| The United States fast food market has seen a | | | | packaging and co-branding opportunities. |
| healthy rise in growth within the last three years | | | | Threats |
| which forecasts can be sustained. The fast food | | | | - Franchisee unrest or litigation. |
| market is forecast to maintain its current growth | | | | - Food contamination (spinach). |
| expectations, with an anticipated Compound | | | | - Competition. |
| Annual Growth Rate (CAGR) of 2.3% for the | | | | - Interest Costs. |
| five-year period 2005-2010. This is expected to | | | | - Economic downturn. |
| drive the market to a value of $57.6 billion by the | | | | - Sabotage. |
| end of 2010. Drivers of growth include increasing | | | | - Law Suits. |
| numbers of Americans in the workplace, which | | | | Competitive Analysis |
| reduces the amount of time spent on preparing | | | | Subway is not without competitive pressures. |
| meals at home. In 2010, the United States fast | | | | Chief competitors include Yum! Brands, McDonalds, |
| food market is forecast to have a value of $57.6 | | | | Wendy's, and Jack in the Box. Yum! Brands are |
| billion, an increase of 12.1% since 2005. | | | | the world's largest, with 33,000 restaurants in |
| Forecast Volume | | | | over 100 countries. Four of the company's highly |
| In 2010, the United States fast food market is | | | | recognizable brands, KFC, Pizza Hut, Long John |
| forecast to have a volume of 37 billion | | | | Silver's and Taco Bell, are global leaders of the |
| transactions (Figure 1). This represents an increase | | | | Mexican, chicken, pizza, quick-service seafood |
| of 5.3% since 2005. The CAGR of the market | | | | categories. Yum! has a workforce of 272,000 |
| volume in the period 2005-2010 is predicted to be | | | | employees and is headquartered in Louisville, |
| 1%. | | | | Kentucky. |
| Success Factors | | | | McDonald's Corporation (McDonald's) is the world's |
| Success factors for fast food franchisees will | | | | largest foodservice retailing chain with 31,000 |
| include products and marketing targeted to | | | | fast-food restaurants in 119 countries. The |
| healthier menu selections, brand consistency, low | | | | company also operates restaurants under the |
| start-up costs, franchisee support, and consumer | | | | brand names 'The Boston Market' and 'Chipotle |
| convenience. Subway ® represents a poignant | | | | Mexican Grill'. McDonalds operates largely in the US |
| example of a fast food franchisee ready for | | | | and the UK and is headquartered in Oak Brook, |
| success in the future fast food market. Their | | | | Illinois employing 447,000 people. |
| strategies transcend the fast food market and | | | | Wendy's International (Wendy's) operates three |
| apply to many other markets and products. | | | | chains of fast food restaurants: Wendy's (the |
| SWOT Analysis | | | | third largest burger chain in the world), Tim |
| Subway sandwich shops are well positioned to | | | | Horton's, and Baja Fresh. Wendy's operates over |
| leverage their strengths and address reasonable | | | | 9700 restaurants in 20 countries, has been |
| threats, weaknesses, and opportunities. The table | | | | included in Fortune magazine's list of top 500 US |
| below highlights these Strengths, Weaknesses, | | | | companies, is headquartered in Dublin, Ohio, and |
| Opportunities, and Threats. | | | | employs about 57,000 people. |
| Strengths | | | | Jack in the Box owns, operates, and franchises |
| - Size and number stores and channels | | | | Jack in the Box quick-service hamburger |
| - Menu reflects demand for fresh, healthy and | | | | restaurants and Qdoba Mexican Grill fast-casual |
| fast. | | | | restaurants and is headquartered in San Diego, |
| - Use of non-traditional channels. | | | | California. |
| - Partnering with the American Heart Association. | | | | Target Markets |
| - Worldwide brand recognition. | | | | The increase in sales of the sandwiches has been |
| - Customizable menu offerings. | | | | a result of decreases in consumer interest in |
| - Low franchisee start up costs. | | | | hamburgers and fries and increases in demand for |
| - Franchisee training is structured, brief and | | | | healthier options. Sales of sandwiches are growing |
| designed to assure rapid start-up and success. | | | | 15 percent annually, outpacing the 3 percent sales |
| Weaknesses | | | | growth rate for burgers and steaks. |
| - Décor is outdated. | | | | Current Marketing Program |
| - Some franchisees are unhappy. | | | | A new breed of restaurant is making big gains |
| - Service delivery is inconsistent from store to | | | | against the market-saturated hamburger |
| store. | | | | establishments. Termed "fast-casual," these |
| - Employee turnover is high. | | | | restaurants are dominated by Mexican chains, and |
| - No control over franchise saturation in given | | | | sandwich restaurants offering fresh-baked breads |
| market areas. | | | | and specialty sandwiches. |
| Opportunities | | | | Responding to evolving consumer expectations |
| - Continue to Grow Global Business. | | | | for health, fresh, custom-made sandwiches; |
| - Update décor to encourage more dine-in | | | | Subway's marketing program addresses these |
| business. | | | | expectations through a number of approaches. |
| - Improve Customer Service Model. | | | | The most notable were the television |
| - Continue to expand channel opportunities to | | | | commercials featuring Jared. These commercials |
| include event wagons. | | | | emphasize the healthy aspects of a Subway |
| - Improve franchisee relations. | | | | sandwich by highlighting the 245 pounds Jared lost |
| - Experiment with drive-through business. | | | | by eating a Subway sandwich diet. Subway also |
| - Expand packaged dessert offerings. | | | | markets through a national sponsorship in events |
| - Continue to revise and refresh menu offerings. | | | | such as American Heart Association Heart Walks |
| - Develop more partnerships with movie | | | | and local events such as triathlons, and children's |
| producers and toy manufacturers to promote | | | | sports teams. |
| new movie releases through children's menu | | | | |