Subway Economic Analysis Subway Corporation: Economic Business

Subway Economic Analysis

Subway Corporation:

Economic Business Analysis

Subway Corporation: Economic Business Analysis

Why Subway?

Microeconomics centers on the study of the economic makeup of individual households, firms, and government. As franchise firms fall into this category, it is clear that small business owners, such as franchise owners, face the day-to-day task of dealing with many economic decisions in order to keep their businesses both functional and successful in order to turn a profit. One such example of this type of franchise is Subway. As the world's largest restaurant chain, Subway franchise owners make decisions every day that contribute to the bigger picture, helping keep Subway one of the world's most recognizable and successful franchises.

In understanding why an economic business analysis of the Subway Corporation is one worth completing, one can ask: what makes Subway interesting? Subway's success story is seemingly unparalleled in terms of growth and global acceptance. Subway is one of the fastest growing franchises in the world with "34,751 restaurants in 98 countries and territories as of June 15, 2011" (Subway Locations, 2011, p. 1). It's offering of healthy sandwich, salad and soup options as well as other items on its menu, Subway is able to cater to a far broader customer demographic than many fast food chains. In essence, Subway is fast food without being fast food. It is just as quick and affordable as a chain such as McDonald's, but Subway allows customers to pick and choose fresh ingredients and watch their order be created in front of them eliminating the question: "What am I really eating?"

Subway has further become a name that is commonplace in conversation. With its successful campaigns becoming instantly recognizable to so many people, it is clear that Subway knows what it is doing in terms of advertising. So many people can associate Jared Fogle as the "Subway Guy," or sing along with the jingles for many of the company's promotions or advertising campaigns, and that is because everyone knows Subway. In a nation where the economy is essentially still failing, business owners and economists must look to those corporations and operations that have remained successful throughout it all. Subway is one such company. Clearly the Subway Corporation is doing something right, and other companies may be able to take a cue from its operation.

Economic Fundamentals

Every economist and business owner knows the three fundamental questions in economics: what should be produced, how should goods and services be produced, and for whom should goods and services be produced? Subway is no different, and its success can be attributed to its decision to abide by these fundamental questions. The first question is easy enough to pinpoint and has been previously mentioned in looking at Subway's background. Subway produces a variety of sandwiches, salads and soups in both health-conscious and more traditional fashions.

In looking at the second question -- how should goods and services be produced -- things get a bit more complicated. While much of Subway's goods are produced in house, such as baking bread and making soups and sandwiches, the resources for these goods are largely brought in to franchises locally. In her article, "Subway's Journey to Green," (2009) author Tina Fitzgerald notes, "Subway's overarching corporate ideals about freshness also yield the best green approach. Procuring things locally not only brings the freshest product to customers but also requires less transport, less handling, and subsequently less energy" (Fitzgerald, 2009, p. 22).

Finally comes the question, for whom should goods and services be produced? Subway both produces and markets its products to individuals who are looking for a fast meal option but are not willing to sacrifice quality for time. The purpose of a franchise is to alleviate the issue that states "a decision to have one person or group receive a good or service usually means it will not be available to someone else," instead making that product available to as many people as possible (Rittenberg and Tregarthen, 2009, p. 9). As mentioned previously, this tactic has proved extremely successful in both maintaining and expanding Subway's significant client base around the world, which ensures that Subway will be around to serve its customers for a long time to come.

Facts and Figures of Franchise Operation