Funds for College Tuition
In 1965, 17-year-old Fred Deluca was looking for a way to raise funds for his college tuition. Upon the advice of a close friend and a $1000 loan, he decided to open up a small sandwich shop named “Pete’s Super Submarines” in Milford, Connecticut. It wasn’t until the opening of his 3rd store, the first store named “Subway”, that he was able to turn a significant profit. This was the turning point for Deluca, he decided to pursue a career in the food industry as opposed to the medical field that he was saving up money for.
Deluca made a goal to open 30 stores but by 1974, he realized he could not achieve that goal and manage the stores by himself. He convinced a friend, Brian Dixon, to open the first Subway franchise in Wallingford, New Haven in 1974. That same year, they were able to open 14 more franchise restaurants. By 1978, the 100th Subway store was opened. In 1984, the first international restaurant was opened in Bahrain. The company grew substantially rather quickly and there were 10,000 stores by 1998. By 2013
How it works
Deluca set for the principles for Subway making it mandatory that every franchise adheres to the pillars of high quality, fresh food, and customer satisfaction. In the pursuit of freshness, Subway mandated that all bread be baked in the restaurant. In 2000, Jared Fogle joined the company as the brand ambassador. He lost 245 lbs by eating only 2 Subway subs a day and doing light exercise. This further boosted Subways fresh food motto and it became the company’s Corporate Social Responsibility to make ‘better-for-you’ food options available. Carroll’s four-part definition of CSR was originally stated as follows: “Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time” (Carroll, 1979). Subway followed Carroll’s view of corporate social responsibility fulfilling an ethical responsibility by providing cheap healthy food options unlike McDonald’s, who has been sued on various occasions for serving food that can make people obese.
Subway, became the largest franchise network in the world, with approximately 43,700 locations worldwide, has been on a downward spiral in the United States since 2015 (Teixeira, 2018). From 2015 to 2017, about 1,221 franchise locations were closed. The downward spiral has been attributed to the passing of founder Fred Deluca and the pedophilia scandal involving brand ambassador Jared Fogle. Additionally, the rapid expansion of franchises has stifled the profit margin for many of the stores. Since Deluca’s passing, his sister took over the company as CEO and will be naming a new CEO in the near future. The company, like many other companies, is likely to suffer a bit during the management change.