MILFORD, Conn. -- To maintain its rapid growth as strip malls and spots alongside the freeway fill up with fast-food outlets, Subway Restaurants is increasingly moving into locations where rivals have fearedor neglectedto tread, reported the Wall Street Journal.
According to the report, in the past several years, Subway has opened inside a church in upstate New York, a handful of coin-operated laundries in California, a Goodwill Industries store in South Carolina, a car dealership in Germany and an appliance store in Venezuela. It has more than 110 restaurants [image-nocss] inside hospitals.
Setting up shop in any nook or cranny it can find has helped Subway surpass McDonald's Corp. as the restaurant chain with the most U.S. locations and has made Subway one of the few restaurants that's building lots of new spots (Subway has more than 20,000 U.S. outlets while McDonald's has about 13,700). Nontraditional locationsdefined by Subway as any place you wouldn't normally expect to see a restaurantaccount for 22% of the chain's outlets, up from 13% a decade ago, the company said.
For decades, quick-service restaurant (QSR) chains had little trouble adding hundreds of new locations each year as they expanded alongside the nation's empty highways and into smaller towns. But several years ago, McDonald's, Burger King Corp. and other chains began paring their U.S. growth in the as existing restaurants struggled and new sites became more difficult to find, the report said.
Between 1981 and 1999, the number of households per restaurant in the U.S. fell from 259 to 196, according to Technomic Inc., which tracks data on the restaurant industry. That number has crept up slightly since the beginning of the decade, when the restaurant pullback started.
Other restaurants have tried nontraditional locations and pulled back. But Subway, with a menu anchored by cold cuts, has an easier time opening in unorthodox spots because it has a simpler kitchen than traditional fast-food restaurants that require frying and grilling equipment, said the Journal. And Subway has edged out hamburger chains and doughnut shops at hospitals and religious facilities partly because it promotes its sandwiches as a fresher, healthier alternative to traditional fast-food. The chain is owned by Doctor's Associates Inc., Milford, Conn.
All Subway restaurants are franchised. The chain estimates that it costs franchisees between $75,000 and $185,000 in initial upfront investment to open a nontraditional location, the report said. By comparison, McDonald's says it requires potential franchisees to have a minimum of $200,000 in nonborrowed personal resources to be considered for a franchise, the newspaper said, citing McDonald's website.
Subway first started broadening its location base in the early 1990s when it began opening restaurants inside convenience stores. As the market for new space grew tighter, Subway created a division just to scout nontraditional locations and help prevent cannibalizing restaurants in fully built-out markets. In 2004, Subway launched a formal initiative to open more restaurants inside Wal-Mart Stores Inc. locations and now has more than 1,200 there. The chain recently opened a handful of Subways inside Home Depot Inc. hardware stores.
Some of Subway's broadening efforts haven't worked. It stopped serving sandwiches on Continental Airlines flights a few years ago because it was too difficult logistically, Subway officials told the paper. The company said retailers and community centers offer a more captive audience than freestanding locations that must lure street traffic. Franchisees said the growth they get from nontraditional spots outweighs the hassles.
Meanwhile, the company told CSP Daily News, which regularly reports on new locations in c-stores, gas stations and truckstops, that during the months of June and July, it opened 340 new restaurants in 35 countries around the globe including 208 locations in 39 U.S. states and seven
Canadian provinces. Of those new franchises, 37 were opened inside c-stores and 64 inside Wal-Mart stores.
Recent U.S. and Canadian c-store, station and truckstop openings include:
Anderson Quick Mart, Harrison, Ark. Bill Saad Fuel Group C-Store, Rockwood, Mich. BP C, store, Brookwood, Ala. BP C-Store, Port Charlotte, Fla. BP C-Store, Farina, Ill. BP C-Store, Detroit BP C-Store, Belzoni, Miss. BP Truck Stop, Livonia, La. CEFCO C-Store, Belton, Texas Chevron C-Store, Carencro, La. Chevron C-Store, Kettle Falls, Wash. Citgo C-Store, Errol, N.H. Conoco C-Store, Great Falls, Mont. Country Farms C-Store, Hopkinton, Mass. Diamond Shamrock C-Store, Houston Esso C-Store, Deschambault, Quebec Esso C-Store, Rosthern, Sask. Exxon C-Store, Kutztown, Pa. First Coast Energy/Shell C-Store, Jacksonville, Fla. Holt Oil C-Store, Leland, N.C. Kum & Go C-Store, Jenks, Okla. Mobil C-Store, Gilberts, Ill. Ocoee Express C-Store, Benton, Tenn. Petrol Travel Center, Claysville, Pa. Phillips 66 C-Store, DeSoto, Kansas Pilot Travel Center, Crawfordsville, Ind. Radiant C-Store, Tampa, Fla. Riggins C-Store, Ocean View, N.J. Shell C-Store, Dallas Shell C-Store, Garland, Texas Shell Truck Stop, Houston Shell C-Store, Sinton, Texas (pictured) Trex C-Store, Dearborn, Mo. U-Pak-It C-Store, Delhi, La.
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