Know how to start a Subway franchise in India, delving into costs, profits, and ROI. This concise guide offers key insights into the financial dynamics of establishing and running a Subway franchise
Overview
Subway Restaurants has been the world’s largest submarine sandwich chain in several locations, with more than 44,000 restaurants in 111 countries and territories as of December 2013. If you want to start a Subway restaurant business in India but don’t know where to begin, you can keep this article handy for all relevant information about the Subway franchise.
An approval and empowerment given by a brand to a different group or person giving them the authority and enabling them to carry out specific commercial actions, such as acting as an agent for that brand’s products in that location. From ₹6,098,000 to ₹11,979,400 can be invested. This includes the ₹650,000 initial franchise charge.
What Does a Brand’s Franchise Mean?
A contract allowing a distributor to use a brand exclusive in a certain area between a wholesaler or retailer and the brand’s owner. This means that, under certain restrictions, the wholesaler or retailer is the only business allowed to sell that brand of product.
Yes, the Subway Franchise is unquestionably one of the most lucrative and satisfying options available to anyone looking to launch a retail-based food service franchise in India. But before you get started, just evaluate and choose whether this Franchise business opportunity matches you based on your talents, passion, experience, and education.
In total, the franchise system generates annual sales of almost $11 billion USD. Each franchise unit produces an average of $422,000 in annual sales. According to statistics, the majority of franchises only make an average profit of 7.5% of their yearly sales, or $31,000. A Subway franchise is a wonderful choice for business owners interested in starting a franchise due to the advantages of an established firm, minimal beginning expenses, and parent company support.
Marketing, promotion, and the caliber of the food you serve are the main factors that affect a business’s profitability. Additionally, it depends on the location where the franchise is located. However, the average monthly revenue of the Subway franchise might be around ₹20 lakhs.
Franchisees of Subway must pay a fee of $15,000, and initial expenditures, which include building fees and lease charges for equipment, can range from $116,000 to $263,000, according to the firm.
Subway partners in a special way and is typically owned by individuals or families. A Subway franchise partner discusses the procedures for opening and setting up an outlet in India in an interview with Business Insider India. In total, the franchise system generates annual sales of almost USD 11 billion. Each franchise unit produces an average of $422,000 in annual sales. According to statistics, the majority of franchises only make an average profit of 7.5% of their yearly sales, or $31,000.
Eligibility Criteria and Requirements for Setting up Subway Franchise in India
Subway franchise offers a proven business model and global brand recognition. Here is a complete outline of the eligibility criteria to be met for setting up a subway franchise in India:
- Age requirement should have a minimum of 18 years
- Net worth of at least ₹1 crore
- Liquid capital of minimum ₹25 lakhs
- Experience or background in the food industry
- Full-time involvement or the ability to hire a qualified manager
- Adherence to subway’s standards and policies is mandatory
- Prospective franchisees include an entrepreneurial outlook and food industry experience
- The Subway franchise fee in India should be filed
- Franchisees must commit to investing in and steering the venture to success
- They should maintain a good reputation and prioritise customer satisfaction
- Being open to learning new skills and training by Subway is crucial
- Franchisees should be passionate and have faith in the business model and products.
Franchisee Responsibilities
As a Subway franchise, you’ll be tasked with:
- Meeting the initial Subway franchise fee of ₹6.5 lakhs
- Securing an optimal location approved by Subway for restaurant operation
- Organising equipment, installation, leasehold improvements, décor, etc
- Hiring necessary staff for smooth QSR operations
- Adhering to the weekly payment structure, where 12.5% of gross sales (minus sales tax) is remitted; 8% as royalty fee and 4.5% for advertising expenses.
10 Ways to Start a Subway Franchise in India
Here are 10 things you should keep in mind when opening a Subway franchise in India. Read on to know more.
Calculate the Cost
The first stage to calculating Subway franchise cost in India is figuring out how much money you would need. Let’s say you want to open a store and only sell subs, salads, and drinks.
The initial investment required for just one store starts at a few lakhs. It doesn’t include other costs like labour and utilities, so it’s important to consider them beforehand. Once all these expenses are added, you can look at an initial investment for just one store.
Calculate Expected Profit
The total cost of starting a Subway franchise varies, considering certain factors. For a return on investment (ROI), the franchisor expects franchisees to have their stores open for at least two years and generate monthly revenue.
On average, it takes about 18 months to break even. Depending on the location, rents can vary from ₹40,000 to ₹ 100,000 per month. A ₹500,000 initial investment is required, with an additional ₹20,000 will be needed monthly.
Calculate Return on Investment
The returns for this type of restaurant are moderate, with an ROI of 3-4%. The typical time frame for recouping your initial investment is about 7-10 years.
That’s not to say that you won’t have some great months to make more than your monthly mortgage payment, but it will take many more months like those to finally make back all the money you put into opening the store.
Calculate Revenue Growth
Now, let’s calculate the revenue growth for this company. As of 2017, the average revenue growth for the last five years has been 12%. It is calculated by dividing the total revenue for 2017 (₹7,348,650) by 2012’s total revenue (₹3,868,225).
Then we multiply this number by 5 (five years). The final result is that they have seen their revenues grow by an average of 12% each year. With the current state of inflation being approximately 2-3%, Subway will likely see a consistent increase in yearly revenue due to these factors.
The next step would be determining how much of this profit comes from royalties or licensing fees. To do so, subtracting all other costs from the total net income can help you understand what percentage those two sources contribute towards profit.
For example, if there are no other costs except royalty or licensing fees, 100% of net income would come from royalties or licensing fees. Alternatively, if all costs such as salaries and marketing expenses are subtracted, zero per cent of net income would come from royalty or licensing fees because those funds were spent on salaries and marketing expenses instead.
Examine Opportunities for Expansion
Western food has become increasingly popular in India in the past few years. If you are looking for an investment opportunity, consider starting up a franchise for Subway – a popular restaurant chain. The first step is to research how much it will cost and what your return on investment might be for opening a franchise of this type.
After doing some research, you will find that the average location costs about ₹350,000 to open. And if you can expand better, with around 100 locations in the future, it could bring in about 7 million annually with an average ROI of about 10%.
Understand Industry Trends
India’s fast food industry is booming, with new entrants arriving daily. The country’s economic growth and increased disposable income have made these attractive chains destinations for customers and investors.
In 2016, the food service industry grew by 12%, making it one of the fastest-growing sectors in the country. Chains such as Mcdonald’s, KFC, Pizza Hut, and Domino’s have been around for decades, but they are facing tough competition from newcomers like Burger King, Subway, and Red Mango.
Understand Competition
India has over 1 million restaurants and food stalls, but fast-food joints are still few and far between. As a result, the Indian market is largely unaddressed, even as the country’s appetite for Western foods grows.
In 2012, only three large American chains opened their doors in India: Pizza Hut, Domino’s, and KFC. You’ll have to research how your target area may compare to competing restaurants, but remember that you have an advantage over the other restaurant brands because you’re bringing something new.
If you want to open up a Mcdonald’s franchise instead of a Subway Franchise in India, you’ll find plenty of them already around. But if you think your location will be different enough from any existing Mcdonald’s restaurant, go ahead and apply!
Learn About Your Target Market
Subway is an American restaurant franchise that’s spread all over the world. It has been opening up franchises outside of America since the 1990s and has been successful in every country it’s entered. The franchise is known for its signature sandwiches on freshly baked bread. There are many locations of this famous sandwich shop worldwide, but there are still markets where they have not yet opened up.
Choose the Right Location
Your location needs to be accessible by foot, car, and public transportation. The goal is to find the perfect spot where customers will come. If you start with a single store, finding an area that meets all these needs may be difficult or impossible. That being said, try to find the best spot possible, as this will help your business grow as time goes on.
Prepare for your New Franchisee Life
The most important thing you need when opening up a franchise is people who are willing to commit. To be successful, you will need more than just one person working on the project. You’ll want at least two or three committed people with the skills required to run the business to get this done.
You may also want to consider using social media and other online tools for marketing purposes. For example, you can use these tools such as Facebook or Twitter to generate awareness about your business, attract new customers, promote deals, and even get feedback from existing customers.
Why You Can Start a Subway Franchise in India?
Since 1965, Subway has unquestionably grown to become one of the largest culinary franchises globally. In terms of the number of units, it is the leader in the Quick Service restaurant network. In addition to the points already mentioned, starting a Subway franchise in India is made possible by minimal startup costs and straightforward operations. The administration of Subway is still seeking growth, therefore there is definitely room for you to grow your franchise business! Additionally, you may find a lot of favorable Subway Franchise Reviews online.
- After McDonald’s, Subway is the second-largest restaurant chain in the world
- It contains more than 44,210 restaurants spread across about 110 nations, as well as more than 531 restaurants spread across 70 distinct Indian cities
- Customers of this quick-service eatery can get very fresh bread made on-site
- One of the top-performing and fastest-growing franchises in India is Subway
- There are no meals for frying, grilling, or cooking available
- They are accommodating regarding the franchise and the space needs
- Our Subway franchise headquarters, State Development Agents, and field executive personnel offer a thorough training programme in addition to their full assistance.
Is Opening a Subway Franchise in India a Successful Business?
Actually, Subway has come a long way in the competitive food restaurant market since 1965 to hold this spot. Since Subway is a well-known brand not just in India but all over the world, becoming a franchisee of the company allows you to focus on running your food business rather than managing a sales force. Sales occur naturally because the food’s uniqueness speaks for itself, thus there is no need to put extra effort into basic marketing. However, you can raise the sales level to large volumes with your unique marketing tactics.
People of all ages are drawn to the distinctive dishes provided in Subway restaurants because of the high standards the company has set for its meals. The key selling point of Subway is its high level of food quality, which also explains why franchisees are not required to put in a lot of marketing or sales effort to promote their products. Utilise all of these advantages and simply look over the franchise application to become one of the prosperous Subway franchisees in India and use Subway as your selling point.
Here is the Process to Apply for a Subway Franchise
Check out the following for a step-by-step instruction on how to apply for a Subway franchise.
- Step 1: Download the application form for a Subway franchise in India from the company’s official website at https://www.subway.com/en-IN/OwnAFranchise. This link, https://subapps1.subway.com/AdditionalInfoApp/index.aspx, will take you to the application form. LC=ENG
- Step 2: Fill out the franchise application form completely with the information requested.
- Step 3: Once all the information has been entered, send the application to the address listed below.
- Step 4: To learn more about the franchise, you can phone the Subway franchise contact number.
Conclusion
Vakilsearch has a vision of making access to justice universal and affordable. It solves the problem of finding quality legal services at an affordable price by connecting people with lawyers who specialize in their area of need through our platform.
It makes it easy for people to find the right lawyer for their case by listing all available services and pricing information upfront on our website, so there’s no need for extensive searching or negotiating prices over email or phone calls like you would with other vendors in this space.
Frequently Asked Questions
How much does it cost to open a Subway franchise in India?
Ans: Starting a Subway franchise in India entails a flexible investment, contingent upon several factors. Factors such as store type (traditional or non-traditional), size (ranging from 300 sq ft to 1500 sq ft), location (metro or non-metro), equipment status (new or used), and labour force (number of employees) contribute to the total cost. While specifics vary, existing franchisee estimates suggest an average investment ranging from ₹50 lakhs to ₹1 crore.
What is the monthly profit of Subway in India?
The earnings of a Subway restaurant vary depending on the city and region. But the average income for a franchise is about ₹20 lakhs per month. Note: This is not an actual number, like any other retail chain the numbers might fluctuate
Who owns the Subway franchise in India?
Subway franchises in India are owned by a mix of individual franchisees and larger investment groups. The ownership structure can vary from location to location.
How profitable is Subway?
Subway can be profitable for franchisees who effectively manage costs, maintain quality, and attract customers. However, profitability depends on factors such as location, competition, and market demand.
What is the failure rate of Subway franchises?
The failure rate of Subway franchises can vary, but like any business, success is not guaranteed. Factors such as location, management, and market conditions can influence a franchise's success or failure.
What are the weaknesses of Subway?
Weaknesses of Subway include concerns about ingredient quality, franchisee relations, and competition from other fast-food chains offering healthier or more diverse menu options.
What problems are Subway facing?
Subway faces challenges such as changing consumer preferences, competition from other fast-food chains, and adapting to new market trends, including demands for healthier food options and digital ordering platforms.
Who is Subway's biggest competitor?
Subway's biggest competitor is often considered to be other fast-food chains like McDonald's, Burger King, and KFC, which offer similar menu items and compete for market share in the quick-service restaurant industry.
