Setting Another Big Goal
As we celebrated Subway’s tenth anniversary in 1975, the fact that we were several restaurants shy of our goal wasn’t much of a disappointment. We knew it was only a matter of time until we would surpass that goal and set a new one. We opened our thirty-second restaurant in 1976; in two more years we opened our 100th restaurant; and by 1982 we doubled our network to 200 units. The rapid growth created numerous challenges that required the resolve of our talented home office team. Subway was no longer a tiny operation. It was on track to expand far greater and faster than Pete and I could imagine.
So now what do we do? How were we doing? Was 200 restaurants a lot or a little? What else was possible? If we set another goal, what would it be? After conducting a market study of the fast food industry in 1982, sizing up other chains and their growth, and considering Subway’s growth, I decided our new goal would be 5,000 restaurants by 1994. It was an aggressive goal. Most of our employees were stunned when I announced it, and some of them thought I was absolutely crazy. We only have 200 restaurants. How are we going to open up 4,800 more?
From the perspective of many of our team members it seemed impossible to grow Subway twenty-five-fold! But from my perspective it looked like an extremely challenging objective, but not much more challenging than opening thirty-two restaurants in ten years from an investment of only $1,000.
After all, we had already spent nine years learning how to run our company restaurants, and another eight years refining our franchise organization. We had developed terrific control systems, we had a network of experienced franchisees, and we were beginning to put Development Agents in place around the country. We had seventeen years of experience to rely on, and to my way of thinking, we were going to keep doing what we were already doing, but we would just do lots more of it.
There was no doubt in my mind that if we worked hard and did lots of things correctly the goal was achievable. Despite any misgivings about the goal, everyone on the team focused on the objective. We made further improvements to Subway and by 1991, a full three years early, we surpassed the 5,000-restaurant goal!
We were growing so quickly that by that time I had already revised our goal to 8,000 restaurants by 1995 and we even surpassed that goal two years ahead of schedule. In fact, in the ten-year span between 1988 and 1997 we added over 10,000 locations to Subway, and for most years during that period we held the distinction of being the world’s fastest-growing franchise company.
How did we expand so quickly? What most people don’t know is that our existing franchisees who were in an expansion mode opened about 70percent of our new restaurants each year. We have many talented, ambitious, hardworking franchisees in Subway and they fueled our spectacular growth. Once they learned the details of the business and how to succeed with a single unit, many would return to invest in additional restaurants. Having succeeded once with Subway, they wanted to succeed over and over again. Even to this day, about 70 percent of our new franchises are sold each year to existing owners who are reinvesting in the business. By keeping the operation simple, the investment in our restaurants low, and by discounting the initial fee for existing franchisees who are expanding, we made it desirable for our franchise owners to open multiple units.
When we passed the 8,000-store mark we decided it was time to publish a different type of goal. Now, rather than measuring how many restaurants we opened, we decided to concentrate on cents per capita in North America. Our goal was for every man, woman, and child to spend 50 cents per week at Subway by 2005. We still have a way to go to hit that mark, but we’re up for the challenge.
International Expansion
In terms of store counts we now have to think of expansion on a global scale. As we approach our40,,000th restaurant——it looks to me like a large fast food company will be able to operate more than 100,000 outlets worldwide by 2050. I’m fairly confident McDonald’s will be first to hit that number, but we haven’t as of yet set a worldwide restaurant count goal. Right now we’re working on our international infrastructure and if we continue to do a really good job we might be able to reach 100,000 outlets, too.
Where will we open all of those Subway shops? Outside North America, for the most part. We’ve operated in international markets since 1983 when we opened a small store in Bahrain, in the Persian Gulf. Shortly thereafter we had a false start in the U.K., and in 1986 we opened in Canada. Today, we are the world’s largest restaurant chain with more locations than McDonald’s. We’ve been making strides on the international scene, thanks in part to the persistence of Don Fertman, who heads up our global development division. Today we have more than 11,200restaurants outside the U.S., But there’s still lots of work to do.
Even though we’re now located in 100countries and in most every region of the world, including countries like Japan, the United Kingdom, Australia, Venezuela, South Africa, Israel, and China, in most places we only have a small presence. Actually, Subway today feels a lot more like 1982 when we had only 200 restaurants scattered across the U.S. We’ve got a good start but there’s still a lot of growth to look forward to.
Our international plan is to follow the same basic formula that has worked so well for us in the U.S. We’re looking for dedicated franchisees to operate in their neighborhoods, and just as we did when we expanded to Baltimore, we’re looking for Development Agents to lead the expansion in local markets around the world.
While our terrific team has accomplished a lot in the past forty seven years, there is still much work and many challenges ahead. Today we must put the pieces in place for Subway to become an international powerhouse. But like every big objective that we’ve faced in the development of Subway—many of which you’ll read about in this book—our team is up for the challenge.
What I never expected, and what Pete Buck never expected, was that we would build such a large company from such humble beginnings. For two guys who knew almost nothing about business, the food industry, and franchising, our forty seven-year-old partnership has led to our personal success as microentrepreneurs. More significantly, we’ve touched, and in many instances changed, the lives of people worldwide. For a kid from “The Projects,” it’s been a fabulous journey. I hasten to add that these accomplishments have less to do with me, and Pete, than they do with our associates at our regional offices around the world, our CT based team at Subway World Headquarters, our Development Agents, and most importantly, our incredible franchisees. These are the folks who continue to make the journey exciting and rewarding.
Come along now, and I’ll explain each of the Fifteen Key Lessons in more detail, and I’ll introduce you to twenty-one other microentrepreneurs whose own incredible stories emphasize the value of these lessons.
chapter four
Start Small
These microentrepreneurs are certain of one thing: Starting small is better than never starting at all! Regardless of money, circumstances, and experience, these microentrepreneurs will show you how to get started.
My story sounds a little improbable, doesn’t it? After all, who could go to a barbecue one day without any intention of starting a business and wind up with a plan, a partner, and the seed money to get started? And what seventeen-year-old ever started a business before, anyway? And who can start a business with only $1,000?
Actually, I think most people would be quite surprised by the number of businesspeople who start on a shoestring and their array of improbable beginnings. You don’t even have to scour the country to find them. For a real eye-opener,