The introduction and identification of the organization’s (Subway)problems can be found below. Please provide solutions to solve the problem. Subway Fast Food Restaurant?Introduction Subway is an American fast food restaurant franchise that was founded 1965 in Bridgeport, Connecticut by a young Italian American man called Fred DeLuca and his co-founder Peter Buck. The fast-food chain started its operations from a small outlet in Connecticut expanded to become one of the world’s largest global franchise. In 2015, it was recognized as the fastest-growing franchise in the world and as of 2021, the franchise had opened over 37,540 locations in more than 100 countries including India, Canada, and Bahrain. The quick expansion made Subway the largest single-brand restaurant chain in the world. Like every successful establishment or companies in the world, there always comes organizational challenges or problems. Most successful organizations initiate strategic ideas to innovate and adapt to constant changes in its environment. This paper examines and identifies some existing challenges facing Subway fast food restaurant and recommends solutions that may help the organization adapt. ?Growth and Expansion In 1965, Fred DeLuca and Peter Buck co-founded Subway in Bridgeport, Connecticut. The company’s original name was Pete’s Super Submarines. Years later, the company was rebranded as Subway to gather a simplistic household name. By 1974, the first franchise opened in Wallingford, Connecticut and subsequently opened another franchise in California in the year 1978. One of the selling attractions for Subway was, customers could see the condiments and point out from various options what ingredient they wanted in their sandwich. At that period, this was hailed as a game changer for fast-food restaurants and was regarded an innovative success. The company successfully branded its restaurant as the place for healthy fast-food when compared to other fast-food restaurants. This marketing strategy was popular because many Americans were increasingly diet focused and were seeking better healthy eating options to avoid gaining weight and getting diabetes. ?Their brilliant concept was a huge win for both Subway and their customers, which made the company continue expansion across America and other countries. By the year 1981, Subway had recorded 200 outlets across different states in America. In 1984, Subway ventured into the international market and established an outlet in Bahrain, then subsequently opened an outlet in England. Subway struck a mega deal with Walmart to open outlets inside Walmart supercenters stores. This speedy expansion saw the company surpass McDonalds as the leading fast-food restaurant inside Walmart stores. The company was recording as many as 50 new outlets opening in a week making it one of the most successful franchises in America. According to Franchise Business Review, “Subway is easy to franchise and remains one of the cheapest fast-food chain to franchise with costs between $116,000 and $263,000” [Franchise Business Review]. Subway ranks in the Entrepreneur Franchise top 500 and in 2015, the company was ranked at number 3 in the “Top Global Franchises” list, while it maintained its number 1 status as the “Fastest Growing Franchise” in the world by having more fast-food restaurants than McDonald’s. Organizational Crisis Most companies experience some sort of organizational problems and Subway is not an exception. In 2016, the company’s sales fell in the U.S markets. This was the first time Subway recorded drop in sales in the company’s history causing the closure of some underperforming stores. Many factors could be attributed to the drop in sales. Listed below are some identified problems affecting the company.?Competition Like any successful business, Subway began to experience challenging competition from new fast-food chains like Panera Bread, Jimmy Johns, Firehouse and Potbelly. These companies became heavy competitors, offered similar fresh diet focused items and healthy sandwiches. They began to win over some of Subway’s loyal customers.?Interestingly, some of their produces were more organic and healthier than food from Subway. These competitors focused on healthy innovations and stole a percentage of Subway’s consumer base. In 2014, Subway’s sales began to plummet because some of their market share had moved to other rivals and Subway had failed to adapt to the everchanging market. Another innovation introduced into the market were the rise of Asian cuisine such as Thai and Japanese delicacies like sushi, which offered gluten free and organic flavors. These diet-specific fast-health-food restaurants offered real fresh food options to consumers who were willing to spend some more money.?Franchise Setbacks New competing fast-food chains were not the only challenges Subway faced. They also had problems with their franchise models. Due to Subway’s quick expansion strategy and focus on restaurant count, the company lost focus on location. They later realized that several franchises were situated on the same street or in the same location. Not only did it affect sales amongst the franchises, but it also created tension among the franchisees because they targeted the same customer base, making them compete amongst each other. This was the first time the company’s easy franchising model was called in question, because it resulted in outlets opening in the same neighborhood vying for the same lucrative markets. The fast-food chain was criticized for getting big too fast and biting off more than it could chew because the company had saturated the market with franchises that contested against each other. By the year 2016, Subway had closed some outlets in America due to poor sales performance, but it remained the fast-food chain with most locations in the U.S. after McDonald’s. “As of 2020, Subway has 22,226 locations in the US” [Business Insider].?ared Fogle In 2000, as part of their marketing strategy, Subway introduced Jared Fogle to the U.S market. Fogle used to weigh 425 pounds and claimed he shed most of the weight by eating Subway sandwiches. Fogle was often seen on commercials holding up his old pants to show how much weight he had lost. ?This strategy captured the attention of the American audience which in turn rewarded Subway with a boost in sales revenue. The campaign was so successful that sales rose by 20% after the first commercial aired. Jared Fogle, became the undisputed face and spokesperson for Subway sandwiches in the U.S. He would feature in numerous Subway commercials discussing good living and healthy eating. In 2014, Fogle was arrested in possession of child pornography and charged with having illicit sexual activities with minors. Being the popular spokesperson for Subway, Fogle’s arrest began to have a negative impact on the brand causing a decline in sales. Fogle eventually plead guilty and was sentenced to nearly 16 years in prison in 2015. Subway immediately cut ties with Jared Fogle and deleted all images of him and any mention of his name from their social media accounts and websites.BusinessManagementMBA 531
Get a plagiarism-free order today we guarantee confidentiality and a professional paper and we will meet the deadline.