-food joint's fries, not like Mcdonalds, Burger King, Wendy's, and all those other big Food industries. But I must say Subway is 20 times better and better for you, McDonald's makes you have gas and a stomach ache, Anyways Great Job Subway! Hope you keep up the good work.
Mar 7, 2011 4:33PM
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Regardless of whether or not Subway is truly healthy food (I don' t think it is), the fact that it's the largest chain in the world should send a message that people want healthier fast food options.
Mar 7, 2011 7:55PM
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One thing the article forgot to mention is that Subway had big fights with franchisee's around the turn of the century, because of over selling franchises. They have more stores today because they set no limits on how close one SubWay is to another. So one may be popular but the one around the corner has a struggling owner who trying to stay afloat. Just a fact.
Mar 7, 2011 7:55PM
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Make sure when you go subway they put 4 slices of turkey,ham etc, on the 6 inch sub.
be careful some franchise want to rip you off......... 

Mar 7, 2011 7:12PM
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What people forget is that Subway is a franchise. One Subway may have horrible management and be a place you want to avoid, another may be the best place you have ever been in. My friend works as a quality assurance employee for Subway.  He goes around to different Subway restaurants in the area that have had complaints or something is suspected and he poses as a normal customer.  A few people have unfortunately had to be let go, and in one case, arrested, due to what is going on. This is however still a new position for Subway and very few areas have this kind of thing going on.

 

A new Subway opened up in the building of one of my employers. The Owner there every weekday to greet me, its kept extremely clean, and the ingredients are well kept. Everyone there is extremely friendly as well.

 

As far as the smell goes, from what my friend (who used to manage one) says, the Italian Herb and Cheese bread is what causes all the problems. Employees hate making it because it stinks up the whole place and lingers. But many customers love the bread and would throw a fuss if it was removed.

Mar 7, 2011 5:03PM
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I know I will be bombarded for this but, McDonalds burgers always tasted metalic to me. At one time they did have the best french fries, not anymore. I live in an area that has fantastic burgers, going to McD's is a big step down.
Mar 7, 2011 10:47PM
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The taste of the sandwiches from Subway is what the customer creates....not the

person "behind" the counter making the sandwich the way the customer "WANTS" ! ! ! !

Mar 7, 2011 4:52PM
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You people talk about them skimping on the meat when every subway uses the same amount of meat. I go about 3x a week and for a foot long BMT you get 6x pepperoni 6x salami 4x ham and 4x cheese...what more do you people want? if you want more then that then get double meat idiots. As far as skimping on veggies just tell them. If they don't give me enough lettuce i say "Can i get more" and they always load it up. All you that talk about them skimping would rather just go to mcdonalds and get a number one large and stuff your fat face.

Mar 7, 2011 11:18PM
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Subway hopefully will keep ahead of McD's. I think that they have more of a health consciousness and really care about the health of the nation. I feel that McDonalds does not. They just care about volume and profits which is not helping the American consumer. Subway appeals to eaters who love meat but they also appeal to vegetarians. Mc D does not. If Mc D did want to contribute to the health habits of the American eater, they would have whole wheat buns, whole wheat wraps, and put a tofu burger on the menu. Mc D's can learn from Subway but they wont. Even Fuddruckers has a whole wheat bun on the menu and you can get a veggie burger.
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