Despite Losing out to Rival Subway on The Number Global Outlets, McDonald’s still Scores on Key Business Metrics and is Easily Winning The Palate game in key Emerging markets. B&E gets through to Subway and Global Analysts for an Insider into The Famed Rivalry.
But McDonald’s clearly scores with a more winnable business model that aims to foster trust among franchisees. Analysts like Equity Research Vice President and Restaurants Analyst Steve West from Stifel Nicolaus tells B&E, “McDonald’s isn’t ‘worried’ about any competitor. They note what the competition is doing, but they focus more on looking ahead and executing their own growth strategy.” But there’s another key difference here too. While Subway works entirely on a franchise model (there’re no company-owned restaurants), McDonald’s owns 20% of its restaurants. This enables McDonald’s to create newer benchmarks in best practices and to replicate these best practices to all its franchisees globally, which helps to drive innovation, menu expansion, management practices, and better quality control. So far, both models have worked – but the Mac has worked clearly better. The number of customers coming to McDonald’s is constantly increasing, with over 62 million people trying out its products daily. The average spend per customer visit at McDonald’s restaurant has also increased from $2.79 in 2006 to $3.28 in 2010, and could rise further due to increasing spend from emerging markets (McDonald’s is planning to open at 490 new locations across Asia, the Middle East, Africa and Australia, a figure equal to its rest of the world new location plans). The chain forecasts that its expansion effort could drive sales growth up by 5% and income up by 7%. And they’re not even looking at Subway while telling that. No kidding...
“In 2010, we Sold 2.5 billion Sandwiches Globally”
Les Winograd, Public Relations Specialist, Subway
B&E: Congrats on Subway becoming the largest QSR chain globally. What does this signify for the food services industry in general and Subway in particular? Les Winograd (LW): We are proud of the efforts of everyone on Team Subway for making us one of the largest and most recognisable brands in the world. Becoming the largest QSR signifies that the franchise model works well. There are many people out there looking for career opportunities who are very interested in joining an established team and a well recognised brand. And particularly at Subway, it confirms that our franchisees not only are hard working and dedicated, but that they also strongly believe in the brand, the products and their ability to grow within the Subway system. Without the franchisees, the Subway chain would not be where it is today.
B&E: What will be your next challenge?
LW: The Subway team has a history of setting and reaching goals. While we are continuously focused on providing franchise opportunities and great tasting food at a good value with exceptional service, our short term goal for 2011 is to open more than 2,000 new locations around the world.
B&E: In terms of revenue and profits McDonald’s is still the leader. How do you plan to close this revenue gap?
LW: Ours are two different business models. While it is exciting to have more locations than anyone else in the QSR industry, our focus has been and remains to offer great tasting products to consumers at a good value and to work with our franchisees to provide a support system that will help them run a successful business. Our growth is a result of our ability to offer franchisees the opportunity to own and operate their own businesses that follow a proven and simple operational model, coupled with all the hard work, dedication and support provided by our team members around the world. Out goal has remained the same as it was 46 years ago: to provide a delicious sandwich, at a great value, in a comfortable environment with exceptional customer service.
B&E: Where does Subway see itself in the next five years?
LW: Our largest area of growth and opportunity today is in the International market. We have five regional offices and numerous country offices equipped to attract franchisees and provide support for their stores. We have a very strong international team in place that know the territories. Our success is on two levels wherever we go. First our business model attracts people with an entrepreneurial spirit - people who want to succeed at owning and operating their own business. And we have a strong support staff in place to help franchisees reach their goals. The second is the product itself. At Subway restaurants we provide a choice for people. And with that choice are a number of healthier options made exactly the way you want them.
B&E: What is the average footfall per day in Subway restaurants globally?
LW: Unfortunately, we cannot provide statistical information on customer visits. However, we can tell you that in 2010 we sold approximately 2.5 billion sandwiches around the globe.
B&E: What will be the winning business model for QSRs in the future, takeaways or the proper dine-in experience?
LW: It is not proper for us to speculate as to what will work for others, however, we feel that our model, which includes 100% franchised locations, food customised to order right in front of each customer, minimal equipment and space requirements, flexibility in floor plans and a focus on service, value and healthier options, is what worked well for us.
“In 2010, we Sold 2.5 billion Sandwiches Globally”
Les Winograd, Public Relations Specialist, Subway
B&E: Congrats on Subway becoming the largest QSR chain globally. What does this signify for the food services industry in general and Subway in particular? Les Winograd (LW): We are proud of the efforts of everyone on Team Subway for making us one of the largest and most recognisable brands in the world. Becoming the largest QSR signifies that the franchise model works well. There are many people out there looking for career opportunities who are very interested in joining an established team and a well recognised brand. And particularly at Subway, it confirms that our franchisees not only are hard working and dedicated, but that they also strongly believe in the brand, the products and their ability to grow within the Subway system. Without the franchisees, the Subway chain would not be where it is today.
B&E: What will be your next challenge?
LW: The Subway team has a history of setting and reaching goals. While we are continuously focused on providing franchise opportunities and great tasting food at a good value with exceptional service, our short term goal for 2011 is to open more than 2,000 new locations around the world.
B&E: In terms of revenue and profits McDonald’s is still the leader. How do you plan to close this revenue gap?
LW: Ours are two different business models. While it is exciting to have more locations than anyone else in the QSR industry, our focus has been and remains to offer great tasting products to consumers at a good value and to work with our franchisees to provide a support system that will help them run a successful business. Our growth is a result of our ability to offer franchisees the opportunity to own and operate their own businesses that follow a proven and simple operational model, coupled with all the hard work, dedication and support provided by our team members around the world. Out goal has remained the same as it was 46 years ago: to provide a delicious sandwich, at a great value, in a comfortable environment with exceptional customer service.
B&E: Where does Subway see itself in the next five years?
LW: Our largest area of growth and opportunity today is in the International market. We have five regional offices and numerous country offices equipped to attract franchisees and provide support for their stores. We have a very strong international team in place that know the territories. Our success is on two levels wherever we go. First our business model attracts people with an entrepreneurial spirit - people who want to succeed at owning and operating their own business. And we have a strong support staff in place to help franchisees reach their goals. The second is the product itself. At Subway restaurants we provide a choice for people. And with that choice are a number of healthier options made exactly the way you want them.
B&E: What is the average footfall per day in Subway restaurants globally?
LW: Unfortunately, we cannot provide statistical information on customer visits. However, we can tell you that in 2010 we sold approximately 2.5 billion sandwiches around the globe.
B&E: What will be the winning business model for QSRs in the future, takeaways or the proper dine-in experience?
LW: It is not proper for us to speculate as to what will work for others, however, we feel that our model, which includes 100% franchised locations, food customised to order right in front of each customer, minimal equipment and space requirements, flexibility in floor plans and a focus on service, value and healthier options, is what worked well for us.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
