The Business Times

Working with franchisees key to Subway’s Apac expansion plans

Vivienne Tay
Published Fri, Sep 9, 2022 · 05:00 PM

AMERICAN sandwich maker Subway has 3,300 restaurants across 15 markets – but only 9 per cent of these restaurants are in the fast-growing Asia-Pacific (Apac) region.

To double the number of its Apac restaurants in the next 5 years, Subway Asia-Pacific president Eric Foo is hoping to lean on the group’s franchise model.

The group has its sights set on Indochina, including Vietnam, which has a lot of untapped opportunities, but finding the right local partner to raise its store count is key in the expansion equation.

“Local operators are key to helping us break into new markets and navigating cultural and regulatory differences so that we can grow quickly and efficiently,” he said.

Franchisees who understand Subway’s business and the market in which it operates will also be able to achieve economies of scale quickly and turn a profit, he added. A master franchisee operating multiple stores would also be able to enjoy cost savings from bulk-importing fresh ingredients.

In May, Subway inked a master franchise deal with Pegacorn, a partner since 2019, to expand its presence in West Malaysia. Under this deal, Pegacorn will open 500 new Subway outlets across Peninsular Malaysia in the next decade.

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The franchising deal follows 2 similar agreements in Indonesia and Thailand. In February, Subway signed a master franchise development agreement with About Passion Co to open 700 new Subway locations in Thailand over the next 10 years.

It also partnered with Sari Sandwich Indonesia, an indirect subsidiary of Indonesia Stock Exchange-listed retailer Mitra Adiperkasa, which manages over 150 brands including Starbucks, Burger King and Krispy Kreme.

Beyond creating scale, Subway is pursuing sustainability in its packaging.

In the Apac region, the company has committed to meet industry standards for recyclable and compostable consumer packaging by 2025. Foo said Subway is working with its suppliers to move its full packaging portfolio towards greener options.

“As we move towards agreements with master franchisees in certain areas across the Asia-Pacific, we’re seeking partners with similar values to Subway and encouraging our partners to adopt best practices when it comes to people and our planet,” Foo added.

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