Saturday, 17 May 2008

Subway's not sleeping

I was quite surprised to see that in the "Marketing" (UK) annual brand popularity survey, Subway is the 2nd most-loved fast food brand in the UK. OK, it's also the 4th most-hated, but the love:hate ratio is rather healthier than that of poor old McDonald's.

The growth of Subway in Germany has been of great interest to me as, back in the late 90s, when I came over here, I thought that it would be a cracking business idea to establish a Pret-a-Manger-style sandwich/filled rolls chain in Germany. And it was around this time, in 1999, that Subway opened their first franchise in Berlin.

I wouldn't have put my money on Subway in Germany, to be honest. I am quite surprised that a country where the bread is so varied and tasty has taken to Subway's offering. And I did also anticipate something of a Starbuck's effect where maybe people wouldn't be prepared to shell out quite so much money for something really quite basic.

But it seems that I have been wrong: Subway have over 400 outlets in Germany and the expansion doesn't seem to be slowing down. So, respect where respect is due. I guess they must have done their market research. But give me a yummy slice of Bauernbrot mit Hausmacherleberwurst any day!


Uwe Lucas said...

Hi Sue, I'm not buying the success story of Subway in Germany. Looks more like its growth is inflated by the hopes of ill-advised franchisees and an aggressive sales force on the side of Subway. Subway is a low entry franchise system, much cheaper than McDonald's, offering a great future with a failsafe US brand name to people with almost no capital. However, existing franchisers complain heavily about their low revenues and almost no marketing support from Subway in spite of license fees that are on the high end of the industry. There's a Spiegel story from March 2007, also available in English as "Sinking Subs in Germany", giving more details.
The German Subway management is obviously a very willing contributor to the brand's global McDonald's-takeover plot. But if there's any sustainable business base for Subway in Germany at all, the consumer isn't learning fast enough so far.
Seems like you're right: there's too much good bread available at every corner in this country for this to have any sustainable reason-for-being.

Sue said...

Thanks for backing up my "gut feeling" on this one with some facts, Uwe! I will track down that article and watch further progress with interest!