Subway, the global fast-food giant, has accelerated its expansion in China, achieving a significant milestone with the opening of its 4,000th store in the Asia-Pacific region, located in Shanghai. Subway's global CEO, John Chidsey, emphasized that global expansion is crucial for the company's growth. Subway, founded in 1965, operates over 37,000 stores in more than 100 countries, ranking second worldwide in store count.
In China, Subway has been present for over two decades, and since mid-2023, it has adopted a new strategy to rapidly expand through company-owned stores. Currently, Subway operates 700 locations in China, with more than 200 being company-owned. The brand has seen strong performance in the region, with double-digit sales growth and most newly opened stores turning a profit.
In June 2023, Subway signed a new master franchise agreement with Shanghai Fullwise Food Enterprises Development Co. to significantly expand its presence in mainland China. By the end of August 2023, Subway was acquired by private equity firm Roark Capital. The company's China CEO, Zhu Fuqiang, indicated plans to open 500 to 1,000 new stores annually, aiming for a total of 4,000 new restaurants in China.
Subway's Chinese operations have shifted from a franchise model to rapidly developing company-owned stores, a strategic move to strengthen brand image and develop a replicable profit model. The plan is to focus store openings in first- and second-tier cities initially, then expand to other regions to optimize management costs and promote brand awareness.
Zhu outlined plans to open flagship stores and expand the store footprint to over 100 square meters with more seating. Subway China's local team has developed a localized menu, and Zhu emphasized that future growth would focus on innovation and transformation while maintaining product quality and efficiency.
Subway China does not engage in price wars but focuses on offering value with a price range of 20 to 50 RMB. Despite consumer pressure from societal issues, Zhu believes this price range remains accessible. The introduction of a 9.9 RMB breakfast set highlights Subway's aim to attract more customers to its breakfast offerings, which also include coffee.
Looking ahead, Zhu mentioned that Subway China is not short of funds for its expansion plans. While not ruling out potential financing or an IPO, the focus remains on brand growth and customer engagement.
