Subway's next venture: Lattes and pastries

The sandwich chain is expanding with concept cafes that offer espresso drinks, Wi-Fi and television.

By Kim Peterson Nov 17, 2011 4:23PM
Credit: (© Business Wire)
Caption: Subway Cafe in CaliforniaMove over, Starbucks (SBUX). Subway is joining the coffeehouse crowd.

The sandwich chain is testing a new restaurant, called Subway Café, that serves lattes and other espresso drinks as well as frozen blended beverages. The restaurant wants people to make themselves at home, offering Wi-Fi and satellite television service from DirecTV.

It's a far cry from the typical bare-bones Subway restaurant. The cafe still sells the usual Subway sandwiches, but has an expanded menu that includes pastries and other baked goods.

Where is Subway going with this? The chain's interest isn't surprising, given the success that McDonald's (MCD) and Dunkin' Brands (DNKN) have seen in the high-margin specialty coffee business.

McDonald's is so bullish on the business, in fact, that it is building defined spaces for its McCafe menu in some restaurants. It's also working on new products, such as the "Cherry Berry chiller" planned for next year.

Subway is just dipping its toe into these waters, however, with only about 20 Subway Cafés operating and 20 more in the pipeline. The company has some 35,000 locations across the world.

The cafes, by the way, are using coffee from Seattle's Best, which is owned by Starbucks.

"We're always cautious whenever you're looking at something that will cost franchisees additional investments," Subway executive Cindy Kopazna told "This idea is more development driven than product driven, but with the combination of our brand strength and having an upscale décor and more offerings, it's very attractive for many."

One co-owner of a Subway Café in San Diego said he thinks the concept will appeal to coffee lovers who also want a substantial meal.

"There are coffee people out there who like to have their Starbucks but want to have something to eat too," Christophe Coreman told The San Diego Union-Tribune. "This concept is a way to get them from the Subway side and introduce them to the coffee side."

Nov 18, 2011 10:37AM
Well now, talk about competition, Starbucks is talking about closing restrooms and Subway is adding coffee and such to its menu.... a place to go with your laptop and an open restroom....well done Subway......
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