For several years, Subway was at the top of its game, opening up locations across the US like they were Starbucks. But all good things must come to an end, and that is a hard reality that the American fast food sandwich chain has had to face in the past year. Though while Subway is tackling its challenges at home, there is one bright spot in the company’s future… and that is Germany.
The German market is currently flourishing for Subway, with six consecutive years of growth. Part of its success has to do with the public growing tired of the standard fast-food chains at the top, including McDonald’s and Burger King.
“McDonald’s dominates the German market so much that it bores people”“McDonald’s dominates the German market so much that it bores people,” economist Gerrit Heinemann of the University of Applied Sciences Niederrhein told German newspaper Welt. “There are certain saturation limits in the food industry, which have been exceeded at McDonald’s and that Subway has not yet reached.”
One major competitive advantage Subway has is its smaller physical footprint for franchise locations. It is not uncommon to find a Subway tucked away inside underpasses, side streets of city centers or gas stations. That ability to set up in locations market leaders would deem unsuitable means the financial investment to open a new Subway is considerably smaller.
Subway has also found recent success with delivery partnerships, teaming up with Delivery Hero to expand sandwich delivery to more than 30 German cities. Plus, over the next year, the company will open 25 new branches at Shell gas stations as part of a new partnership the two companies recently reached.
Of course, much of the troubles Subway are currently facing in the US could be right around the corner for Germany should the chain not learn from its mistakes back home. But for now, Germany’s status as an emerging market for Subway is giving the chain some hope of continued success in the future should the situation at home continue to decline.