Expansion on Horizon

After guiding Subway APAC successfully through the COVID-19 pandemic, region President Eric Foo is focusing on the coming years and some ambitious expansion plans.

“Subway is on an exciting multi-year transformation journey to improve across all aspects of our business,” Foo says.

“Over the last few years, even with the pandemic, we have achieved several milestones, such as delivering significant sales growth, expanding our brand presence on digital platforms and entering a new market – Indonesia – through the first master franchise agreement in the Asia–Pacific.

“If you look at the next five years, we should probably be nearly doubling the number of restaurants that we have. In the next 10 years, we could be looking at three times of what we have today. So that’s the scale that we’re looking at.”

“We will continue to drive advertising, continue to drive menu innovation, continue to drive brand advertising to make sure that there is top-of-mind awareness.”

He believes that the Asia–Pacific remains the growth engine for many companies, and the growth trajectory is not expected to change, given the size of the population and growing affluence in the region. 

At present, there are almost 3,600 Subway restaurants in the region alone. Foo is focused on supporting these franchisees in a number of ways.

“We will continue to drive advertising and menu innovation, to ensure that there is stronger top-of-mind awareness and excitement among our guests. We continue to see increasing demand for freshly made, craveable, better-for-you food that is accessible,” he says.

“Just as important, we are making sure that Subway restaurants are in the right locations and right formats. We have expanded our non-traditional fleet including drive-throughs in key markets.

“At the same time, we’ve focused on training our franchisees to elevate operational excellence, so we give our guests the best experience possible when they come to our restaurants – each and every time.”

Expansion Roadblocks

While expansion is normally a good sign for a business, it still includes several challenges for Foo, including finding investors who are interested in those expansion markets. For example, in the Philippines, Foo has not found any credible investors who are willing to take up the local market.

“The Philippines is a fantastic growth market. Over the last few years, Subway’s average restaurant sales have grown by more than 30 percent, and we want to attract a well-resourced partner that can help ensure that we remain competitive for years to come,” he says.

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“We have a fantastic relationship with Eric and the team at Subway APAC. The direction of the Subway brand has never been so exciting, and Eric’s strong leadership will unlock the growth potential of Subway in the Asia–Pacific region.” – Duane Barber, President and CEO, IPC Asia–Pacific

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Another more obvious challenge is the new market itself.

“When do we want to start getting the new markets, and where we are able to have the bandwidth to start, we will basically be opening up new markets and again inviting potential investors to basically invest in those markets,” Foo explains.

 A key differentiator for Subway is its relatively lower capital expenditure and highly competitive unit level economics, compared to traditional quick service restaurant (QSR) players.

Subway also has a flexible footprint, making it easy to open a restaurant just about anywhere – from malls and high streets to universities, hospitals, transport hubs, petrol stations and convenience stores. That said, the profit and loss and economics need to work for franchisees.

“We are committed to offer food that not only tastes good, but also helps our guests feel good about making a healthier choice.”

The company enjoys what Foo describes as a very strong competitive advantage that is relevant and also recognized by consumers. “The first one you probably know is the fact that we offer a much healthier option than all the other QSRs, and this is something that we have,” Foo says.

“If you talk to your friends and family and ask them what is Subway, the first thing that comes to mind is that the food is much healthier. So we continue to want to leverage on that brand positioning.

“We are committed to offering food that not only tastes good, but also helps our guests feel good about making a healthier choice.”

Looking Ahead

Foo’s overall goal as President is to continue to drive the expansion of the business all around the Asia–Pacific region.

“While our day job continues to be maintaining franchise profitability for our franchisees, we talk about supply chain, brand standards and operation excellence, so that’s still the day job,” he says.

Then there is the expansion plan, and continuing to look out for potential qualified, well-resourced investors who understand QSR businesses and want to join Subway.

“In many of the countries identified, Subway has not even started,” Foo says.

Now that sounds like food for thought.