The Economic Times: May, 2015
New Delhi: Fastfood chain Subway, which runs over 500 franchise stores in India, plans to increase the number of local outlets to 2,000 in the next five years, according to its country head, Manpreet Gulri.
At a time when most food chains are going slow on their business expansion plans due to sluggish demand, Gulri is aiming to widen Subway India's network with franchise partners.
"An important factor fuelling our growth is that a lot of Indians who live abroad know the brand and its business model. The largest Indian communities holding Subway in the US are the Patels and Singhs. The word-of-mouth from them is fuelling our growth in India," Gulri told ET. "We want to grow organically; the target is 2,000 in 2020."
The American brand has divided India's geography into seven sub-regions and delegated franchise responsibility to its development agents. Of the seven sub-regions, Gulri handles four—north, west and south; other business agents report to him for franchise developments in their allotted regions.
It all started in 2000, when Gulri was studying abroad and used to depend on sandwiches. "That's how the idea evolved. I wanted to bring Subway to India for its healthy meals and opened our first store at PVR Saket, New Delhi," Gulri recalls. Today, about 60% of the Subway franchisees have multiple units running in the regions.
According to Gulri, Subway's standalone stores need an investment of Rs 55-60 lakh; in a food court it is reduced to Rs 30-35 lakh. Globally, Subway has more than 43,800 restaurants spread across 110 countries. This makes Subway the world's largest sandwich franchise restaurant chain in the world.
"I think because the brand is so old and we have been franchising for so long, there is precedence for every problem," Gulri said. The brand is franchising for almost more than 40 years now and running its franchise models in 110 countries.
But all this was not easy for Gulri. In order to make the model work in India, he identified some key challenges and turned them in his favour. "It was a difficult task to introduce cold sandwiches to Indian audiences. We also realised that a large pie of community is vegetarian in the country. Thus we started opening two counters at store level—for vegetarians and non-vegetarians—separately only for India," Gulri said. The initiative pushed up sales in cities like Ahmedabad and Mumbai which have a sizable vegetarian population.
Customisation of menu and fixing the product in front of the customer were the other initiatives that paid off. "We gained lot of trust and acceptability from our audience," Gulri said, adding that several local tastes were introduced such as 'paneer tikka', 'chicken tandoori' and 'harabhara kebab'. Internationally, Subway sells 16 different sandwiches, but in India, the food chain has 23 sandwiches on its menu.
Currently, Gulri is focusing on boosting the production capacity from vendors and ramping up the supply chain to widen the network. "This would later bring economies of scale when we will have more outlets in future," he said.