SWOT ANALYSIS ON SUBWAY RESTAURANT

MBE3183
STRATEGIC ENTREPRENEURSHIP

SESSION APRIL – AUGUST 2019

PREPARED FOR:
MADAM DELORES PAMMIE JOEH

PREPARED BY:

NAME STUDENT ID
ANNISA DZURAIFAH BINTI ABD GHANI BEN17041187
TABLE OF CONTENTS
CONTENT PAGE
NUMBER
1.0 INTRODUCTION 3–4
2.0 STRENGTH 5
3.0 WEAKNESS 6
4.0 OPPORTUNITIES 7
5.0 THREATS 8
6.0 CONCLUSION 9
7.0 RFERENCES 10

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SWOT ANALYSIS

1.0 INTRODUCTION

SWOT analysis (strengths, weaknesses, opportunities and threats analysis) is a framework for
identifying and analysing the internal and external factors that can have an impact on the
viability of a project, product, place or person.
SWOT analysis is most commonly used by business entities, but it is also used by non-
profit organizations and, also individuals for personal assessment. Additionally, it can be used
to assess initiatives, products or projects.
The company chosen for this SWOT analysis is Subway Restaurant which the SUBWAY
brand is the world's largest submarine sandwich chain with more than 44,000 locations around
the world. Subway is an American fast food restaurant chain that mainly sells submarine
sandwiches (subs) and salads. It is owned and operated by Doctor's Associates, Inc. (DAI).
Subway is the largest single-brand restaurant chain globally and is the second largest restaurant
operator globally after Yum! Brands. (Subway, 2019)

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2.0 STRENGTH
Strengths describe what an organization excels at and what separates it from the competition:
a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For
example, a hedge fund may have developed a proprietary trading strategy that returns market-
beating results. It must then decide how to use those results to attract new investors. (Grant,
2019)
The strength of the Subway Restaurants can be described as follows;
1. Subway Restaurant is known as largest fast food restaurant chain in the world by the
number of outlets. Currently the company operates 38,181 restaurants in 99 countries,
more than McDonald’s or any other fast food chain operator. (Jurevicius, 2013)

2. In terms of brand loyalty, SUBWAY has a high brand recall and following among its
customers. The ones who eat at Subway are high brand loyalists. On the most valuable
restaurants in the world, Subway holds the number third spot being beaten only by
McDonald’s and Starbucks. Its brand value stands at $10.314 billion.

3. Marketing and promotional strategies. Subway employs superior marketing techniques

and promotional strategies to attract and grow their customer base. The most successful
Subway’s promotional offer was to offer foot longs for only $5, which became a new
pricing standard of a sub.

4. As we already know, Subway Restaurant focus on customer that prefer fast food that
gives health benefits. Then, Subway offer healthy subs sandwich that is preferred and
much better as compared to food items offered by other fast-food chains like
McDonald’s. McDonald’s and KFC rely heavily on oily and fried foods which are
completely opposite to what Subway aims for. The rise of Subway rapidly can also be
accounted because of increasing health related problems by eating junk food and so
customers have started moving towards healthier options. This is probably the best
strength in the SWOT analysis of Subway.

5. Subway has become the partners with Britain and American Heart Associations. Hence,
Subway has received certificates from both organizations that it serves health meal
options, which is a great reward and differentiates the business from other fast food
restaurants.

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6. All restaurants are owned by franchisees. Subway doesn’t own any restaurants itself so
it experiences less risk and can focus its efforts on marketing and growing the franchise.
Franchisee staff training is structured, brief and designed to assure rapid start-up for
new employees as these are all carried out by the agency which has hired the brand
name of Subway. This ensures easy set-up of new restaurants at far off locations and
smooth functioning without any obstructions of different regulations.

7. Low start-up costs. One of the reasons behind such a high growth rate of Subway stores
is the low start-up costs. Subway stores are smaller and require less money for leasehold
improvements and equipment.

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3.0 WEAKNESS
Weaknesses stop an organization from performing at its optimum level. They are areas where
the business needs to improve to remain competitive: a weak brand, higher-than-average
turnover, high levels of debt, an inadequate supply chain, or lack of capital.
The weakness of Subway Restaurant can be listed as follows;
1. Subway Restaurant has the weakness on their brand value. This happens where
although having the highest no of operating locations in the world Subway still suffers
in brand value when compare to its biggest competitor McDonald’s. It is also not very
far away from its closest competitors, though in restaurants it is solidly at the second
position in which keeps changing year on year.

2. Therefore, Subway is known as old-fashioned themed restaurant. Subway has not

updated their restaurant’s styles accordingly to the changing times. This results in poor
satisfaction level of the customers leading to the customers changing their preferences
over time.

3. Subway faces problem of high employee turnover. Subway Sandwich Artists job is a
low paid and a low skilled job. It results in low performance and high employee
turnover, which increases training costs and add to overall costs of Subway.

4. Satisfaction and Level of Service: Because of the training of the staff is outsourced to
the ones who have franchised does not ensure a common level of service satisfaction
around all the Subway stores around the globe. The commitment cannot be the same
across all the restaurants.

5. Services are not consistent from store to store. The business struggles to ensure
consistent services’ quality throughout it stores and so a service in one store may please
a customer when another may fail to do that.

6. Too much control over franchisees. Despite the fact that Subway fails to ensure
consistent quality throughout the stores it exerts too much control over its franchisees.
This is done through the contracts that are more favourable to the franchisor. An
example of such high control is seizing of franchisee restaurants if the later one is
struggling to keep them open.
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4.0 OPPORTUNITIES
Opportunities refer to favourable external factors that could give an organization a competitive
advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a
new market, increasing sales and market share.
The opportunities of the Subway Restaurants are as follows;
1. Increasing demand for healthier food. It’s an opportunity upon which Subway already
grows itself and could further introduce low fat, low salt and more nutritious subs.

2. Introduction of drive-thru. McDonald’s already offer only drive-thru restaurants, which

is a great opportunity for Subway to jump. Drive through also one of the services
offered by its competitors for the quick and working class people.

3. Offering more vegetarian foods. Mostly Subway offers different kinds of meats but
lacks in a varied menu for vegetarians. It needs to diversify in this front as well.

4. Changing customer habits and new customer groups. Changing customer habits
represent new needs that must be met by businesses. So far, Subway has only one
variation of restaurants, different to its close competitor McDonald’s, which tries to
satisfy and reach previously untapped customer groups by introducing McCafé,
McExpress and McStop.

5. Providing home meal delivery. Subway could exploit an opportunity of delivering food
to home and increase its reach to customers.

6. Diversification of offers. Subway has stuck with only one kind of product i.e. Subs but
it needs to diversify into different kinds of healthy options and stay in the competition.
They can utilise their already established customers to change their eating habits and
generate more loyal customers.

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5.0 THREATS
Threats refer to factors that have the potential to harm an organization. For example, a drought
is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other
common threats include things like rising costs for materials, increasing competition, tight
labour supply and so on.
The threats of the Subway Restaurants are as follows;
1. Saturated Market: New restaurants are coming up with the same model as of Subways.
The fast food market in the developed countries is already overcrowded by so many
fast food restaurant chains and this already proves to be a threat to Subway as it finds
it hard to grow in the developed economies.

2. Bad Reputation: Subway has been involved and lost a few lawsuits in the past because
of the poor company policies regarding franchisees management. Lawsuits are
expensive, time consuming and damages the firm’s brand.

3. Trend towards healthy eating. Only part of Subway’s menu offers healthier choices of
meals, while the rest menu is rich in salt, contains many calories and is accompanied
by soft drinks. Customers who care about their food and well-being may opt out for
something else rather than Subway.

4. Competition: Subway can face a serious threat from competition like McDonald’s,
KFC, Taco Bell, Wendy’s which also have a loyal following. If they also start providing
low-fat food options this can seriously damage Subway’s customer base.

5. Currency fluctuations. Subway receives much of its income from foreign operations.
That income has to be converted into dollars and may affect the company’s profits,
especially when the dollar is appreciating against other currencies.

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6.0 CONCLUSION

In a nutshell, a SWOT analysis is a great way to guide business-strategy meetings. It's powerful
to have everyone in the room to discuss the company's core strengths and weaknesses and then
move from there to define the opportunities and threats, and finally to brainstorming ideas.
Often, the SWOT analysis predicted before the session changes throughout to reflect factors
that is unaware of and would never have captured if not for the group’s input. A company can
use a SWOT for overall business strategy sessions or for a specific segment such as marketing,
production or sales. This can make the company see how the overall strategy developed from
the SWOT analysis will filter down to the segments below before committing to it. The
company can also work in reverse with a segment-specific SWOT analysis that fit into an
overall SWOT analysis.

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7.0 REFERENCES

i. Grant, M. (2019, April 27). Strength, Weakness, Opportunity, and Threat (SWOT)
Analysis. Retrieved from Investopedia:
https://www.investopedia.com/terms/s/swot.asp

ii. Jurevicius, O. (2013, February 16). SWOT analysis of Subway. Retrieved from
Strategic Management Insight: https://www.strategicmanagementinsight.com/swot-
analyses/subway-swot-analysis.html

iii. Subway. (2019). Subway. Retrieved from The History of SUBWAY:

https://www.subway.com/en-MY/AboutUs/History

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