Subway Reports for Duty at Military Bases
Subway contends with the challenges of opening and operating on military bases to reach its core customers and continue building its brand.
By Maya Norris, Managing Editor -- Chain Leader, 10/1/2008 12:00:00 AM
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| Subway prefers to open units on military bases located in remote areas rather than metropolitan areas, where servicemen and women can easily leave the base to go to Subway’s competitors. |
The military has been a useful ally for Subway. By opening units on military bases overseas first, it gives the Milford, Conn.-based sandwich chain a launching pad into civilian locations in countries such as Germany and South Korea and, more recently, Portugal and Italy. At the same time, it allows the company to extend its brand domestically, too.
But operating within the military's strict, regimented culture has its challenges—something Subway has ample experience dealing with since opening it's first military unit more than 20 years ago.
Subway has opened 255 units on military bases since 1986 in the United States and globally including in the United Kingdom and Afghanistan. The QSR has already opened 19 military units this year and will open a dozen more by year-end and 20 to 30 in 2009.
“The military is prime demographic for us,” explains Chuck deNicolo, global account manager of new business development. “It's predominantly male. It predominantly skews younger, active and heavy users of our type of product.”
The average unit volume for a military unit is 5 percent to 10 percent higher than a traditional store, though the company won't provide exact figures.
Past the Gates
To open on a military base, Subway works with the military exchanges, which oversee the retail services on the bases. The Navy Exchange, Army and Air Force Exchange, Marine Corps Community Services or Coast Guard Exchange negotiates directly with a local franchisee or with Subway, which subfranchises it to a local franchisee. In some cases, the exchange serves as the franchisee. For example, the Army and Air Force Exchange is the owner-operator of 70 locations.
The operator usually opens a unit where the military exchange sees the need. They are located in diverse areas such as gas stations, convenience stores, dining halls, food courts and freestanding buildings. Buildout costs range from $100,000 to $1 million depending on the size of the unit and if the space previously housed a restaurant. A traditional Subway averages 1,200 to 1,400 square feet and costs about $250,000 to $350,000.
Rules of Engagement
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Units on military bases generate average unit volumes 5 percent to 10 percent higher than traditional Subways. |
Once the unit is open, operators must find employees who have the skills to thrive in the military culture. Employees go through background checks and physicals. In addition to Subway food-safety training, they must complete the military's food-safety and sanitation training, too. Most importantly, employees have to contend with impatient customers such as high-ranking military personnel, who expect quick, attentive service, deNicolo says.
Subway also has to deal with other stringent operational issues. All suppliers must be approved by the U.S. Department of Agriculture. Some locations require that food products go through a central delivery station, where they are examined for bombs and other weapons. For locations overseas, food either has to be shipped directly from the United States or has to come from local manufacturers approved by the military. And once a food product is open, it must be served within 24 hours; traditional Subway units have a 48-hour window.
Despite the challenges, Subway will continue to expand on military bases. “Not only does it provide more outlets for us to serve sandwiches, serve our food to customers and build our customer base, it's also a way for us to make our men and women in uniform more comfortable where they are,” says Public Relations Coordinator Les Winograd. “So it's something we can all be proud of.”
