Can I purchase a franchise for other CIS countries?
Unfortunately, we are not able to do this for you: The Subway Russia Franchising Company concludes contracts on rights to use the SUBWAY trademark only on the territory of the Russian Federation. In order to find out about opening a Subway restaurant in your own country, please address your inquiry on the official SUBWAY website, address: www.subway.com
Having concluded the contract, can we open only one restaurant?
Yes, that's right. Each subsequent restaurant must be validated by a separate Contract indicating the address of the restaurant. Therefore, lump-sum payments decrease - $9,000 US (exclusive of VAT) for the second restaurant, and $6,000 US (exclusive of VAT) for each subsequent restaurant, starting from the third one.
Who is the founder of the SUBWAY network? When and where were the first SUBWAY restaurants opened?
The first restaurant was opened by Fred DeLuca, a 17-year-old college student, and his uncle, Dr. Peter Buck. The first restaurant opened in the city of Bridgeport, Connecticut on August 28th, 1965, and was called "Pete's Super Submarines".
When was the first SUBWAY franchise sold, and where was this restaurant located?
Первый ресторан, работающий по франшизе, был
открыт в 1974 году в городе Веллингфорд, штат Коннектикут.
Where are the SUBWAY headquarters located, and how many people work there?
The SUBWAY headquarters are located in the city of Milford, Connecticut, and more than 600 people are employed there. In Russia, the headquarters are located at 20 Nevskiy Avenue in Saint Petersburg. The company responsible for developing and expanding the SUBWAY franchise is called the Subway Russia Franchising Company. This company includes Departments of Marketing and Advertising, Development, Business Support, Finance, Centralized Deliveries, Design and Equipment, an Administrative Department and a Practical Training Center. In total, the Subway Russia Company employs more than 20 specialists. You can get acquainted with them on our website: http: // www.subway.ru/about/staff/.
Is the SUBWAY network a corporation or a private company?
The SUBWAY network is a private company, and does not sell shares on the Stock Exchange.
What are the conditions for obtaining a SUBWAY franchise? How can I become a SUBWAY franchisee?
In Russia, any able citizen of the Russian Federation or any non-citizen of the Russian Federation can become a Subway franchisee, carrying out his entrepreneurial activities on the territory of the Russian Federation, with the desire, financial possibilities and mathematical knowledge of high school level.
Do you provide exclusive rights for each territory, and is it possible to buy the master-franchise from you?
No, that's impossible. Granting exclusive rights for each territory goes against the main principles of SUBWAY's territorial development. SUBWAY franchises can and should be available to any businessman who trusts our successful experience, and is ready to develop his own business under the SUBWAY brand. The head controller of possible territorial disputes between two franchisees is the "Approval System for Facilities". Of course, we will not approve the facilities for one of the franchisees if this facility is located territorially in the area of another operating franchisee.
Why hasn't such a good restaurant as SUBWAY been launched in our city? Can I open a SUBWAY restaurant on my own, or do I need help from co-founders?
The fact is that SUBWAY constitutes quite a unique network. Its uniqueness consists in the fact that SUBWAY restaurants open and develop all over the world exclusively as franchising projects. In other words, the owner of the trade mark does not have his own restaurants, and all SUBWAY restaurants belong to the owners only under franchise conditions. Therefore, if you want a SUBWAY restaurant to open in your city, first there should be an investor who really wants and has the means to open and operate a SUBWAY restaurant there. All franchised SUBWAY restaurants belong to their owners by 100%.
Why isn't the SUBWAY network so popular in Russia, as say, for example, McDonald's although you outnumber them in the USA?
SUBWAY has been operating in the USA since 1965, and only since August, 2006 we started pushing the SUBWAY network actively forward as a franchising project. From 2006 to 2008, we managed to double SUBWAY establishments in Russia within three years in a row. Our predictable objective - 1,000 SUBWAY restaurants by 2015. All SUBWAY restaurants currently operating in Russia are very popular. For example, about two thousand people visit the SUBWAY restaurant on Nevskiy Avenue in Saint Petersburg every day. We can account for a total of 63 operating SUBWAY restaurants in Russia as of May, 2009. We plan to have 100 restaurants operating in Russia by the end of 2009. The question of SUBWAY's popularity Russia is only a matter of time.
What is SUBWAY's target audience?
We aim to attract frequent people who enjoy fast-food restaurants. Our present and potential customers are people aged 12 to 44 years. Our guests look really well, they are full of energy, and they care about their health. More than 20 % of all Subway guests visit our network more than 4 times a month, which amounts to 48 % of all the visits. These are people with an above average income, students and schoolchildren, and employees working at offices in the neighbourhood. They are active and energetic people, setting up serious objectives for themselves, and capable of achieving them. They have a good level of education. They can afford to travel a lot.
How are sales dynamics at a particular SUBWAY restaurant monitored?
Computerized cash registers were established worldwide at all SUBWAY restaurants in January, 2011. Weekly accounting documents are processed by the computer, and are automatically sent to the Subway Russia Office.
Is it necessary to register an individual legal entity for a SUBWAY franchise, and what taxation system do you recommend?
When you are ready to conclude the Contract with SUBWAY and conduct economic activities under this Contract, you can use any registered legal entity (an unincorporated businessman), or register a new legal entity (an unincorporated businessman). It is important that the Charter of the organization (the certificate on entrepreneurial activities) designate the activity - "Extending services to the population through public food services", or something similar. You can also choose the most convenient form of the taxation for yourself - a simplified form, which does not take expenditures into account (6 % of the total turnover), a simplified form, which takes expenses into account (15 % - minus expenses), or the imputation tax. The imputation tax probably constitutes the most convenient form of taxation. The tax will be between 3-5 thousand RUB a month. Imputation may be different in each region, and will depend on the arrangements that you have made with your tax inspector. The calculations will most likely concern the total surface area. In the majority of regions of Russia, restrictions on facility surface areas, where the imputation tax is applied, totals no more than 100 sq. m.
As I have never been engaged in the restaurant business, can you tell me about all the required licences, and regulations that I must settle with local services (Health Inspection Services, Veterinary Services, etc)?
The activities, which you are planning for yourself, do not apply to any licensing categories. No licenses or permits are required. It is another matter if you open your restaurant in violation of current legislation; you may be fined, or temporarily forbidden to work. Execution may differ depending on local legislation. You should address the local branch of Rospotrebnadzor (Federal Service for Supervision of Consumer Rights Protection and Human Welfare) for explanations concerning procedures for opening a café. The main supervising bodies - Rospotrebnadzor (in fact, the Health Inspection Services), Rospozhhadzor (fire brigade), and Energonadzor (electricity). Certificates from the above-mentioned instances on the conformity of the facilities with their requirements - that's all which is needed. Hygiene certificates on the equipment and finishing materials will also be required; they will be provided by the supplier of the equipment.
Federal law recently established a notification form for opening small businesses, including public food services and catering establishments. Therefore, you are not required to provide any permits for the actual opening. The Federal law of the Russian Federation No. 294-ФЗ "On the Protection of Rights of Legal Entities and Individual Businessmen under Implementation of State Control (Supervision) and Municipal Control" dated December 26th, 2008 has been in force since July 1, 2009. The given Law simplifies procedure for launching new businesses. In particular, one of the main principles states that it is necessary "only to provide a notification order in order to implement different types of entrepreneurial activities".
Is a contract of commercial concession and a franchise contract one and the same thing?
Yes. As the term "franchising" is not defined in the RF Civil Code, franchising relations in Russia are regulated by the Contract of Commercial Concession, and sometimes (additionally) by a license agreement. The most important Contract is the Contract of Commercial Concession for the SUBWAY system in Russia.
How can I get acquainted more closely with the SUBWAY business before making my final decision whether to purchase a franchise or not?
You can arrange a meeting with any owner of a SUBWAY restaurant, and then visit his establishment. The best way to learn more about the SUBWAY business is to visit our office in Saint Petersburg. We will organize a tour of all restaurant formats, and organize meetings with owners and managing directors. If you should decide to sign the Contract, we will reimburse your travelling expenses to Saint Petersburg according to the rate of a round-trip flight in economy class for one person.
Can I have the opportunity to communicate with operating franchisees before making my final decision whether to purchase a franchise or not?
It is possible to receive information on franchise conditions directly from owners operating their own businesses. Not only is it possible, but it should be required before making a final decision on purchasing a franchise. We would like you to size up all the operating conditions of the SUBWAY brand, not only from our consultants, but also from other independent sources, namely operating franchisees.
We will send you coordinating information on all our franchisees as soon as you have examined the Contract, and confirm that you agree with the Contract provisions in general (without signing). In this way, we respond to the request of ours franchisees, namely, to reduce the number of company requests for consultations and advice addressed to the franchisee to a minimum. Please try to get most of your information from our consultant so that all you have to do for the franchise is confirm (or negate) the facts provided earlier by the consultant, and receive confidential financial information from franchisees themselves.
Is there a management system which can simplify work operations (accounting system)?
The management system and control over restaurant operations constitute one of the strongest competitive advantages of the SUBWAY franchise. A system, which has been verified and tested by years of experience, is used to help the owner to operate his restaurant: clear and simple reports, a planned schedule of working hours, express procedures for making inventories, and planning and tracking the efficiency of marketing programs. All these subjects are taught at the Training Center in Saint Petersburg within a period of two weeks. All the owners are also given special written instructions on managing SUBWAY restaurants.
EXPENSES ON OPENING A SUBWAY RESTAURANT
How much does a franchise cost?
"the cost of the franchise" means a registration (lump-sum) payment. It
is an initial irrevocable payment for the right to use the trademark.
When you open your first SUBWAY restaurant, you should provide $12,000
US, exclusive of VAT. If you should decide to open additional SUBWAY
restaurants, registration payments are reduced - $9,000 US for the
second restaurant, and $6,000 US for each additional restaurant starting
from the third one, exclusive of VAT. The registration fee for opening a
satellite (a booth or a mobile unit) is stipulated separately for each
specific case, but does not exceed 50 % of the registration fee for a
How much does it cost to open a SUBWAY restaurant?
course, the registration payment is not the only expense connected with
opening a restaurant. You will be required to provide the funds to
purchase and install your equipment, repair or renovate your facilities,
and hire your personnel. The total sum of investments in a franchising
project to open a SUBWAY restaurant usually ranges from $100,000 US to
$200,000 US. There is a very detailed description of the expenses
connected with opening a SUBWAY restaurant on our website:
www.subway.ru, in the section called "SUBWAY Franchise" under the
subsection "Financial Information". The information is presented in the
form of a "Financial Calculator" with examples and possibilities to do
the calculations on your own, by referring to your own facilities. Enter
the data in the "Calculator" column, and calculate your financial
Attention: preliminary registration is required to access this service.
are SUBWAY's commission fees? Is it a one-time payment for the license,
or a percentage of the proceeds and profit, and how is this process
There are two types of payments under the Contract of Commercial Concession: (a
franchise contract): 1. The registration fee (a lump-sum payment) -
$12,000 US (+ 18 % VAT) constitutes a one-time payment for the period of
validity of the Contract (20 years with the possibility to extend the
term) 2. Licensing payments (royalties) at the rate of 8 % (+ 18 % VAT) from the total turnover (total proceeds) are submitted every month.
What about security systems?
degree and techniques of safety requirements in each restaurant are
evaluated and determined independently by each franchisee. He must
decide whether he wants to use active or passive security means - bars,
rolling shutters, techniques for early fire prevention, and
Are the engineering and design projects of future restaurant prepared and paid by the franchisee himself?
The design project (the engineering plan and the project) is worked out
by our designers and project planners independently (it is free for
you) on the basis of the data provided by you, concerning facility
dimensions and communication lead-ins, and is always coordinated with
you. You make the final decision whether or not to approve the design
project, and take part in discussing these projects at all stages of
SUBWAY ECONOMICS. PRICING, PROFITABILITY AND RECOUPMENT.
What is the profitability of SUBWAY restaurants and how quickly can they be paid off?
We can answer this question more definitely (with minimum errors), when we have the information on leasing costs and the estimated consumer turnover rate of the specific site (facility). On questioning operating franchisees, we can say that the profitability of the SUBWAY restaurant business in Russia (at the end of 2008) is within 10-15 % of the total turnover. It may be significantly higher (up to 25-30 %) if you can find facilities with a good ratio between the actual lease and the estimated consumer turnover rate. You can receive even more precise data about recoupment and profitability from operating SUBWAY franchisees. After you have examined the key parameters of SUBWAY economics, and agree with the contract provisions, our consultants will provide you with other franchisee contacts in Russia so that you can make your own assessment of the given business by communicating directly with them.
Do you help franchisees to calculate the profitability of their future restaurant? Do you provide a business plan?
On principle, we do not provide business plans to our franchisees. This is due to the fact that all risks in the franchise business should be assumed by the franchisee himself (the purchaser of the franchise). Despite the fine-tuned and successful system that we offer, many risk factors, objectively speaking, depend only on you (preterm termination of the lease, the human factor involving the personnel's work, etc.). We would not want you to base your decision on purchasing the franchise only on our own forecasts. We will advise you how to make a clear and intelligible business plan to submit to the bank for a loan. We will provide you with more than adequate and reliable statistical information. We will show you how to choose the location for your future SUBWAY restaurant correctly, and how to calculate profitability. Together, we will try to reduce possible risks to a minimum. We will act consistently, precisely and very quickly, with in-depth examination of the matter at hand so that the information you receive will be understood and perceived as absolutely reliable. We will also provide you with contacts to all operating franchisees in Russia so that you can verify the reliability of our information, and make corrections according to the subjectivity of different points of view.
Key data on profitability calculations of a restaurant are data on customer visits. In other words, you should know how many people will visit your restaurant. Another important condition for making a network restaurant successful is whether you are ready to adhere to SUBWAY standards, and if so, to what extent, i.e. whether you are capable of keeping your customers, providing quality products and quality services. We cannot calculate the profitability of a restaurant until we know the answers to all these questions.
In general, our policy of building up a relationship with the future franchisee consists in not pronouncing any forecasts on the future success of a specific restaurant so as not to instill a feeling of false self-confidence in the franchisee regarding the future success of his enterprise. If you should require expert assessment conducted by independent experts, we will refer you to independent consulting agencies, which will help you to calculate the consumer turnover rate at a specific location, and will also help you to draw up a business plan.
Can your Analytical Department specifically calculate the profitability and the recoupment of "our commercial area"? And what information would you need for this purpose?
We will answer this question more correctly and more precisely in this way: we SHALL help and we SHALL show you how to calculate the profitability and recoupment of your future SUBWAY restaurant. We approach this question very carefully and tactfully - the question of calculating future profits. In fact, the SUBWAY restaurant franchise is a business venture which belongs 100 % to the owner, i.e. the franchisee. Accordingly, all the commercial risks connected with work operations of your future SUBWAY restaurant are considered to be your own risks. A fast-food restaurant is a business where the human factor plays a very important role: we cannot predict and we cannot influence how you will work with your personnel In fact, your personnel's professionalism depends on whether your customers keep coming back to visit your restaurant again and again. We do not know and we cannot predict whether you are capable of working in a rather rigid system of corporate standards. In fact, proceeding from the fore-mentioned fact, we cannot say to what extent some or any of the SUBWAY restaurants actually conform to the customers' concept, which means that "your own SUBWAY" depends on whether your customers are satisfied with the trademark.
We will provide all required statistics, all algorithms of calculations, we will share processes for calculating customer flows, we will provide all contacts of other franchisees, who have acquired experience in managing SUBWAY restaurants. We will do the very best we can so that you can calculate the profitability and forecast the recoupment on your own. It is most important to us that the decision to open a SUBWAY restaurant be YOURS - a well thought-out and calculated decision. Such an approach does not provide you with easy and noncommittal promises, but it constitutes a pledge of long-term and confidential relations between us.
What are SUBWAY's commission fees? Is it a one-time payment for the license, or a percentage of the proceeds and profit, and how is this process carried out?
There are two types of payments under the Contract of Commercial Concession (a franchise contract):
1. The registration fee (a lump-sum payment) - $12,000 US (+ 18 % VAT) constitutes a one-time payment for the period of validity of the Contract (20 years with the possibility to extend the term)
2. Licensing payments (royalties) at the rate of 8 % (+ 18 % VAT) from the total turnover (total proceeds) are submitted every month
CHOOSING THE LOCATION OF THE FUTURE RESTAURANT. FACILITIES REQUIREMENTS. CONSTRUCTION AND RENOVATIONS.
What should be the minimum population in the city where I want to open a SUBWAY restaurant?
We do not find it very important to associate population numbers in a city to the planned opening of a SUBWAY restaurant. In general, some restaurants are outside actual urban settlements - for example, along the roadside of busy roads, or in airport complexes. Everything depends on the location. If your lease is not too high, about 200 visitors a day will make your future restaurant highly profitable. We make individual assessments for actual locations in each case.
Searching for facilities: how should I go about it?
There are two ways of searching for facilities: 1. You try to look for them on your own. 2. You work with a database which we send to you by E-mail. This database is based on offers sent to our corporate E-mail address by lessors.
Our consultants evaluate all the offers for available facilities and, when the Contract is signed, an Appendix is added, i.e. a document called "Notice on Approving the Facilities". This document was drawn up after research studies and facilities assessments were conducted by our consultants on business development.
What is the ideal location for a restaurant? Compare locations in a shopping center and in separate facilities.
The ideal location for a restaurant - where there is a favourable combination between leasing costs and the number of potential customers in the immediate proximity of the chosen location, i.e. in actual conditions, when the leasing market is obviously overheated, there are very few convenient locations situated "on high-flow thoroughfares" (the city center, in through streets, etc.). A low-lease location can turn out to be more favourable, namely on a university campus, or near a large medical institution. These are the so-called unconventional locations, which make up 30% of the locations in the global SUBWAY system. In any case, we help you to compare various versions of facilities, and evaluate the appeal of any location by making an economic forecast.
As to the comparison between two traditional locations - the food-court in a commercial complex or separate facilities in a city - this question can be viewed from two different points of view, each having its own pluses and minuses. The food-court location is definitely a plus as the expenses for opening a restaurant in such a location are quite low; these facilities will not require many renovations, and customers do not need special furniture. On the minus side, the food-court location depends entirely on the public appeal of the commercial complex itself. On the other hand, if the commercial complex is successful, this fact will allow you to save on advertising expenses to attract visitors since that will be done by the commercial complex for you. Despite all that, separate facilities may require double the initial investments than food-courts; such facilities have more chance of growing and developing. You can work out long-term marketing programs, allowing you to attract and keep loyal customers. Such restaurants can attract a lot of visitors, and generate consumer flows independently. As a rule, separate restaurants are more profitable. It should be also taken into account that operating in a food court will require you to pay much more attention to your personnel, as your restaurant will be located in a highly-competitive area, where several other public food operators will also be working. Each franchisee assesses his various strategies for development very differently. Successful franchisees can be people who develop only in food-courts in commercial complexes, whereas others open only separate restaurants, very often buying out the entire facilities to pursue their objectives.
What are the requirements for these facilities?
One of the strongest competitive advantages of the SUBWAY franchise are the requirements for restaurant facilities: you need 50 kW/min in a food-court, up to 100 kW/min in separate facilities, and 30-35 kW of voltage for electric power consumption. SUBWAY restaurants use equipment certified for operating in enclosed areas - special ventilation and vent hoods are not mandatory requirements (regional requirements of Health Inspection Services may not coincide with the current legislation of the Russian Federation).
I have a property which is much larger than what is required for a SUBWAY restaurant area. Can I combine a SUBWAY restaurant with something else on a territory measuring 500m2?
Yes, that's possible. In such cases, restrictions are stipulated in the Contract, whereby you are not allowed to deal in making or selling sandwiches at the same time, and not to use the SUBWAY trademark. It makes sense that if you open a snack bar (for example, a pancake house) right next to your restaurant (under one roof), you will start moving your proceeds from one pocket into the other. It would be much more logical to make a playground for children, open an Internet room, etc., thus creating and adding new customer flows. Combining SUBWAY restaurants with cafés or ice-cream parlours is also a good idea as these places offer other products, which do not interfere with the customer's desire to be well nourished.
Can I open my first SUBWAY in a street booth (street commerce)?
ВYou can open a SUBWAY street booth only if you have been operating successfully as a franchisee of a stationary restaurant for at least 6 months. This requirement can be explained by several points:
- There should be a stationary SUBWAY restaurant, where the main products are prepared and bread is freshly baked, in the immediate proximity of the booth. Several times a day, products are transported from the restaurant to the booth as they are gradually sold out. This should take place in a timely manner and without any interruptions.
- Organizing sandwich sales in a street booth is more difficult than selling them in a stationary restaurant. Therefore, such types of commerce can be assigned only to franchisees who are used to working with SUBWAY standards.
How does construction (renovations) take place in restaurant facilities? Who supervises the work operations, and who monitors the construction?
It is undeniable that, to a large extent, the franchisee is responsible for construction (renovations) of his own facilities. The franchisee pays for building materials and construction services independently. We can draw up engineering and design projects for the franchisee in any format required for renovations. The project is worked out according to functional SUBWAY requirements and to company design standards. We render consultation assistance during the entire period of construction (renovations).
Two days prior to opening the restaurant, our Manager for Business Support will come and visit you in order to approve the restaurant in its final stage. The same manager will help you to operate your restaurant for the first six days. Furthermore, he will continue visiting each restaurant, which he himself approved, every month, and extending consultation assistance.
DELIVERY OF PRODUCTS AND SUBWAY MENU
Who determines the prices on the menu and how are they are worked out?
Pricing in a separate SUBWAY franchise restaurant is the prerogative of the owner of this restaurant. Exceptions are made for prices during special regional and federal events: for example, the "Sandwich of the Day" - 79 RUB", is a federal event when uniform prices are imposed in all SUBWAY restaurants in Russia. Restaurant prices are usually determined according to procurement prices of different products and consumable materials. Since there can be different prices for products in different regions, consequently, the menu prices can differ in different cities. The price for the final dish is worked out in view of the economic feasibility and estimated profitability of each restaurant. Pricing can be influenced by other aspects. We have all been surprised by the overestimated meal prices at airports. This is not due to the owner's desire to make a huge profit, but because of the unreasonable and overestimated rates at our airports.
What basic products are used in SUBWAY?
The products are really quite common: ham, sausages, sauces, fresh vegetables and bread, which arrives at the restaurants as a frozen semi-finished product, and is baked directly before the customer's eyes.
Who supplies the products to SUBWAY restaurants? How are product orders and deliveries carried out?
The SUBWAY system operates according to the principle of using independent approved regional suppliers. The SUBWAY Company itself does not deliver products or consumable materials. Product suppliers are selected according to the conformity of their products with SUBWAY standards, and offers of competitive cost prices. Suppliers are also chosen according to their closest proximity to operating SUBWAY restaurants. Franchisees can expand the list of such suppliers by applying for approval for any product (products) provided by the given supplier. Orders, delivery conditions, and payments for these products are carried out on the basis of mutual agreements (signed agreements for deliveries) between the franchisee and the supplier. The franchisee usually transmits orders by telephone to the supplier, and the products are delivered directly to the franchisee's restaurant the very next day.
We help you to find the largest possible number of suppliers in your city, who can deliver all the required products to your future restaurant. A special department handles this business aspect; a representative of this department will arrive in your city one month prior to the opening of your restaurant, and help you to make a list of suppliers, check and approve all the products.
How are suppliers of products and beer selected?
Product suppliers are selected according to the principle of conformity of their products with SUBWAY standards, and offers of competitive cost prices. You can expand the list of such suppliers by applying for approvals for any product.
Today, SUBWAY franchisees choose their beer suppliers independently.
What security measures are applied for all the products in SUBWAY restaurants?
All-round employees should wear disposable polyethylene gloves at all the different stages for preparing sandwiches (starting from the creation of various preparations to serving the customer). All franchisees should look through the subject called "Food Safety" set out within the framework of two-week courses for franchisees. Only employees, who have passed relevant examinations, are allowed to work in our restaurants. Procedures directed towards food safety mention such important aspects, as: washing your hands, using gloves, storage temperature, the rotation principle, etc. Product procurements are effectuated several times a day, and the temperature in refrigerators and deep-freezers is regularly monitored. Both directions for monitoring food safety means approving both suppliers and products: only approved producers and suppliers can deliver their products to the SUBWAY restaurant network.
УDo you offer the same menu at all SUBWAY restaurants? If not, how can it be changed?
ЕThere is a basic menu - an assortment of at least 12 kinds of sandwiches (salads and wraps) and additional food. The SUBWAY policy is quite flexible with regard to additional dishes on the menu. Many franchisees widen their assortment by including ice-cream, cocktails, desserts, freshly-squeezed juices, children's menus, and soups.
We do not recommend that you experiment with the menu during the first year of your work operations.... until you have clearly defined what kind of people make up your target audience of customers. You should also understand all the fine points of running specific business, which requires organizing fast and healthy food, corresponding to the SUBWAY concept.
EQUIPMENT AND CONSUMABLE MATERIALS
What equipment is required for a restaurant?
The complete set of equipment for a SUBWAY restaurant consists of equipment which can be arbitrarily divided into three zones:
a) Customer zone (large hall or room) - equipment comprises furniture (tables and chairs), ceiling and suspended fixtures, central air-conditioning (or forced-air and exhaust ventilation), sanitary equipment for public toilets, etc. This zone is reserved for customers who are enjoying their meal. It measures 50-70 sq. m. (provisional calculation: 1.2 - 1.5 sq. m. per seat).
b) Customer service area (a display-window counter and a space behind the display-window counter). The display-window has a tunnel refrigerator set at a temperature of +5C, a hot section for soups; the bottom cases are used for storing consumable materials; there is also a cash counter with a safe and cash equipment, and a display-window for desserts. In the rear line (the zone situated near the wall behind the personnel) - a rear counter where refrigerators and cases for storing food products are situated, the baking center consisting of three elements (proofer, retarder, and oven), a microwave oven, a toaster oven, an aerated drinks machine, a refrigerator for different juices, a coffee machine, and a beer tap. In all SUBWAY restaurants, the main processes for preparing sandwiches take place in this zone - in a customer service area well within view of all the guests. This is done intentionally so that customers can observe all the procedures for preparing sandwiches, starting from actual bread-baking. This zone measures almost 12 sq. m.
c) The third zone - "kitchen-storehouse". "Kitchen" is written in quotation marks as there is no real kitchen in a SUBWAY restaurant. This area should be called the cold storage room. There are two refrigerators at temperatures set at -18C and +5C for storing reserve products, two sinks - one for vegetables, and the other one for dishes; two stainless steel tables - one for cutting meat and the second for cutting vegetables; racks for consumable materials and packages. ... and that's it! The surface area for the "kitchen" measures 20-30 sq. m.
Where can I purchase your equipment and under what conditions does the SUBWAY Company deliver it?
The system of independent approved suppliers operates within the SUBWAY system itself. The SUBWAY Company does not sell equipment. Company equipment (ovens, counters, furniture) are all manufactured as company-style elements, made to order only for SUBWAY restaurants, and are cheaper than popular analogues. This equipment is delivered to SUBWAY consolidated warehouses located worldwide, where individual and complete sets of equipment created by our design-projects are selected for each restaurant. These projects are prepared by our specialists, and no additional payments are required from the franchisee. The nearest SUBWAY consolidated warehouse to Russia is located in Prague; therefore, our franchisees use independent and approved suppliers (carriers), who deliver the equipment to the doors of the restaurant.
The second part of the equipment, which has nothing to do with our company, and cannot be seen by our customers (preparation tables, sinks, refrigerators, etc.), can be acquired independently by each franchisee wherever it is most convenient and favourable for him. The complete list of equipment, furniture and décor elements is prepared and presented together with the final project.
Which manufacturers can install their equipment in SUBWAY restaurants? Why is it so expensive?
We use equipment produced by well-known manufacturers in our restaurants (Duke, Omana, Turbo Chief). Most of this equipment is made specially for SUBWAY restaurants and is not available for free sales. We benefit from reduced prices by 10-30% compared to retail prices for similar equipment; therefore, we can say that prices for equipment are rather high (like all prices on hi-tech equipment), but comparatively low. The SUBWAY Company does not make a profit on equipment purchased by the franchisee, and does not receive any commission fees. Such conditions have been created for franchisees in the SUBWAY Company's interests so that they may receive equipment under the most favourable prices and as quickly as possible in order to open the largest possible number of new SUBWAY restaurants.
Can we get preferential financing from you to purchase our equipment, or any other credit assistance?
The SUBWAY Company does not receive any income from sales of equipment, food stuffs, or any other services for franchisees, except for the income from royalty payments. Equipment and production suppliers are completely independent, but approved for our franchising objectives. The SUBWAY Company has managed to obtain the best prices from equipment manufacturers for franchisees due to its representations and reputation.
The SUBWAY franchising business is not a joint business venture, providing our participation as shareholders, or co-founders. It is seen as a business belonging 100 % to the franchisee; therefore, we do not participate financially in a franchisee's credit program, and we do not assume the role of guarantors when loans are extended.
However, we are always in touch with banks and leasing companies, thus providing additional possibilities to purchase equipment, and we share these contacts with our franchisees.
What systems of the cash equipment and warehouse accounting do you use?
You can choose your own cash equipment (provided that it meets SUBWAY program and systems requirements), or obtain it from our partner - the UCS Company, which is a software developer for the SUBWAY Company in Russia. Software products are written on the R-Keeper platform, and can be obtained from and installed exclusively by the UCS Company, or its representative.
The UCS Company provides discounts starting from 25 % on the equipment, and from 50 % on software for all SUBWAY franchisees.
PERSONNEL, REMUNERATIONS AND TRAINING IN THE SUBWAY SYSTEM
What do training courses for franchisees represent?
Each franchisee is obliged to attend a two-week training course on managing a SUBWAY restaurant. Theoretical (in a class-room) and practical (at a restaurant as an all-round employees) courses are offered. The ratio between theoretical and practical courses is 50 % to 50 %. At the end of the course, the franchisee must pass a final examination in order to obtain the certificate giving him the right to operate SUBWAY restaurants.
Are these training courses at your Educational Center free-of-charge?
All the training programs (practical courses) held at the certified SUBWAY Educational Center in Saint Petersburg are available for SUBWAY franchisees gratis (free-of-charge). Courses take place according to a confirmed schedule. Franchisees are responsible for all training expenses connected with their employees' travels and accommodation.
What are the quantitative and qualitative structures of the personnel employed in a typical SUBWAY restaurant?
The qualitative structure of the personnel consists of three levels: 1. The Managing Director of the restaurant (a restaurant network) - one person. Both parties agree on the salary. If the franchisee is a private investor, the restaurant owner usually fulfils the functions of the Managing Director. 2. Shift-work Managers (operative Managing Directors) - two to four persons in one restaurant, working with a planned schedule so that one of them is always present in the restaurant. Remuneration plan - salary + bonus. Total income is between 15 to 20 thousand RUB. 3. All-round employees. As pay by the hour (flexible hours) is fixed for all-round employees, the number of shift workers will depend on the customer turnover rate at specific time intervals, and is determined according to the following formula: one all-round employee is capable of preparing and selling products to ten buyers in one hour. Therefore, if the customer turnover rate reaches 30 persons from 10:00 a.m. until 13:00 p.m., you will need to have three employees working; if you get 50 customers from 13:00 p.m. until 16:00 p.m., you will need two more employees plus one shift Manager. All-round employees' remunerations depend on the situation on the labor market in each city, and range from 50 to 80 RUB per working hour. An employee's total monthly remuneration in one SUBWAY restaurant usually amounts to about 90 thousand RUB, or higher, depending on the workload in the restaurant.
How are remunerations for SUBWAY restaurant determined? Who makes up the personnel staff and what salaries do you suggest for them?
Personnel selection in a SUBWAY franchise restaurant is fully determined by the owner of this restaurant (the franchisee). The staff usually consists of one Managing Director (he may be the owner himself). Both parties agree on the salary; 2-3 shift-work Managers - 12-15 thousand RUB (salary + 10-15 % salary bonus); 8-10 all-round shift employees - remuneration per hour - 50-80 RUB per hour.
Salaries take up about 15 % of the total turnover. Operating expenses are considerably reduced, up to 10 % of the total turnover, if you are in charge of several restaurants. According to our experience, the minimum expenses on remunerations per month add up to at least 100 thousand RUB per month, including taxes and social payments (Labor Compensation Fund), calculated for one restaurant.
ADVERTISING AND MARKETING IN THE SUBWAY SYSTEM
What is the SUBWAY Company's target audience?
There are many target groups at the SUBWAY Company, and they can be very different, starting from schoolchildren to employees working at diplomatic representative offices. SUBWAY production caters to a very wide consumer audience, including people with low incomes (complex offers, "cheap meals", or "school lunches" starting from 80 RUB), and very picky people with regard to food and meals, but ready to pay more (original sandwiches "for gourmets" are sold from 150 RUB). SUBWAY restaurants also count on family visits ("Kids' Park"), and on office workers arriving during their lunch break ("Lunch Combo"). In any case, if we try to make a general description of our guests, we can say that regular SUBWAY customers are usually people who like to choose their own meals according to the price, but safe and healthy food are the main reasons for their choice.
Do you compensate for the franchisee's expenses on advertising in any way?
No. The franchisee takes no part in spending his funds on advertising separate restaurants. We have a joint program to promote different types of products (coffee, beer, or drinks) with our suppliers. For example, our strategic partnership with the PEPSI Company allows us to considerably reduce some franchise expenses for advertising actions, where PEPSI is used.
What advertising support do I get from the franchiser?
We render consultation support by developing and carrying out advertising campaigns and marketing actions. We provide on-line access to the corporate base of marketing know-how. The franchisee is responsible for his own advertising campaign.
How should I organize and conduct the Grand Opening of my SUBWAY restaurant?
The Grand Opening should be conducted one month after the actual opening, when you have clarified your contacts with suppliers, and your employees have received required operational experience with all the products and customers. The exterior and interior of the restaurant are usually decorated. The mass-media and representatives of the authorities are invited. Festive dishes, party platters, and huge Party-Sub sandwiches are prepared. The program of the Grand Opening is worked out together with our marketing specialists, and conducted together with our Manager for Business Support when he is scheduled to visit your restaurant.