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.

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