Part 3: On the Subway.com website, Subway highlights some of its sustainability initiatives. The company works with Energy Star to reduce the energy usage of its stores by using more efficient light bulbs. The company does this in partnership with Philips, the manufacturer of the light bulbs.
Subway has a new store concept known as the eco-store. The first Subway eco-store opened in Kissimmee, Florida in 2007 and two more are open in Oregon. The eco-store is built according to standards set by the U.S. Green Building Council, including Leadership in Energy and Environmental Design (LEED) certification. Such features of these stores include high efficiency HVAC systems, remote condensing units for refrigeration and ice-making, high efficiency lighting, low flow water fixtures and decor made from sustainable resources, including recycled materials. While there are only three eco-stores in existence, the company is developing more. At some point, Subway could take the extra step of providing financial incentives for its franchisees to open eco-stores, as at present most are opting not to.
Subway also has initiatives to address waste in its supply chain. The company has worked with its main logistics supplier IPC to reduce the number of stages that goods pass through on their way from the vendor to the Subway restaurant. By reducing goods handling, the carbon footprint of the process is reduced as is the time spent in inventory, meaning less space is required (SCB, 2011). This is especially important from an ecological perspective when considering the amount of Subway's inputs that are either frozen or refrigerated. According to the Subway.com website, this initiative has saved 1.7 million gallons of gas per year and 10,491 truckloads annually. This also saves Subway money -- with financial motivation the company can engage in sustainability practices to the mutual benefit of the earth and the company's ownership group. In addition, Subway works to ensure that all of its delivery trucks are full, further maximizing efficiency in the distribution process and eliminating waste (Subway.com, 2011).
As one of the world's largest fast food chains, Subway inevitably generates a lot of waste. One of the company's sustainability goals is to reduce the amount of waste that it produces. The company approaches the issue of waste reduction on a product-by-product basis. Napkins are made from 100% recycled materials, saving an estimated 147,000 trees annually. Subway made changes to the materials used for its plastic cutlery, saving 610,000 pounds of resins annually -- the equivalent of 13,000 barrels of oil. The company has also made improvements in several other product areas (Subway.com, 2011).
One of the benchmarks for environmental management in a company is ISO 14000 certification. Subway has not sought this, and to do so would be a complicate process because it would require the involvement of the 11,000 franchisees as well. Subway has not won any major awards for its environmental initiatives either. This perhaps indicates that the company is more of a follower with respect to sustainable practice than a leader.
Part 4: The benchmarks for the fast food industry with respect to sustainability are fairly low. McDonald's, for example, has two eco-stores, a waste diversion program, some recycled packaging and has become greener in its sourcing of beef, coffee and seafood. Some other chains have also introduce eco-stores or similar initiatives, including Dairy Queen, although none of these chains has very many of such stores (Fields, 2009). As with Subway, McDonald's has focused on its supply chain, and again largely because improving efficiency there also helps the bottom line. Leadership in the industry comes from minor chains such as Le Pain and Pizza Fusion (King, 2010). Such small chains do not have the same challenges as massive global chains, have, however. Within its peer group, Subway's performance is decent, trailing both McDonalds and Starbucks...
Subway's initiatives do, however, cover most of the key categories, but not all. The company does not make an effort in organic food, however, and its performance with respect to energy, waste and water initiatives in the U.S. generally lags the industry leaders. Moreover, Subway does not publish a sustainability report, which makes it more difficult to track the company's performance. There are indications that Subway has not made very many improvements in the past couple of years (Ibid).
Part 5: The effectiveness of Subway's sustainability program can be analyzed according to a number of criteria. In terms of financial outputs, Subway's efforts thus far appear to have performed well. While this cannot be confirmed, increased efficiency typically leads to cost savings. The company's brand reputation has also improved slightly as a result of its efforts, particularly in the Greenopia survey. In terms of community engagement, Subway's performance would have to be considered weak -- the company's efforts are internal and not very well publicized.
There are few costs associated with not being more sustainable. The most important reason is that the bar is set very low for fast food chains -- few do anything with respect to sustainability so any effort is seen as positive. The industry has little to fear from regulation, so it has to political incentive to pursue sustainability, and the consumers generally do not care either, at least when making purchase decisions. Where there is room for improvement -- reducing energy costs for example -- Subway has taken some baby steps -- but ultimately leaves the final decision to the franchisees.
Part 6/7: With few consequences for failing to be more sustainable, it is not surprising that Subway performs fairly poorly with respect to sustainability. Despite this, it outperforms most of its industry peers, as the industry as a whole is horrible for sustainability (Kamp, 2008). Subway may perform well in its industry, but there is little positive to say about clearing a hurdle that low. Most of the company's efforts thus far have come from a desire to lower costs rather than to be sustainable. There are, however, some things that Subway can do relatively quickly and easily to improve sustainability.
The first is to publish a sustainability report. This would give the public a better sense of the company's performance. In addition, it would provide a benchmark for the company to work with. The second recommendation is that Subway can begin to seek out more ethical suppliers for its list of preferred vendors, or pressure its vendors into providing more recycled and organic products. The company has the bargaining power to do this, and should take advantage of that. In addition, Subway should push further with respect to energy and water efficiency, and with waste management. Finding a way that its employees do not have to use a new set of plastic gloves for every sandwich would be a good place to start. Using more natural light in the stores, and eliminating food waste would lower costs for franchise owners as well as improve the company's sustainability. Most importantly, Subway should focus on changing its culture with respect to sustainability. The company does not seem concerned with the issue, and that trickles through to its franchisees, resulting in the fairly limited action that we see.
Fields, K. (2009). A new order. Eco-Structure. Retrieved May 3, 2011 from http://www.eco-structure.com/retail-projects/a-new-order.aspx
Friedman, M. (1970). The social responsibility of business is to increase profits. New York Times Magazine. Retrieved May3, 2011 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Greenopia. (2010). Fast food. Greenopia. Retrieved May 3, 2011 from http://www.greenopia.com/usa/fastfood_search.aspx?category=Fastfood&Listpage=0&input=Name%25or%25product&subcategory=None&sort=ratingdesc
Kamp, J. (2008). Can fast food be sustainable? Ode Magazine. Retrieved May 3, 2011 from http://www.odemagazine.com/doc/52/can-fast-food-be-sustainable/
King, B. (2010). Greenopia ranks sustainable fast food. Reuters. Retrieved May 3, 2011 from http://www.reuters.com/article/2011/03/21/idUS354293878820110321
QuickMBA.com. (2010). PEST analysis. QuickMBA.com. Retrieved May 3, 2011 from http://www.quickmba.com/strategy/pest/
SCB. (2011). IPC streamlines the supply chain for the Subway restaurant chain. Supply Chain Brain. Retrieved May 3, 2011 from http://www.supplychainbrain.com/content/nc/industry-verticals/food-beverage/single-article-page/article/ipc-streamlines-the-supply-chain-for-the-subway-restaurant-chain/
Subway.com, various pages (2011). Retrieved May 2, 2011 from http://www.subway.com/subwayroot/AboutSubway/history/subwayHistory.aspx
The Economist. (2010). Good and hungry. The Economist. Retrieved May 3, 2011 from http://www.economist.com/node/16380043
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