Tweet

Fast Food Fury: How DeLuca Created a Franchising Phenomenon

Article Overview: “What's happening to us is beyond whatever I imagined,” says DeLuca, looking back on his career. “If you told me 30 years ago that one day I'd be sitting in a Subway store in Russia, I'd have said you were crazy.” DeLuca went from being just another kid in Brooklyn to being at the top of an international fast food phenomenon. How did he do it?

Fast Food Fury: How DeLuca Created a Franchising Phenomenon

“What's happening to us is beyond whatever I imagined,” says DeLuca, looking back on his career. “If you told me 30 years ago that one day I'd be sitting in a Subway store in Russia, I'd have said you were crazy.” DeLuca went from being just another kid in Brooklyn to being at the top of an international fast food phenomenon. How did he do it?

Inexperience: The very first day DeLuca opened up shop, he had spent the better part of the morning sitting out back, cutting vegetables with a three dollar knife on an old sheet of plywood. “There’s nothing in that store that would pass muster today,” he says jokingly. But despite his inexperience, DeLuca dove headfirst into his business and came to believe in the strategy of learning by doing.

Goals: “I say to [new development agents], ‘Ok, you must become the biggest fast-food chain in your country,” says DeLuca. From day one, DeLuca had his heart set on opening 32 Subway stores in ten years. He far surpassed that goal, but he never stopped setting new ones. Reaching one goal simply meant he had to set the next one even higher.

Customers: “We have good market acceptance and that’s why Subway is growing very nicely,” says DeLuca. “We win markets one customer at a time – that’s been our simple formula since the beginning.” Subway has become a franchising hit because DeLuca has made it his top priority to anticipate and listen to his customers’ needs. From the food to the building design, he has put his customers’ opinions front and centre. “Customers get what they want.”

Profit: DeLuca learned a hard lesson early on in the game: rising sales did not necessarily mean more money in his pockets. When the word came back that he was still at a loss, he knew it was time to change things around. By cutting costs and taking advantage of economies of scale, DeLuca learned to play the game of profit or perish.

Relationships: “Our job in the next five years is to build an international infrastructure,” says DeLuca. “And that’s done one store, one person at a time.” From his days of being unable to pay the bills, DeLuca has learned the importance of developing strong personal relationships at work. Today, he continues in that vein through his treatment of both employees and franchisees. “Subway is known for the fact that we bake our own bread in the store every day,” he says. “But it’s not just what we have. It’s who we are. Here at Subway, we’ve built a strong organization that can offer franchisee support.”

Although the company struggled in its first few years, Subway has since gone on to become one of the most successful companies in the world. For an unprecedented 15 times in 20 years, it has been ranked by Entrepreneur magazine as the number one franchise opportunity. With almost 30,000 units around the world, Subway’s growth is still going strong.

Related Articles
  Lesson #1: Beginning as a Beginner is Okay
  Lesson #4: The Name of the Game is Profit or Perish
  Lesson #3: Put Yourself in Your Customers’ Shoes
  The Little Submarine That Could: DeLuca Takes Subway to the Top
  The Sandwich King: The Early Years of Subway’s Fred DeLuca

Article Tags: brooklyn, economies of scale, fast food, food chain, game, heart, inexperience, international infrastructure, market acceptance, muster, next five years, phenomenon, plywood, pockets, reaching one, relationships, russia, subway, top priority, vegetables



Related Forum Posts
Re: When did your entrepreneurism start? - I sold my science fair project when I was 9 year old after I won 2nd place. Created crystals from lumps of salt that collected on a string. Cost less than a penny to make and got $1 a piece for them. Not bad profit margin but was too young to realize I was ripping anyone off at the time.
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

What I Really Want Is...

What Type of Business Should I Start?

Ways to Improve Your Landing Page Conversions

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.