It’s easy now to say that we rushed into the deal, or that we were carried away by the excitement of our new enterprise. I certainly should have conducted a wider location search and I probably should have signed a lease. However, we were just getting started, and college was opening soon so it was important to take action. Rather than sitting around making plans for the rest of our lives we decided to just go ahead and do it. Pete and I were, and still are, the type of guys who like to make decisions without belaboring things. From my perspective today, taking action is a good quality and I’m glad we took that first location. Sometimes, knowing less and actually doing something is far better than knowing everything and never doing anything at all.
The Submarine Sleuths
Funny thing, until I was face-to-face with our first customer, I had never made a submarine sandwich. Nor had Pete. We enjoyed eating them, and we knew they consisted of meat, cheese, vegetables, oil, and bread, but we had absolutely no experience making them. So it was important that Pete took the time to drive my mom and me to Portland, Maine, where we decided to research the fine art of making submarine sandwiches. Although we were familiar with Mike’s in upstate New York, we needed to experience another taste profile, and also watch the process of making sandwiches.
Pete had grown up eating submarine sandwiches at Amato’s Italian Deli, and he remained fond of their product, so he suggested that we visit his parents in Portland and spend some time hanging out at Amato’s. My mom decided to join us, and we appreciated her company, especially because she knew much more about food than we did.
We arrived in Portland in time for dinner and decided to begin our research the next day around noon. From outside Amato’s front window we gained a vantage point from where we could watch the action behind the sandwich counter. After a few minutes we decided to go inside to gain the experience of being a customer. We ordered our sandwiches, paying attention to the entire process of ordering and making the sandwiches. We then took our sandwiches outside and resumed peeking through the window. We paid particular attention to the process of cutting the bread, laying in the meat and cheese, and applying the oil. One of the things we noticed was that Amato’s people poured oil onto each sandwich from a gallon can. Our trio, in spite of our inexperience, thought that was clumsy. We immediately decided it would be better to transfer the oil into smaller containers, the size of a small pitcher, then pour from the containers onto the sandwiches, thus making the operation a little easier. Later we discovered our idea also added expense and created inconsistency!
There was only so much we could learn from Amato’s. They only sold two variations of sandwiches—ham and salami—so we decided to visit several other sandwich shops that day. We bought sandwiches at each shop, observed their operations, and evaluated what we perceived as the pros and cons. Between visits we compared notes.
Within twenty-four hours, our research, sparse and unscientific though it was, provided what we thought was sufficient information to make some key decisions. Essentially, we had two prominent profiles to consider for our business: Amato’s and Mike’s. The two had little in common and that was a plus because it gave us different perspectives. Mike’s variety of sandwiches included cheese and tuna. Amato’s sold only the two sandwiches. We liked variety, so we stuck with our earlier decision to sell seven different cold sandwiches.
We preferred Amato’s taste profile, but we also preferred Mike’s bread. Amato’s used a nine-inch soft roll, but Mike’s was a foot long, and that sounded good to us. Amato’s added a larger variety of fresh vegetables to their sandwiches. Mixed with oil, the fresh vegetables added flavor to the sandwich, so we decided to include them. The foundation of an Amato’s sub was like an Italian salad without lettuce, and that was very much to our liking. We decided to imitate Amato’s sandwich and put it on a foot-long roll, but we would sell a greater variety of sandwiches, just like Mike’s.
Even though we didn’t know anything about costs, we stuck with Mike’s pricing scheme. After all, as good as it was, there was only one Amato’s, but there were thirty-two Mike’s! We figured Mike’s must have been doing the right thing with pricing, but the fact that Mike’s combined thirty-two restaurants’ worth of volume and had far greater buying power wasn’t even a consideration for us. What did we know about volume?
That was the sum and substance of our research. It was really simple. Could we have done more? Certainly. Would it have made a difference? Probably. Observation is a terrific tool, but when you don’t know any better, you can see something that’s obvious and not know what it means, or you can miss a critical component. Something like pouring oil on sandwiches is a good example. When we watched Amato’s people poke a small hole in the top of a gallon can and lift that heavy can each time they wanted to pour oil on a sandwich, we thought there had to be an easier way. That’s why we decided to use small pitchers. However, the secret to pouring the oil from a gallon can with a small hole in the top is control and consistency. By making the hole a certain size, Amato’s could control the amount of oil per sandwich. With our pitcher, we had no control. The amount of oil we poured on each sandwich depended on how far we tilted the pitcher, and for how long. Consequently, our oil costs and product quality varied from sandwich to sandwich. But that’s not something we would have understood simply by observation. We had to try it ourselves before we realized there was method to the madness.
Intuitively, we realized that to really understand our business, we would have to begin to work it. It didn’t matter if we chose Amato’s pricing instead of Mike’s, and Mike’s taste profile instead of Amato’s. If we made mistakes—and we did—we could correct them as we progressed. We realized that we were starting a small business. It was a tiny investment of money. We didn’t have much to lose. If there ever was a time to experiment, it was now. Indeed, other people were already operating similar businesses, and it was so easy to go see what they were doing. Why would we spend our limited time and capital on research?
When we had 14,000 restaurants, we spent $70,000, a modest amount of money for this kind of research, that worked out to just $5 per restaurant. What a bargain! When we were just getting started, we couldn’t get much research for $5, and we couldn’t have afforded much more than that. Therefore, we did what we could as quickly as possible without getting hung up on what we didn’t know. And there was plenty we didn’t know.
Today, however, it’s a different story. For example, to introduce something as simple as a new cookie formula in our Subway restaurants, we invest months of time and tens of thousands of dollars in the research. We might send researchers into five or six regions in North America to hand out cookies and ask detailed questions to gather information about perceptions and preferences from consumers. We then hire experts to correlate mounds of data in anticipation of finding the perfect cookie for our customers.
Preparing the Restaurant
On the way back from Maine we targeted Saturday, August 28, 1965, for the opening of our restaurant. That meant I would devote all of August to preparing for the big event. With some help from my parents, and my high school friend Art Witkowski, who wasn’t doing anything that summer, I purchased equipment and supplies, contacted vendors, built a counter and an outdoor sign for the restaurant, and drummed up future customers by handing out promotional flyers.
Oh yeah, Pete and I also came up with a name for our business. As we looked at the stores adjacent to our shop, there was Ann’s Bakery, Judy Blair’s Dance Studio, and Suzie’s Yarn Shop. All of the businesses were identified by a person’s name, so we arrived at the logical decision to call our business Pete’s Submarines, but we decided to glorify the name by adding the word “Super.” Thus we became Pete’s Super Submarines! Occasionally we had to shorten the name to the less glorious Pete’s Submarines to make it fit on our outdoor signs.
However, we later discovered the name wasn’t easy to communicate. When people heard the name Pete’s Submarines over the radio, they often thought they heard the words “pizza marine.” When consumers who had never been to our restaurants began asking me “What kind