BRIDGEPORT, Conn. – From its humble beginnings in Bridgeport, Connecticut, to its thousands of locations around the world today, Subway has become the world’s largest restaurant chain. Founder Fred DeLuca talks in Inc. magazine that journey.
When Subway started franchising in 1974, the company had a modest goal of expanding its reach. Eight years later at 200 stores, DeLuca said he set his sights on passing McDonald’s, which had close to 8,000 units in 1982. “Could we open as many stores as McDonald's had everywhere? I thought, Yeah. Why not? Anywhere they have a store, we can have a store,” he said.
After changing up the franchise process by adding local franchise hubs, the sandwich chain took off. “We were growing really fast by that point. I remember very distinctly thinking that getting to a thousand stores [in 1987] was a big deal. But there were still lots of people who didn't know what Subway was,” he said.
By 1995, Subway had reached 10,000 stores. DeLuca attributes much of the success to the fact that “the fundamental building block at the store level was pretty good. Because the stores worked, franchisees wanted to build more stores. If your model works, folks who are happy with it will buy out the ones who aren't happy.”
DeLuca shared his secret to success. “I tell everybody there are only three things that we do. We build sales at the store level, we build profits at the store level, and we build more stores. The first two things go in tandem, of course. It's pretty tough to build profits without sales.”