Subway Restaurant Hours
Posted by Subway Franchisee - Site Admin at 8/1/2007 10:17 PM and is filed under Subway Restaurant Hours 
I appreciate everyone's comments and love the fact that we can bounce ideas off eachother regarding our own Subway Franchise experiences. I am sorry I haven't blogged in a while - things have been quite hectic. I have made quite a few changes within my restaurant, but its too soon to tell how valuable these changes are or will be.
I found out that a group of my employees have been stealing money behind my back. I never quite found out how much they stole, but am aware that it could be a fair amount of money since they have been working for me for years! So a couple of weeks ago, i decided to "clean house" and fire all but the three people I trust. We managed to arrange the schedule so that all open shifts of the former Subway staff were accounted for. The day after firing I notice that sales were up $200. Enough said.
I also started closing my Subway Franchise on Sundays. FINALLY SUBWAY HQ APPROVED SOMETHING TO MY BENEFIT. If you could believe it, because of the rural location of my subway - and some of you probably know this already from keeping up with this blog - I have had quite a few Sunday Subway earnings less than $30! And yes, that is for the entire day. So I begged and pleaded and explained that it didn't make sense to pay 2 employees and be open for the entire day (incurring operational costs) for a measely $30. How could this not have been approved months ago when it was requested?
So, I will continue to manage my Subway Franchise to the best of my abilities. Once again, any comments or experience sharing is much appreciated.
Congrats on the change in hours and finding out that you were losing money due to dishonest employees. It really is a shame that in the fast-food restaurant business there is so much money lost due to theft. Also, i remember reading in your blog sometime back that you wanted your store to be closed on Sundays also. Did you request that as well. I too am interested in cutting my Subway hours a little shorter in the evenings on weekday because most of my business comes from afternoon lunch crowd.
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I am looking to buy in I am concerned at what I read.
V. E.
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Are you happy??
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I am interested in franchising my shop any ideas out there?e-mail me at mcerce@hotmail.com
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Hi V.E. I'm not saying that all Subway Franchises have negative results. However, please make sure that you research all avenues before buying into a Franchise. No, I'm not happy!
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what would you suggest that people looking to purchase a subway franchise look into first. I am also in the process of owning my own franchise.
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hi betty,
you need to look at subway monthly sale report / inventory report at each particular store for sale, it will shows all income and all expense. it will show you wether it is making money or losing money
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I was mildly involved with Subways for a while and learned a lot about operating these stores. The general rule of thumb is that if you really push it (work in the store yourself, keep food and labor costs as low as possible, and stay on top of loss prevention) you can reach a profit margin of about 25%. So, if you have a store averaging 10,000 a week in sales, you'll make about 10,000 a month profit. Keep in mind, this is not easy and most Subway owners don't do this well. The real key is to not rely on Subways internal marketing and do some local advertising/marketing of your own.
Secondly, everyone who has posted here is correct. Subway is not a great franchise to be involved in right now. There are way too many of them and internal competition is a major problem. All the development agents care about is getting more stores built, not whether or not those new stores will be detremental to existing stores... and I don't blame them because Subway has made them multi-millionares. There are some great franchises that are based on the "Subway" model that I think would be better investments. You might look into some of those...
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I AM ALSO INTERESTED IN BUYING A FRANCHISER FROM SUBWAY. I AM RATHER CONCERN DUE TO HOW MUCH IT TAKES TO OPEN ONE UP.
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I AM ALSO INTERESTED IN BUYING A FRANCHISER FROM SUBWAY. I AM RATHER CONCERN DUE TO HOW MUCH IT TAKES TO OPEN ONE UP.
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Hey Chris, I was thinking about a Subway franchise. But now am having second thoughts because there are so many. You had said there are others that you would think about. Could you give some names?
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Well, I have one for sale - for free! (Buyer pays for transfer fees, inventory and equipments at depriciated value.)!!!
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Maybe we can do a deal with someone. Sell two Subway Franchises for the price of none!
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I have a question for everyone on this website -- We have been issued a Demand for Arbitration because supposedly we were marked out of compliance on some items for a few evaluations. We dont want to go to Arbitration as that costs money as well -- does anyone on this site know what this Demand for Arbitration issued by Doctors Associates Inc is all about?
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I don't know, but I was misused by subway.
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I have a question for anyone on this web. I had taken a math and english test to be a Subway franchisee. They graded my test and told me that I did not pass it. I believe that is not true and want to get my scantron. They are not ready to show me any scantron or give me a copy of my scantron. What steps can I take to get my results?
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I myself have received but 1 of theses thank goodness and was because i had no cucumbers .. Needless to say I had a box of oh 20 bad ones but they dont give a crap about that.. anyway, what were you marked out of compliance for and did these occur consectively? I would just clean up my act and see what happens on the next evaluation.....
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Afterthought, ooopsss! the thing with subway is that they tell you how to do nothing and yet demand that you do things there way. What i mean by this is u go thru the training and leave with Nothing but a huge waste of time... you are all geared up to open your resturant for the 1st time with little to no help.. they say go getter! u have to learn how to run reports..
how to navigate the pos on your own.. basically how to run your subway on your own ever single detail. and it is extremely stressful.. then heaven forbid you do mess up they are the 1st ones there to smack you on the hand and say "no no" don't you know better! is pretty much a joke at this point.. am tired of struggling am tired of taking money out of my pocket and i'm just tired period....lets just say had i known now what i know then..i wouldn't be commenting on this site nor would i be searching for info on subway! Ps.. i found this on the arbitration issue!
check this out http://franchisepundit.com/index.php/2005/05/
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I was looking for a Subway forum to post my disgust with the current Subway ad campaign... the stupid dad throwing a temper tantrum. What a slam on Dad's. Who are they trying to appeal to? As the Dad of three who caries the cash and the Credit cards I will never enter a Subway again! I refuse to spend my hard earned money with a company that insults and demeans Dad's the way that that ad does!
It's time that fathers in this country stand up against the current run of stupid insulting ads being run by Subway and others portraying us as stupid or inept.
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u r an idiot!! its funny and you must have had a bad day prior to watching it. I work hard as well and have three kids!
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I am not familiar with that particular Subway commercial. I will do some research to locate it online, and if possible will post it for others to comment on.
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Intrested and would like to find out more info.
Thanks
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Hi All,
I'm happy to find this forum. I'm actually about to buy a Subway restaurant in NY. The owner claims to make about 12k a month in take home money. Here is some of his numbers:
Weekly Gross: $7,800
Rent/Util: $3,850 a month
Garbage: $80
Inventory Costs Weekly: $1200-$1500
The rest you guys know.
Take home Weekly Avg.: $3000
I sat down in the place for 2 weekdays and a Saturday. Avg number of customer per weekday was 140. Saturday is about 45.
He showed me offers by people that are interested in buying his place:
$198k
$225k
$185k
$204k
He wants $205k to sell with inventory included. The owner says he is selling because he wants to go to Dunken Donuts with a freind who already owns Dunken Donut locations. I don't know if he is lying or not. Please advise me on what to llok for in making my decision. Your help is greatly appreciated. I'm about to take ou the loan and invest 59k of cash that my family are welling to give me.
Thank you all,
Sam
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1 word for you sam WISR. This will give you the weekly breakdown in sales. This will also inclused if done correcly Utility fees etc.. If he wants to sell this place bad enough he will show you his reports.. otherwise, don't believe him without proof..
GL
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For those of you who may not know, WISR is the Weekly Inventory Sales Report. And I agree with Footlong who says that the Subway owner should willingly show you this information.
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Is this the same thing as the "Combo report?"
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The Subway Combo Report is what your coordinator puts together for you based upon the information you transmit to them. The Combo Report doesn't have the breakdown the WISR has. The coordinator generates this report based upon your WISR. It's more of a summary of key indicators.
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7800 x 0,26 = 2028 of inventory cost/cost of goods sold, not 1200-1500... Franchise fee 8% = 624 /week, marketing fee 4,5% = 351 week. That leaves your gross margin, which is 7800 x 0,595 = 4641. Deduct rent: 962,50. Deduct garbage, 80, leaves you with 3598,50. HOWEVER: where's the cost of staff? Insurance? Phone? Depreciation? Intrest and amortization? City/state tax? Maintenance costs (and provisions), and so on, so on, so on? Either this guy is really trying to lure you, or he hasn't even ever heard of the concept of a bookkeeper/accountant... My advise of course: don't buy a SW (your best decision ever
(Read up on my other posts on this blog, to see all I've discovered about SW when they tried to lure me into opening stores with them...)
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HE IS LYING,DON'T BUY AT THIS PRICE
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I am just a normal employee who does the weekly Inventory in a small Subway in Germany but 140 customers a day you said? Thats kind of nothing...
We had about 1286 last week which is 1400 Euros profit
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My Dear Friend,
In financial (weekly).. where is staff cost?.. It must be arround 1500 - 2000.. Also Inventory must be arround 24 - 27 % of Sell....Is it net (Exclude TAX/Discounts)... Check it out.. Where is provision of maintenance?
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Current owners of a subway please help me. what should your weekly sales be at $1100 cost of food?
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For starters, check your WISR. Look at your food cost percentage. It should be no higher than 26%. What are your weekly sales?
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sales around 3300 a week, Iam in a deal with the seller and his WISR showes around 1100 cost of goods a week and around 320 every 2 weeks for coke syrup drinks. He thinks store has a major theft problem,, please give me input.
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after all of the costs, and the 12% deducted weekly from your sales, you will be making enough to cover the costs, but you will not be making extra money the food cost is not only about sales, it all depends on how much they are placing an order for, and how much they are ordering. it doesnt mean that they are using all of that every week. if you see excess product in the store then it shows you they buy more than they need you should look for a subway that does 8 or more a week. 3,000 is very low volume. 3,000 a week is not worth more than 120 thousand
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hi all,
im currently at college in the UK and i am researching into what i can do when i leave. I am very interrested in business and one day hope to open my own food outlet in Birmingham (west midlands). However i am also keen to understand how franchising works, especially with Subway as it has seemed to 'take off' massively in the UK market. I would like to ask what experience would you recommend me have to open a subway store? Also what experience do subway look for in protential franchisees?
Thanks!!
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Subway requires no experience. Subway takes off in many markets because it is easy to get into, not becaause each store makes a fortune. It takes 2-4 Stores to make a decent living, so do the numbers. RENT is the most important consideration, then Labour. Food cost too, but that is usually withing a decent range.
I have been doing this 20 years
e mail me....fayazk@extremepita.com
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Rent is NOT the most important consideration. I believe it is location.
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I believe he meant that RENT is the most important % of your indirect cost
Which, depending on where you reside, is or isn't true: for example, cost of wages in Europe are considerably higher than in the USA (due to all kinds of "social surcharges" the employer has to pay on top of the gross wage).
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Finally somebody who sees the world as I do
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dont forget that subway also collect 12% of your weekly sales regardless of what you are making.
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you are right, but not only that, do you really think that subway cares about who is going to buy a store, they want to open as many as possible because they recieve 12% of your sales any way for nothing, regardless of how much you are making. if your store is losing money, they still take the 12%
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subway was unfair to me. I am too hurt to talk about it now, but one day I will and would like to share it to the world.
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I am doing a report on Subway franchises and was wondering if any one who owns a Subway franchise would be interesting in answering 10 questions for me
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I would be glad to answer your questions. You can either post them here or send an email to help@subwayscam.com and I can post the questions/answers for you.
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1. Did you consider any other franchises?
2. How long have you had this franchise?
3. Would you ever consider starting you own business after owning a franchise?
4. What is something that surprised you about the franchise process?
5. What is the biggest disadvantage of owning your franchise?
6. What is the biggest advantage of owning your franchise?
7. Would you recommend owning this particular franchise to someone else?
8. Who is your target customer?
9. Do you believe that because you are a franchise you get more business than a non-franchise store similar to yours?
10. What is the most important thing to consider in owning a franchise?
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ive been working for subway 10+years. if anyone need help with their micros pos,installation,troubleshoot...for the washington area,feel free to contact me
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do you work for doctors associates, or are you a private entity? I have some questions about hardware, printers in particular. NOT Micros printers. I have the MICROS, another Subway not far from me has the Dell T200 - someone told me that they are Star Micronics TSP700 - I'm told the warranty and reliability on the Star smokes the MICROS - 3 years??? What's you opinion?
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hi all, considering buying an existing location doing about $5,000/wk. Rent about $1,500. Asking price $180,000. Reasonable? Thanks in advance.
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I'm sorry, but if this is the kind of people that buys a SW or *any* other business for that matter, there's no beginning in trying to help people...
I mean, what do people that ask these kind of questions really think? Like you don't need to have at least some education before you get into a business?
...
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You are showing me 7.2% as a rental factor, sounds very good.
Does it need a remodel soon ?
Is there another store coming nearby ?
What is so special about the location?
The price is a replacement cost price
From the earnings perspective, not such a good price. You are buying a job
Can you build sales? Good operator or bad current operator?
Call me to discuss further. 949-253-4610
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Fayaz,
Expose yourself. You are not a consultant, but rather a glorified Extreme Peta DA. Jeez. Fish for sales somewhere else.
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I'd like to chime in to support Fayaz. He helped me sell 2 of my 3 stores, and for that I will be eternally grateful to him! He is knowlegeable and straightforward, and gives solid, no nonsense advice, whether you are buying or selling, even if it's not always what you want to hear. I welcome anyone to call me about Fayaz... My email is mark@yourfranchisementor.com
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I am a DA for Extreme Pita and this is not a fishing exercise as I am the DA for Los Angeles ONLY. Yet my Subway inquiries come from across the USA
I am also an Business Broker for Subway LA and OC and I do not hide anything.
Being a DA for Ep does not take away my 20 years Subway experience as a multi unit franchisee, DA and broker.
I try to help people-if you don't not need it, step aside, as many others do need help.
Better still, why not call me and we can have brief chat and clear up matters that disturb you...949-253-4610
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I'm looking at a exsisting store that avg. sales are 9300/wk, food cost of an avg. 27%, labor cost avg. 25%, rent of 2187.92/month, all other expenses ie. power, gas, water, garbage, alarm, insurance run about $1250/month the store is not up for remodel until 2014. It's in a great location and seems to have lots of regulars. The store has been at this location maybe...12 years. The asking price is 450,000.00. What do you think? Did I give you enough info?
thanks for your help
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Hi Dean,
I ran a quick P&L based on the numbers you provided (and I think they are questionable), and showed that if the store were to run without you spending full time in the store it would net around $110K before taxes and any financing charges (add another $24K of income if you spent nearly full time). I wouldn't value that stream of income higher than 3x net income, or about $330K. I'd start out with an offer of 2.5x or $275K. Having said that, I'm concerned about some of the numbers: 27% food cost is too low. Here's the question to ask: Mr. Seller, if you add up your distributor purchases plus Coca-Cola purchases over the past 8 weeks and divide by your total sales, do you still come up with 27%? If he says the number comes from the WISR, that is a bogus number and ignores many costs. Second, ask the seller about the detail of the labor: how much is he/she working (both on schedule and off), or other family members that are being paid under the table. Rent is excellent for this volume, but you want to find out what the term of the lease is, and whether it is likely that rent can be preserved. Also, check where the $9300 weekly sales is coming from - is that the volume since the $5 Footlong began (store volumes have gone up 15-30% across the board) or is that what it was prior to the special? Does that help?
-Mark Leonard at www.YourFranchiseMentor.com
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Thanks for the reply Mark..
The owner only works on Wednesday and does payroll. No one else from his family works there. He has a manager that is very good at running the operation and seems to take ownership in the store (the employees would remain when store is sold..they say and I have no reason to doubt them)He pays the help better than other Subways I'm told. I'm getting the food cost and sales numbers off of the WISR and the combo report. I've have last weeks and I have one from last Oct. that the owner gave me back then. The report tells me that he's been doing about 9000/wk for a couple of years if I'm reading the reports correctly. The owner lease runs out in 2009 but thinks it would be renewed as is?? He tells me he has 350,000 in the place and makes about 100,000/yr. He seems to run a good store...I eat there a lot...always clean, seems to be steady no matter what time of the day it is. Could he be the exception?
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9300/wk store. Then asking price should be $9300 * 4 = $3,72,000. That is rule of thub about asking price. That said, $450,000.00 is way too much.
Second, is he owner/operator?
Third, Will his employees continue once you take over?
Fourth, Have you looked into lease?
First, you need to square out above facts. Then, look into the details of food cost and others. Because, if current owner is owner/operator and he is working there over 40 hours a week then foodcost/laborcost will stay in margin, otherwise it won't.
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Fayaz - I'm looking at buying a Subway in the Inland Empire. Owner says his rent & CAM are about $2600. He doesn't want to show me the WISR until we have a tentative agreement. What would his weekly sales need to be in order for this to be a profitable deal?
Also, I'm looking to buy a franchise. Any recommendations other than subway?
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I think you need to stop right there. He needs to show you the WISR before you have any kind of agreement. Here's a great tool that will help you pick a franchise that will suit your needs. http://href.nu/lk
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Strange guy who wants you to make an agreement before seeing some records
At the very least, get a Combo Report and send it to me for analysis
To answer your Qu
This store should be profitable at $6000 a week; the real Q is will that small profit be enough for you to live on , and/or service any debt you may incur on purchase. Secondly, is there any remodel due soon ? In my opinion, it is better to have this nice rent with a $8000+ a week store and pay a higher price for it. It's about more cash flow....you may call me to discuss further 949-253-4610
regards, fayaz 20 yrs with Subway
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The problem with such high rules of thumb are that if you follow them you are likely to get your thumb cut off after purchase.
30-35 weeks of sales is a more normal, acceptable and workable rule of thumb to start with-then make adjustments for lease, labor %, remodel,etc.
Also depends on buyer and seller desperation and motivations....
Fayaz Karim , 949-253-4610
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Fayaz Karim , 949-253-4610 - How is your side business going buddy? I suggest that you start new hotline number called 1-800-RipOff-Fayaz
Betty - Owner would not show any type of WISR report. Because, that is going to trigger thier managers and employees that owner is going to sell the store.
I think that it's fool's game to hire someone to analyze your potential stores records. You will be better off making decisions on your own.
Below are the things you need to look for:
Priorities:
(1) Combo Report
(2) Rent
(3) Remodeling date
(4) Lease Agreement
Foodcost/labor, other expenses and WISR falls behind. However, Fayaz won't agree with this because he needs to eat money off the buyers. But, I gave you these tips for free. It's your choice, don't waste your money on someone elses opinion.
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Abhi, I am sorry you have no appreciation for Professionals. You do a disservice to those who need independent advice and help. So I will not stoop down to your level.
I have helped many people get in and out of Subway and they appreciate my advice. But of course you know it all...
Fayaz
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Fayaz - I do have appreciation for Professionals. But, I don't agree with you here. You are typing your name and email in every single post so these innocent fox will email or phone you. That is not adive or help, but that is a rip off. If you really want to help them, then just write your honest opinion here other than having them call you. Once they call you and if they are not experience, they will easily pay you the fees for stuff they can do using their own common sense. That's all and about my rule of thumb of weekly gross * 4 = Asking Price, is the nation wide accepted rule of thumb for Subways.
P.S. - Lets not go down to level here. We are just having an argument here. We all know whose level is at where, Mr. Advertisement.
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Abhi, let us agree to disagree on some matters. Readers can follow your rule of thumb or mine it matters little to me as we are in cyberspace.
FYI-I was once in a DA meeting with about 200 DA's and one DA said to Len Axelrod.." I will never sell to another Patel in my territory". I wonder why...
Call me for a friendly chat so that you and I can clear the air between us. There is no charge for this contrary to your preconcieved notions...
Fayaz, 949-253-4610
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FYI-I was once in a DA meeting with about 200 DA's and one DA said to Len Axelrod.." I will never sell to another Patel in my territory". I wonder why...
To answer that question Fayaz, again, I don't want to go down to your level. But, lets not forget that 9/11 people were from your community and religion. Aren't they muslims? Opps did I go down to your level? Sorry, If I did.
May be, Subway DAs don't want to sale their Subways to Patels and that's why there are majority of the Subway owners here in States who are Patels and they just don't own one Subway my friend, but they own multiple Subways.
If you were so called DA then why are you selling your self on this forum? For free, I might add. Many DAs that I know in Subway field, who are well to do and they don't sell their self for money on online forums. They give advice for free and help other people.
Before finger pointing to my community or to my lastname, please first make sure that where you and your community came from.
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I do not mind people advertising their services for FREE on my site. However, I do mind racist comments. Please watch yourself or you will be banned from this forum.
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Site Admin - Do you think that I was racist? While Fayaz was finger point to my last name Patel? You wouldn't consider that a racist?
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Hi Dean,
Looks like my high estimate of $110K was about right. It's possible that labor is OK at 25%, but I would run a detailed 7-day hour-by-hour schedule just to make sure there aren't any discrepancies. I don't know where you live, so I don't know what the wage rates are either. Biggest flag is food cost. 27% is IMHO understated, particularly if it comes off the WISR, which tends not to report a lot of costs. What's been the impact of the $5 Footlong? A lot of stores are seeing 20-35% increases, with a 4-5% cost increase in food. The lease expiring next year is a big yellow flag: if the rent is below market, you can count on an increase. Talk to a local Commercial Real Estate Broker who is a tenant rep and get a sense from them (take him or her to nice lunch if you want to get the really good information). Other than that, there is the small issue of price. 4.5x income is way excessive for this kind of business. Walk away from it for a penny more than 3x proven income. Remember too that you will have franchise fees, training fees, transfer fees, inventory, and escrow fees before you become the owner. Maybe walk away from it anyhow: it's a rugged business, and you should be completely aware of what you are in for before you commit that much money...
-Mark Leonard at www.YourFranchiseMentor.com
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Yes, Mark is right. Lease is the yellow flag here. Many of my relatives wasted big bucks in due to lease. Best bet for you to contact Subway's lease person in charge of that store. Then, you contact the guys in charge of lease yourself and square out the confusion. Other than that, I am still convienced that you are paying way too much for that store. Negotiate with him....making him pay the transfer fees....did you inspect walk in coolers/freezers? What about speed owens? What about register?You need to check it all. If you sign the agreement, then make sure if any of those equipments are broken then seller will have to pay for it. Did Fayaz tell you all of these without charging you? Ummmmm NO
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Thanks Abhi for your advice. I will check in to the items you mentioned. I'll post later after I find out this info.
thanks
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Regarding the lease an Abhi's comments of 5-16
Buyer has no legal rght to talk to landlord regarding lease terms-seller and DA do have that right, so there is no incentive for landlord to talk to buyer. This is a sublease from DAI(Corp) and they like to control the negotiations with the DA. This is usually done at renewal time , about 6 months before expiry.
Cooler/freezers-if these were in bad shape they would be mentioned on the Monthly Evaluation report and if temps were bad you will know. Check the repairs bills on them to see maintenance
Make sure there is a service contract on the speed oven and cash reg.
Transfer fees can be negotiated, but the franchise agreement states that Seller pays it. The way seller gets it back is by having you reimburse him in escrow
Fayaz, 949-253-4610
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thanks Mark for your advice and your time! I appreciate it. Need to dig a little deeper into this. Bottom line though "asking to much"
thanks,
Dean
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Mark and Abhi are both right with the points they raise. Abhi and I have agreed to disagree on matters, but at least you are getting the right advice.
Your offer, if any, should be subject to getting 10 years more on the lease at a minimum. If the lease goes to market rate, you need to know what that is-call Mark he is an expert.
If you want to know more pitfalls to avoid call me-contrary to Abhi's post here, I have talked to a few on this blog at NO CHARGE. Isn't it strange that Abhi, who knows it all, could not help his relatives who "lost big bucks".
Had his relatives been in contact with me they might have saved some bucks.
THis store sounds like a good store but not at $450k
Ask the DA for the Subway checklist a buyer must complete before transfer-it has many questions you need answers on and will help you as you make the deal
And the reason I put my phone number in here is that I cannot type as fast as I can talk, and it is easier for me as one question leads to another and very soon it is a useful conversation...for you
Fayaz, 949-253-4610
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Fayaz, it's monday morning and I don't want to start war of words yet. But, I came into Subway business about two years ago and I learn about the pros/cons of the Subway through my relatives who lost/made big $$$ in Subways. It's their bread and butter.
Abhi, who knows it all? Haha, Fayaz, it's you who on here is blaming and claiming that you have been DA at Subway and you are offering your so called "services" to the prospective buyers on this forums. Shouldn't your "socalled" services be free to these members of the forums? Look at all of your comments you have listed so far, you are "teasing" the buyers on this forum by giving out two or three "not so complete" advices and then list your signature "Fayaz, 949-253-4610" call me so I can rip you off by giving you my charges.
I haven't done that yet and I am not going to do it either. All I am saying is that what knowledge I have in Subway field, I am willing to share it to my fellow friends here.
There are pros/cons with this Subway business. Again, it all comes down to how Owner is going to manage the store and how he is playing his cards.
Fayaz is only one rip off before enetering into Subway. After him, there are many more. For example, credit card companies, telephone reps, local sales rep, your employees (potential theifs of ur store) and many more. List just goes on and on. But, I don't blame Fayaz for this, after all he has to make a living!
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It was a comment made to everyone. I don't see why it's relevant to discuss racism when this blog is about franchise and franchisee issues.
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Site adminstrator and Abhi.
My comments ar not racist in any way-I merely put on the blog what I had heard many years ago from a DA in a meeting-he was the racist, not me. I probably speak the same native tongue as Abhi.
The DA comments also show how powerful a handful of DA's are and that they can be manipulative. Most are very decent and easy to deal with.
Lastly, in California I have to say it is a seller's market not a buyer's market for Subways as AUV's are higher here than most parts of the US and everybody wants to get in the CA system, which is almost closed to new franchisees.
But since the markets differ in USA, rules of thumb and such must vary; it must ultimately be about bottom line cash flow. By using two or three valuation methods and taking into consideration everything on this blog about leases, min wage etc, you will get a better sense of value. Lastly, Price and Value are different.
Thanks-no offense meant to anyone.
Fayaz 949-253-4610
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I do apologize from my end to Fayaz, I just got caught up in a heat of the moment.
Fayaz is on the money about DAs and their system. He is also right about some DAs hating on specific guys (patels or non-patels). One of my cousins moved here from FL just to buy a Subway. DA told him first to get an apartment, so cousin went on to sign the lease for an apartment. Then DA came back saying that he is not going to sell him the store. So, yes there is a lots and lots of discrimination going on from DAs offices to specific community. But, we gotta deal with it.
Also, after $5 footlongs, foodcost is going skyhigh and over beloved Subway fieldreps is saying that it only increased 2%, it did NOT, it increase on average about 4% but Fred won't let that number slip out. Stuff like that sometimes makes life hard to deal with. Otherwise, there is profit and money in Subway business. But, like I said before one has to play his cards right.
And, hey, if you are newbie, go for Fayaz to close the deal, if you don't mind paying some fees to him
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Site admin and Abhi. OK, all is well and we have moved on to a nice new topic.
$5.00 footlong promo
As an outsider to the system now, this is how I see it:
Your 10,000 a week store at 28% food cost(2,800) is now doing 12,500 at 32% or 4,000 food cost using Abhi's numbers
Your increase in sales was 2,500, for an increase in food cost for that week of 1200, but it throws 1,300 down to the bottom line(2500-1200) and that is almost pure profit - I did not consider overtime, or using more electricity and small incidentals like that. Most people would be very happy with that number even though it is only for a few weeks. This assumes you are already a profitable store and over break even
My suggestion would be to have at least 2 footlongs permenantly on the menu every week in rotation, owner chooses the two to rotate. Your customer obviously loves the deal !!
fayaz-949-253-4610
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Fayaz, yes the margin goes up and customer loves it as well. But, there is more to it than just a foodcost.
(1) Extra labor - I have to have extra guy to the regular staff just to keep the crowd moving.
(2) Customers - Some highscale customers don't care about $5 footlongs, but some other customers came into the store and left because Subs (i.e Chicken Bacon Ranch, Roast Beef, Teri Chicken) aren't $5 anymore.
(3) Supply/Demand - I used to order food at reinhard on average of $1200 a week at foodcost of 20-25% avg. But, after $5 footlong my average went up to $2200 with foodcost of 28-32% on avg.
(4) Customers Again - Some of the customers that come to my store put extra of every veggies on their $5 subs. Now, if there are 100 customers a week does extra veggies then that is also going to increase foodcost.
Customers weren't this way before, but after $5 footlong they stop ordering chips/drinks as well. All they do is come to the store only for footlongs and they don't bother ordering Tuna, Turkey or Ham. They always go for Chiken Bacon Ranch, Roast Beef etc.. I don't blame their either, I blame Damn Fred for this. He knew that with $5 footlongs foodcost is going to go skyhight, but that ain't gonna bother him. Why? Simple, because that is going to increase his royalty.
My stores previous weekly volume was $10000, but with $5 footlong, it went upto $14,000 and that is going to increase royalty from $1250 to $1750, that is difference of $500 a month. Also, a labor cost and extra food cost. So, afterall the profit margin don't go up. This ain't just my story but it is story from all the store owners except the ones whose avg volume was below $4500.
Also, some sellers wants to sell their stores now with volume going up. And guess what, who gave Fred an idea of $5 footlong? Patel based in FL. He did this $5 thing to his stores to increase the volume and Fred saw extra bling bling in that and rest is history.
Even Quizons are doing that, obviously that is affecting us franchisees but not Fred, all he cares about is his royalities.
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Abhi, glad we are communicating. I hear you on the extra costs and even after I have taken it into consideration, whether you take the 1300 I calculated or any number you calculate, the point is that your bottom line is better for those weeks than without the $5 promo.
You should stop worrying about Fred and what he makes, focus on how much more you make.
Here is an interesting analysis for you:
If you follow the % of sales rule of thumb (50-80%) see how much more your store is worth with higher sales. So for example if your store went up to 14k, you had an extra 4k in sales for 7(?) weeks of promo, or 28k. STORE Value based on 50-80% of sales went up 14k-22.4k
Now look at the TIMES earnings formula Mark suggested at between 2 and 3 times earnings, if your 28k brought you an extra 8k(?) in earnings, then it added value by 16k-24k per year and that earnings will be shown in the P&L at the end of the year, whereas your dramatic sales incease may level off and might be treated as a one time effect and good fortune and dismissed accordingly. In other words buyers will say your store is still a 10k store not a 14k store anymore.
Fayaz 949-253-4610
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Good analysis Fayaz. I still need to dig into that once I get free time
Now, Subway is going to promote expensive regular Subs for $6 price and the rest will be at $5 price. But, the premiere subs will be still at regular price accordingly. I wonder why they didn't go with above formula to in the beginning.
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Not all subway's go this way. I own a very successful one that attracts many, and we have two in our small city. You may think that you are doing the right thing by cutting down others plans, they can do what they want and can be very successful!
You should be ashamed.
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Idiots - Are you taking to me boy?
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Subway does not have to give you the test copy or the detail results. You get a pass or fail, THAT'S IT.
If you feel you passed, you probably answered all your questions correctly, but YOU DID NOT ANSWER ENOUGH questions and did not finish the test. If you answered all questions and finished the test, then you just failed , that is all. You can do another test within 1 year I think.
Fayaz , former DA and owner. 949-253-4610
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I have read all of the drawbacks about owning a Subway franchise, but I feel with the number of franchisees out there, someone must be making money. That being said, owning a Subway has been a dream of mine for over 5 years, and the moment is getting close. I am in the due diligence phase, and will be sending the last of the paperwork to HQ later this week. I would like to ask some seasoned owners about their experiences with maintenance and insurance.
The store I am looking at does about $20,300/month. The owner owns 9 stores, and he is selling off his stores doing less than $5,000/wk because he just doesn't have the time to really be able to monitor costs. He said an owner/operator would do much better. I have obtained the combo report, WISR, and income statements. My question is, the owner's income statement shows maintenance about $450/month and insurance about $415/month. I mentioned to the owner that those figures seem quite high for a low volume store. He said his accountant doesn't carefully track those expenses by store, and essentially allocates the expenses to the individual stores based on sales. Thus, his higher volume stores are inflating those numbers, and they aren't realistic of the store. He said a more accurate maintenance expense would be about $250/month and insurance about $315/month. Do these expenses appear reasonable? In case you're wondering, the other major expenses are as follows:
COGS: $7,100 (about 35%)
Royalties: $1654
Advertising: $800
Payroll: $4,500
Rent: $2,050
Utilities: $900
Payroll taxes: $570
Credit Card fees: $350
He claims to clear about $1,400/month on this store. The store was built in 2001 so it needs updated to the Tuscany decor. This is estimated to cost about $30,000. He is willing to take $68,000 for everything (including opening inventory). Thus, I would have a store for under $100,000.
I would also like to ask 2 more questions for the experienced members:
1) Does $30,000 for the Tuscany remodel sound about right? I did some research with contractors, and this seems reasonable for 1,100 square ft.
2) The WISR lists the FAF as 3.5%. I know it is 4.5%, but the owner said it varies depending on when the franchise agreement was signed. Has anyone else heard of this?
The only drawback of this store is the payroll doesn't include a full-time manager (she is shared with 2 other stores). I will take over as manager. I realize that if a full-time manger is employed the store will barely be profitable at current sales volume. I can make a comfortable loan payment with the current cash flow, and it would be even better if I can get a waiver on the 98 hour rule. I would just like some feedback on the 3 questions I posed.
Thanks in advance for all of the advice on this board. The experiences I have read about have already proven valuable in pursuing a store of my own.
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My friend - How much are you willing to spend? It all boils down to that.
(1) $100,000 for a store which does below $5000 a week is a SWEET DEAL.
(2) Tuscany remodel - I don't know what is Tuscany remodel, but regular remodeling is ATLEAST $50,000 to $70,000 on average.
(3) Should you buy this store? I'd say HELL YES. Why not? But, be prepared to work 60 to 70 hours a week behind this store.
Think about it this way.....average asking price of a store which does $5000 a week is about $200,000. OK, he is willing to unleash this store for half the price. NOT A BAD DEAL.
Those prices that his accountant showed on P/L statements! Don't pay attention to them my friend! Why? Because it's BS, anyone can make that up. HELLO!!!!!
Things to look out for......
Rent: $2,050 (you can't reduce this)
Payroll: $4,500 (you sure as HELL can redue this by working more than 50 hours a week(
Payroll taxes: $570 (damn gov)
Royalties: $1654 (can't reduce this either)
Utilities: $900 (damn sure, you can reduce this.....keep an eye open for water....don't run unnecessary lights all day long in a store....don't keep the over ON all the time...keep it on SNOOZE etc etc)
Credit Card fees: $350 (you should be able to reduce this, when you take over...you do have an option to re-negotiate contract with credit card company)
Advertising: $800 (can't reduce this)
COGS: $7,100 (I believe this is foodcost, if it is....then current employees are stealing from the store....there ain't no way in HELL foodcost goes up to 35%)
Now, you can significantly reduce above expenses....foodcost, payroll, utility and credit card fees.......YES YOU CAN!
Let me tell you.....two years ago, I bought store which was doing $5000 a week and I paid freaking $200,000 for it. And next year I am going to be paying for remodeling of the store as well........in two years.....my store is almost paid off....how? By applying above factors.....yes, I am owner/operator and my wife works there as well.....we are almost there 6 days a week from open till 6 in the evening and make sure everything runs well.
We count bread, cups, wraps etc etc every single day to make sure that none of those items are short.......if they are short....the employee who was running the register will pay for it......SIMPLE RULE
It's your dream and don't let it ruin....you can do it....you will just have to put time/energy in it for couple of years....once your store is paid off....you can work couple more years...earn some more and go ahead and sell it.....
I did the same.....I bought the store while it was doing $5000 a week and I boost sale up to $6000 a week and I just closed a contract on it...I am selling the store for $230,000...My monthly rent is $1900, not much of a different.....my point is that you can do it....Subway people are not as bad as people on this forum picture them to be....they are easy to deal with as long as you keep the store clean and out of compliance issues.
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Well, I tend to disagree with you on some of the more important topics:
1. 100K for a store with *revenue* of 5K a week is expensive, it's not "a sweet deal". Mind you, revenue isn't what counts, profit is...From the costs mentioned above we arrive at a total of 18000K. That leaves 2K of GROSS profit (because not all costs are mentioned in the above...! And neither are taxes). So, a bad deal.
2. You say an accountant makes things up? For sure a CPA doesn't. So yes, DO LOOK at the P&L the accountant provides, but make sure it's a real CPA who drafted the P&L.
3. There isn't much that he can reduce in costs; for sure not the credit card fees, and probably utilities neither. And working more than 50 hours a week as a way to reduce payroll? Well, that's a way of properly planning a business...
Remarkable that you are "only" selling your store for 230K. That's a 15% GROSS increase, whereas your sales went up by 20%. The value increase should have been much higher. (fixed costs...).
All in all, what I mean to say is: it's a lot of crap, SW...
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If I recall, your one of them MBA holder so called "millionare" from Europe??
haha, man or hermaphrodite, are you still here?
If you are millionare, to whom, Subway DA was going to offer you five Subways at once, you rejected that offer! hahahahaha comon, give me a break!
Now, you are going to come out in this forum and start discouraging other users NOT to buy Subway? Are you pissed that you can't get into Subway, that's why, you are deteremined enough NOT to let others buy Subways too?
In all of your posts on this forum, you are talking craps about Subway and their formulas and how Subway franchisee don't make anything. Well, if that's the case they why there are these many Subways OPEN and RUNNING in USA USA USA USA USA USA USA USA USA, NOT EUROPE.
That said, take your smart comments back to Europe and discourage another European owners about Subway not American ones!
There are over 50% of Subway owners who are happy with their business.
Sorry my European friend, you can't get approved for Subway.
Hey, Quiznos is taking applications!
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There we go again: typical childish bad mouthing from your average "Joe tough guy": no arguments, but bad mouthing. Figures...
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There we go again: typical childish bad mouthing from your average "Joe tough guy": no arguments, but bad mouthing. Figures...(And quit bragging about "I/we make money with SW: if you need to work 80 hours a week to make some money you are NOT making money...Yes, the difference is probably for a great deal in the MBA, true. Btw, see that dollar exchange rate?...)
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Btw, I forgot: quit bragging about how you and some of your palls make money: if you need to work 80 hours a week in order to get some pennies in you are *NOT* making money, and neither are you when one of your "key competitive factors" is watching your staff, like some Mrs. Marple, to see if they by any chance are stealing a sandwich from you. Because if that's how your P&L looks like then trust me: you are in the deep shit that is called SW.
Btw, noticed the exchange rate of the USD lately? ...
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Agreeing with Bridman....bbbbbb....Birdman!
Ladies and Gentleman - Let me make this clear....this European man "Yes_a_complete_fool" did NOT got approved for a store in SW, that's why he is taking his anger out on this forum and he is encouraging other buyers NOT to buy SW business.
If he is right about everything, then why there are these many SW owners who are driving this expensive cars and living in half million dollar houses?
It ain't Subways fault if you CAN NOT handle or manage the store.
This European fool is some high school nerd who reads up on CNN about latest US news and copy & paste it on this forums and trying to tell other fellows that he is very konwledgable about everything..
If that's the case, then why he posted these many entires on this forum. He even lied that SW DA offered to sell him five Subways at once (HAHAHAHAHA, BIGGEST JOKE OF CENTURY) but he denied saying that he don't want it because SW has weak formula.
Folks - it's up to ya'll to believe him. But, I am proven SW multi store owner and have been in this business for more than a decade. I have been living upper middle class lifestyle. And, my retirement will come early once I sell my stores.
Don't be mislead by this European fool the tool. Follow your dream and you will retire early too.
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Sigh...
To answer your question: people of the USA tend to live in big houses because they loan money wherever they can. didn't you read the news for the last 2 years? The bubble has bursted in the USA, it's going down (!) The whole world has lost it's fate in the USA, were's withdrawing our funds (yes, we've financed you for the past 20 years...).
Sigh. To think some of the brightest people I know are from the USA. And then I have to cope with this...
Guess what, "Joe": we over in Europe are decapitalizing the USA and are investing into more stable continents...
Oh, and, btw, the topic here was: SW sucks!
(Not how the USA has lost it's place in the world thanks to no-brainers like you and "Birdman"
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What?
Did I saw the name not_complete_fool
No, your name should be......110%_Complete_fool_from_Europe
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I take it you too are a fine lad from the USA, since you are referring to Europe? But, I fail to see what Europe has got to do with it. I mean, it would be the same like me getting Irak into the discussion, or Afghanistan, or the weak economy of the USA, or their money scams with the banks, or the big bubble they call the value of a house in the USA, and the big bubble called Down Jones, and the lack of ... etcetera. Well, I guess, you get my point: please keep it to the point...
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Bridman.....what? Birdman......
Hey European man - I don't know what you mean man! First, you live in Europe....that's end of discussion....second, you didn't got approved for SW.....that's why you are jealous at other ppl who are making money off SW and potential buyers....you are trying to scare them off.......Thrid, didn't I say you live in Europe? hahaha.......Hey, listen....WE LIVE IN USA.....#1 country in world...no matter how many recessions we will get....we will still be #1 in world....no matter how many wars we go to....we will be still #1....no matter how low housing market will go....we will be still #1....but, I see you staying in Europe, hiding behind ur computer desk, talk and write big about your MBA degree and your hate for SW.....if you would have spend these much energy in McDonalds....maybe by now, they could have granted you to Manager role, haha.......
Birdman.....b b b b Birdman.....what?
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Thank you for your feedback. There were smaller miscellaneous costs I did not mention (laundry, uniforms, etc) and let's not forget about maintenance and insurance. There is a gross profit of a bit less than $1,400/month. I will be owner/operator, but I'm also not looking to buy myself a job. Food cost has gone up with the $5 foot long specials, so I don't think 35% is totally out of line. After reading all of these posts I think the owner is too high (especially considering the remodel). A $98,000, 7 year loan at 8% interest would require a payment of $1527 (I'm ignoring my own contribution for this purpose). It will be back to the negotiating table.
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Hi
Yes, but still you don't have all the other costs. Think about your transportation, communication, office furniture (depreciation), whatever: the list is long (!) What you would need to look at is the so-called "elasticity" (hope I spell it right: too lazy to look it up and English is not my native language
And I agree with you, food cost will go up even more. However, I think you have the right attitude: this "Fred" that replied above is one of wishful thinking, you, on the other hand, look at less "optimal" scenarios.
Don't let them fool you
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"Think about your transportation, communication, office furniture (depreciation), whatever: the list is long (!)"
What in the Blue hell!!!!! How many big multimillion companies offer transportation? hahahaha, maaaaain....this European strange boy is really cracking me up.
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Oh man, I am getting tired of you...(!) Read up again on what I wrote, then go back and try to finish elementary school and then again read up on what I wrote, so you perhaps sometime in the far (!) future understand what I wrote here.
I feel really sorry for you, no brains whatsoever. And quit referring to my European origin: you don't want to know what the rest of the world thinks about the USA...(my guess is you do know: we, the global community, are ending our financing of the biggest bubble that ever existed: the USA. And it's not because of the fine people the USA has (lots of them! Including some of the members that post here), no it's exactly because of people like you. The world has had enough of those people of the USA...
Sigh,
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BirdMan B B B B BirdMan........What?
Hey European man - What the rest of the world think about USA? They think that USA is their boss, it's that simple. And, Europe, hahahahahahaha, Europe ain't one country...it's mix of small iny winy tiny biny countires...who thinks they are as big and as strong as USA.......
The world has had enough of those people of the USA....that says a lot about you European man.
I can understand that your depressed and jealous....
(1) because you didn't got approved for Subway franchissee
(2) because you also didn't got approved to be US Citizen
It ain't my fault that you are in Europe and you are European. You guys live in small houses and you guys drives small cars. Us Americans love everything BIG...from money to cars to houses.
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"Us Americans love everything BIG...from money to cars to houses."
And loans, and bubbles
I really feel sorry for you: you are the prototype of the blue collar worker in the USA, who votes for Bush and makes sure the rest world loves the USA.
Ehrm, about Europe: I guess Fox networks didn't tell you Europe is bigger than the USA (markets, financials, people), and the dollar is sinking more and more as the EUR is rising since the *whole* world is putting it's trust in the EUR, since the dollar can't be saved anymore. And perhaps you don't know it, but we Europeans and our fellows in Asia are financing the bubble that is called "the land of opportunities, the USA". Yes, that's right, Joe, if we didn't finance you, the USA couldn't buy anything anymore. So quit bringing in these false arguments, because attacking Europe is stupid...
What remains is: I *do* feel very sorry for you. How do you get through life when you have such a narrow view of the world?
Finally, the point being here is: SW sucks.
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I forgot, about the "car"-thing (this is a laugh!):
Name me one USA-car that can compete with the European cars like Audi, BMW, Mercedes-Benz, Maybach, Rolls-Royce, Daimler, Ferrari, Masserati, bladibladibladibla...
And how about our friends (our's, not yours...) from Asia, like Toyota, Honda, Nissan, Infinity,...?
Bladibladibla...
Oh man, really, I am glad I sold my property in NYC
Still, I am not fighting against the USA as a whole: I have a lot of friends there, it's just I don't like stupid people like you, who don't realize the USA has a different place in the world now than it had 20 years ago
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I forgot, about the "car"-thing (this is a laugh!):
Name me one USA-car that can compete with the European cars like Audi, BMW, Mercedes-Benz, Maybach, Rolls-Royce, Daimler, Ferrari, Masserati, bladibladibladibla...
And how about our friends (our's, not yours...) from Asia, like Toyota, Honda, Nissan, Infinity,...?
Bladibladibla...
Oh man, really, I am glad I sold my property in NYC
Still, I am not fighting against the USA as a whole: I have a lot of friends there, it's just I don't like stupid people like you, who don't realize the USA has a different place in the world now than it had 20 years ago, and think they can still piss on us people in Europe, South-America, and Asia.
Realize: the USA stood still for 20 years thanks to "Oprah", while we all in the rest of the world moved on
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Hi Eric, it sounds like you are starting to understand the realities of this business. There is a lot of yelling going on elsewhere in this thread, including from an existing franchisee who for some reason is unwilling to reveal his real name, but is faking the franchisor's name. But through his encouragement, I think you can see the realities of the business: work 70-80 hours a week, and watch your employees like a hawk. I would agree with him that this is what it takes to be successful. Some people can do it, others can't: it's up to you. In my humble opinion, buying a low-volume store that needs to be remodeled that a successful franchisee can't make work is a recipe for losing all your money while working 70-80 hours per week. And I do think that buying a Subway, especially just one store, is in most cases paying a lot of money for a low-paying job. Is that the highest and best use of your talent?
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Mark - Yes, I am existing franchisor in USA who is unwilling to display his name for various reasons. I won't give you the reasons, I don't have to.
Now, working 70-80 hours a week. How did you come up with that number? Is that a stereotype that every existing franchisees work 70-80 hours a week to make a living? NO. I don't work 70-80 hours a week. And, watch your employees like a hawk. What is wrong iwth that??
If you go on to spend half million $$$ on a store and see your employees "hooking up" their gfs, bfs, family and friends with free subs and drinks. What would you do? That's the reason many Subway owners are FAILURE in this industry. Manage what you can handle!!!!
I bought two stores...one with weekly business of $5000 and other with weekly business of $11,000. In both stores, existing owners weren't happy with their stores...just like every other people on this forum. They were ending up blaming it all on Subway, just like everyone else on this forum. But, why they can't blame on themselves? Whey they can't manage it?
I took over both of those stores. Put people in place, re-org staff, hired new team lead and currently managing both stores successfully. Not to mention, I am pulling over $15,000 monthly income with these two stores....with me working close to 40 hours a week. These are the exact two stores where previous owners were bitching about it.
Point is that, one has to go inside and learn the business inside out, learn their employees, learn managing style etc etc....if you don't want to do that then this is not the business for you.
In McDonalds, you can buy it and still make $ without being at the store 40 hours a week. But, investment in McDonalds is not as small as Subways investment.
Eric - Key is that, if you are planning on having one or two stores....do what I did....learn everything and manage your employees properly. If you will NOT manage them, then they will act like they are your boss. If any of my employees try to ditch me, I show them the door. You have to be strick. It's tough business ot be in, but $ is there.
If you are planning on having more than two stores, then you can loosen up on your employees, becaues you will be still getting little profits from different stores and at the end of the day, it will all add up.
So, don't listen to these guys here. They are here to discourge you, simple story....because they haven't been successfull in SW. Follow your dream and go for it.
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Agree with you that you can't blame all of it on SW. True. But then again, the formula is one of the weakest in the business, in my humble opinion. Low margins, no "partnership" with SW but just "shut up and pay" and "we sue if we can". I've read their contracts when they offered me their stores here in Europe, and what remains is: it's a crap offer. Like Mark posted before: you're actually buying a low-paying job. The ROI is zero.
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Hi Mark,
Agree with you about the "paying a lot of money for a low-paying job".
Weird that people don't see that if you need to work 70-80 hours a week and think that is "normal business", that things are very wrong then.
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Thanks, not-a-complete fool. I think the answer is a little more nuanced, and I would not make the claim that 60-80 hours per week is wrong. For some, it is really a perfect business. The other writer with whom you have been engaged in a "dialog" is very happy. He says he is making $15K per month working 40 hours, but I also get the sense that his wife is working at least as many hours. But he is clearly a happy camper! For many others, it is a total trap: too much invested, too many loans to pay off, long hours, too much rent, not enough volume, labor cost too high, 7 day per week pressure. It's not a matter of blaming SW: it is simply how the game is set up. If the owners' expectation is to work long hard hours, pay off the loans, watch everyone like a hawk, then it is fine as long as the initial deal (location/rent) is good. The challenge is when people are misled by all the hype that the franchisor (SW or Q or any other franchisor) is some benevolent uncle who is really looking out for the well-being of the franchisee. Wrong. The franchisor cares primarily about increasing system-wide sales. If the franchisee can make some money under this umbrella, fine; if not, too bad. My primary purpose in contributing to this site is to let people know what the real story is, and then they can make a truly informed choice.
Mark@YourFranchiseMentor.com
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Yes and No.
Yes, Subway don't care as long as they are getting their 12.5% fees. And, that's why they bump promotion of $5 footlongs. Nationwide sales went up and SW's discount went up as well, but what others don't know is that our foodcost went up as well. So, overall eventhough business volume went up, we the owners still make the same or even less. Because, more and more customers are attracted to $5 footlongs now.
But, Subway people aren't totally careless about their franchisors either. Because, I owned one $5000 a week store and to bump up the sales, they input new marketing strategy, which ran up to $2000 and Subway paid for all of that. So, I wouldn't say that Subway people are whole and sole concerned about 12.5% only, but yes that's their major concern. Yet again, they do care about existing stores and their volumes....that's the reason they send out monthly field inspectors!!!!
Now, about my wife working 40 hours a week! Well, everyone is US household works 40 hours a week, regardless of jobs, right? She don't work 40 hours a week but her presense is there when some employess calls in.
Now, about 15k a month after TAXES. You tell me, Directors/Managers/PMs etc etc at big multimillion dollar companies.....do they make 15k a month after TAXES? If they do....how much of a stress they go through? What is the job security?
That said, yes Subway is profitable business but if owner won't pay attention to it then it won't be that profitable.
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"The franchisor cares primarily about increasing system-wide sales. If the franchisee can make some money under this umbrella, fine; if not, too bad."
Excellent perception!
But that way of working of SW is not what constitutes "franchising" as respectable companies do.
For some reason I sense you have a lot of brains
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Eric, I am going to make a very strong statement here: WAKE UP! You have had a "dream" to own a Subway for 5 years - your dream is about to turn into a nightmare.
This store is owned by a successful franchisee, who has not been able to figure out how to make this dog work. The store is out of compliance from the minute you take over since Tuscany upgrades were due to be completed ages ago. Is $30K right? Maybe, maybe not. Many times you'll start the upgrade, and then the city will demand an ADA compliant bathroom: add $20K. You'll discover your equipment is beyond repair: add $10-20K. Plus, you may have to shut your store down for a week or two, or four, or six. Add $10-20K. Plus, lose all your employees. Finally, what practical experience do you have managing contractors, permitting, architects, Subway resources, etc? Your seller has a lot more experience. Why hasn't he upgraded?
My advice: make the seller do the upgrade before you even consider buying the store.
Do the math on the payroll, and do not count on receiving a waiver regarding 98 hours. You must have 2 people there at all times, 7 days per week. Even if your store miraculously receives a waiver, and you get to 82 hours, you'll still need 120-130 hours of labor, plus your own 40-50 hours. Do the math!!! Create a spreadsheet schedule showing 2 employees 7 days per week, plus 3 at lunch.
You will have invested at least $20K of your own money, be on the hook for $80-125K, working 50 hours per week, and taking home $0.00. Why would you do that?
When you then figure out what a loser this is, you'll try to sell it. If you have not gotten the volume up significantly, you might be able to sell it for $30-50K, losing another $70-100K.
Your seller, obviously a successful franchisee, is trying to unload a dog from his portfolio. Your "dream" is clouding your judgment.
My sense is that you are not doing proper due diligence. You are only attempting to justify your dream. Great pain awaits you...
My bluntness, bordering on rudeness, is my last, best, compassionate attempt to prevent you from making a colossal mistake.
Call me if you'd like me to elaborate even further. Mark Leonard, mark@YourFranchiseMentor.com, 415-354-2388.
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