Where There Is an Appetite, There Is a Way
Subway Franchises Thrive in Non-traditional Locations
When Hersheypark approached Subway franchisees Ben Farahani and his family about opening a Subway in their theme park, they were intrigued. The family already was operating Subway franchises throughout the central Pennsylvania region, but they liked the idea of owning a franchise in a “non-traditional” environment.
“This was 1992 before the trend for national branding in venues took off, so we were in unchartered waters,” Ben Farahani noted. “We were initially skeptical. We knew going into Hersheypark that we would have only about 400 square feet in which to work, and the franchise had to be a different type of operation completely. Still, for us it made a lot of sense to try. We thought it might be a fantastic opportunity for not only our family but other franchisees down the road.”
The new opportunity paid off as Farahani and his family now own three Hersheypark Subway franchises in addition to their 22 locations throughout the Harrisburg and State College, Pa., areas that also include one in the Bryce Jordan Center at Penn State University. Farahani serves as a Subway Development agent for 220 Subway franchises as well.
“The amusement park and sports and events arena have shown us that Subway can perform profitably almost anywhere. Our business model can be tweaked and adjusted to meet the needs of the customers and venues far better than other national chains.”
Faharani’s Subway replaced an existing eatery in Hersheypark. Unlike other chains that require more prep area and equipment to cook food such as a kitchen hood, Subways do not. Farahani was able to streamline the Subway operation to meet the demands of amusement park customers.
“The amusement parks can be a little intense on our employees, as we have to serve the food faster than we do in our other restaurants. The customers at the amusement parks are there all day long, and so we had to come up with a way to provide them the high quality food that they love in Subway without making them wait,” he noted.
So, the family made some operational changes that included simplifying the menu and serving only 6-inch sandwiches. More employees were added to sustain a two-line ordering system.
“We were and are very conscious that the amusement park locations and the sports arena locations are more stressful on our employees so we provided more training and motivational policies for our employees in those locations including higher pay,” explained Farahani. “We have many locations around the park and Penn State so we have a large pool of employees that helps if we need to bolster our workforce for an event or for a busy season.”
The first Subway at Hersheypark proved to be a success so the park approached the Farahani family to take over a second location, which required that they expand a building.
“There are usually more costs associated with the non-traditional franchise location but the customer volume does make up for it and this type of location can prove to be very profitable for both franchisee and venues,” he noted. “Hersheypark looked to us to build traffic in some areas of the park that were not attracting as many people. So, when a third eatery left the park, they asked us to come in, and within a month, we had another Subway operating.”
Farahani noted that like the amusement park franchise, the stadium location posed different challenges than the traditional locations.
“If there is an event, we are there and open all the time, and it’s busy and sort of crazy,” he explained. “The Bryce Jordan Center hosts everything from major concerts to THON, a 48-hour annual marathon run by the students which raises funds for pediatric cancer. The place is packed for 48 hours straight with students, guests, families and faculty, and my workers are there to feed this massive number of people. That is a challenge. We pull our workers from other stores to meet the demands, and it works. If there is no event, we don’t have to be open. It’s not a day-to-day operation like our regular franchises.”
Initially, Farahani might have been skeptical of Subways in non-traditional locations, but that skepticism is long gone.
“It’s a win-win situation. The venues like the idea because they issue short-term leases and get a percentage of the top-line sales or rent. So, if it works out and is profitable for everyone, the relationship is wonderful. We like it because, despite the challenges, the customer volume holds so much potential for profit and the Subway name attracts customers because we stress health, value and choice so our customers are always happy with their meal.”
“Non-traditional venues have always been part of the long-range goals for Subway since the franchises came into existence,” noted Liz Smethurst, the Global Account Manager who oversees the development of franchises in amusement parks, train stations and casinos. “At present we have 44 franchises in 28 different parks which mean some of the parks have multiple locations and most of these locations are run by experienced franchisees. They tend to see the non-traditional venues as a welcome expansion to their franchise organization. The franchises in the parks need only a minimum of 250 square feet plus storage access to operate, which is a lot less than other types of food outlets whether they are owned by the venue or another chain.”
The franchise growth in stadiums is also on the rise, according to Dan Vermilya, the Global Account Manager who oversees stadium and arena franchises.
“We want our franchisees to succeed, so we are very open to the non-traditional setting.” explained Vermilya. “In the arenas, the venue takes a percentage of top-line sales and maybe a little extra for marketing. The Subway name is associated with the team and there are banners and other promotions and everyone benefits.”
Vermilya concurred with Farahani that the stadium stores require a different operating plan.
“Stadiums are a unique venue in that they are not open every day all the time,” said Vermilya. “Unless they have an outside door access that allows customers to come and go, most stadium franchises are open according to the stadium’s calendar. And since most of the stadium franchisees are experienced owners as well, they know how to manage worker schedules, and meet the specific needs that owning a stadium location requires.”
Subway has come a long way from its first operation in 1965 in Bridgeport, Conn. A single sandwich shop started by 17-year-old Fred DeLuca, it was opened with the help of a family friend Dr. Peter Buck. DeLuca was looking for a way to finance his college and future medical school tuition, and Buck offered him the money to start the shop. Almost 50 years later, Subway is a now a franchise-only chain that will include 39,000 locations by mid 2013 of which 25 percent will be in non-traditional locations. Subway does not operate any corporate-owned stores as it does not want to be in competition with its franchisees. It also assigns Franchise Development Agents such as Ben Farahani, who are franchisees who serve as mentors and consultants to other franchisees in their region.
While am-usement parks and stadiums are the most common non-traditional settings, they are not the only non-standard sites where Subways thrive, and they were not the first non-traditional location. The first non-traditional Subway site was in a convenience store. Impressed by the success of the business-within-a-business concept, Subway looked for ways to make the non-traditional a core part of the chain’s growth and development.
“We have and will have Subways in colleges, casinos, train stations, airports, military bases, industrial and professional parks, and we even have one in a church,” Vermilya said. “The pastor is a franchisee who opened a location inside his church which is in a depressed area of Buffalo, N.Y. He uses the Subway to teach job skills and provide employment for members of his congregation. To Subway, a non-traditional setting is a setting where one wouldn’t expect to find a Subway – a business within a business or where there is a ‘captive audience’ so to speak, who wants quality food at a great value.” -