Is Subway Franchise Profitable in 2023? How Much Does a Subway Franchise Owner Make?

subway franchise profitable

Is Subway franchise profitable? Franchises are a fantastic way to start a business and create income with no risk.

To learn how to operate a business without taking on too much risk, many people who want to open their own company consider starting by purchasing a franchise.

If you choose a well-known brand, such as Subway, a franchise is typically a very profitable method of conducting business.

With around 10 billion sales worldwide through its network of franchises, Subway is among the most well-known and significant restaurant businesses in the world.

The likelihood of success is very high due to the size of the market. 

If you’re considering buying a Subway franchise, you might be concerned about its financial viability.

Let’s examine the average income, profit margin, number of Subway franchisees, and other financial information for Subway franchises and their owners.

Therefore, this blog post will also examine profitable Subway franchises and how much a Subway franchise owner makes.

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Key Takeaways 


  • Running a Subway franchise might be the perfect combination of your passion and your dream of starting your own business if you appreciate eating healthy cuisine.
  • You can provide consumers with fantastic, wholesome, and cutting-edge food alternatives at Subway for one of the lowest startup costs in the business.
  • Subway is a possibility you should look into if you’re a business owner who wants to run your company independently but yet has the backing of the biggest restaurant chain in the world.

The BackStory

Nuclear physicist Dr. Peter Buck gave a $1,000 start-up loan to Fred Deluca in 1965 so that he could launch a submarine sandwich shop and use the proceeds to pay for his academic expenses. 

Today, the largest submarine sandwich chain in the world is Pete’s Subway, which began as a tiny sandwich shop in Bridgeport, Connecticut. 

There are currently about 37,000 Subway franchise restaurants selling made-to-order sandwiches that are fresh and reasonably priced.

After recognizing they would not be able to open 32 stores by the deadline, the pair began franchising in 1974 while still owning and operating 16 submarine sandwich restaurants throughout Connecticut. 

After that, they immediately grew thanks to their catchphrase, “Eat Fresh.” Subway now has 36,826 locations operating in 100 different countries and territories, 56% of which are in the United States, according to its website. 

The business had sold 38,878 franchises in the US as of December 31, 2021, of which 21,147 were operational and 104 were still under construction.

Furthermore, John W. Chidsey, who has held the position since 2019, is now the Chief Executive Officer of Subway Restaurants.

Is Subway Franchise Profitable?

Is Subway franchise profitable? Well, let’s find out.

subway franchise profitable

Subway generates about $11 billion in annual sales throughout its entire network of franchise locations. 

Each franchise location brings in an average of $422,000 in revenue each year. 

According to statistics, the typical franchise only makes $7.21 each month. 

They make $31,000 in profit annually, thanks to their 5% annual revenue.

Franchisees who are associated with well-known brands and sectors of the economy typically make more money. 

Franchise owners in the food service sector make an average of $82,000 a year, which is a respectable wage when compared to nonfranchise restaurant owners, who can make anything from $24,000 to $155,000 a year.

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How Much Does a Subway Franchise Owner Make?

The average annual pay for a Subway franchise owner is thought to be $31,000. 

To arrive at this estimate, the total yearly revenue of Subway in 2021—$9.4 billion—was divided by the total number of franchisees, which stood at 21,147.

As a result, each franchise generates $444,507 in annual revenue. 

Successful franchisees often make a profit of around $31,000 a year, or about 7% of their yearly sales.

About 35% more than the US national average is earned by the average owner of a Subway franchise.

Depending on the nation where their location is, Subway franchise owners outside of the US might examine different numbers. 

In the end, it will be somewhat similar to this figure.

What is the Average Profit a Subway Franchise makes?

Due to the popularity of the brand, the income and profitability of your Subway franchise are often very high.

However, it has expenses of its own that lower the profitability of your revenue. 

Also, several factors might alter the numbers for both revenue and profitability.

Your numbers are significantly influenced by the area, the company, and the fees Subway charges in your nation, among other factors.

Hence, by examining the average figures across all Subway franchise locations, we can get a general indication of the revenue and profit that Subway franchises might anticipate.

An average Subway franchise location typically brings in roughly $400,000 per year.

The typical annual profitability of a Subway shop is between $40,000 and $50,000 if franchise expenses, fees, and salaries are subtracted.

When compared to other similar franchise brands, Subway has inexpensive startup costs. But each month and each year, you must pay more in fees. 

They charge the following:

  • $15k in franchise fees
  • Franchise royalties and advertising costs amount to 12% of weekly gross sales.

What is the Subway Franchise Cost?

$222,050 to $506,900 ($182,550 to $373,900 for a non-traditional location) is the initial expenditure required to launch a Subway franchise. 

This amount entails a payment to Subway’s affiliate of between $22,370 and $44,830.

Each store’s first franchise cost should be $15,000, to be paid by the franchisees. 

The initial franchise price is decreased to $7,500 if you already own a franchise and are planning an expansion. 

Your initial franchise cost will also be $7,500 if you are a member of the US military. 

Also, you are required to invest capital and assets in addition to paying franchise costs.

Rent, location fees, and deposits are anticipated to range from $2,050 to $14,500, and equipment purchases are anticipated to cost $90,000 to $180,000.

In exchange for the franchisor’s marketing services, franchisees are required to pay the business an 8% royalty charge on gross sales once the store’s operations get underway and a 4.5% marketing fee. 

Industry average royalties are 5.3%, and industry average fees for marketing services are 2.3%. 

Finally, franchises for Subway require greater percentages of both mandatory fees.

Is Owning a Subway Franchise A Good Investment?

So, you must make a start-up investment in the business before you can even think about earning money from a Subway. 

Fortunately, if you’re set on getting a Subway franchise, the corporation has a low barrier to entry and frequently has new or existing franchises available.

At a net worth of $150,000 and $100,000 in liquid assets, or cash on hand, at each location, Subway sets the bar high. 

Just to be eligible for a franchise position with Subway, that is what is required.

The initial franchise fee of $20,000 is then added to your initial investment. 

Additionally, based on estimates from Subway itself, you will need to invest anywhere between $207,000 and $477,000 in your restaurant. 

Your estimate will rely on the size, configuration, and location of the building, among other things.

Remember that any alteration or renovation you perform in your area must follow the franchise rules for Subway. 

The shop design team at Subway did not consider some franchise owners’ spaces to be suitably structured for franchised outlets after they had already prepared them in advance.

Pros and Cons of Owning  a Profitable Subway Franchise

Just like every other business, owning a profitable subway franchise comes with lots of advantages and disadvantages.

The pros and cons of owning a profitable subway franchise are outlined below:

Pros of owning a profitable Subway Franchise

  • As a  well-known business, Subway franchises have a sizable client base, a few of those customers have a high level of loyalty, and their name is well-known.
  • Franchisees of Subway have access to training, continuing assistance, and resources like marketing collateral and operational manuals.
  • Compared to other franchise options, Subway has moderate franchise fees when you first start, making the cost of a Subway business affordable.
  • To accommodate regional preferences, Subway offers various menu customization options.
  • Strong relationships between Subway and its suppliers are credited by some franchisees as being beneficial for getting high-quality products at fair costs.

Cons of Owning a Profitable Subway Franchise

  • The Subway franchise royalty fee reduces the profit margin, as regular forum participants noted.
  • Franchisees of Subway claim that the menu’s flexibility is insufficient and that the requirements placed on them prevent them from developing distinctive menu items.
  • Even though Subway is no longer the largest restaurant chain in the world by number of locations, there are still many new franchises opening up, according to some franchisees, and competition from other fast food restaurants remains fierce.
  • Employee churn in the fast food sector as a whole is significant, and Subway franchises are no exception.
  • The guidelines and regulations that apply to Subway franchise owners might be restrictive.

9 Secrets to Owning a Profitable Subway Franchise

There is no doubt that choosing to pursue a Subway franchise is a difficult decision that is rife with the usual risks that come with starting any new business.

Naturally, this also applies to franchising as a whole.

Keeping this in mind, we’d like to leave you with one more list that could be useful to anyone thinking about opening a Subway franchise or any other kind of franchise.

One excellent opportunity is franchising. But it needs to be the best option for you.

The following are nine important franchise-related facts:

1. Examine the Franchisor before Investing: 

Learn about the franchisor’s background, finances, and reputation. Investigate any warning signs, such as lawsuits, bankruptcies, or unfavorable reviews.

2. Recognize your rights and Obligations under the Franchise Agreement: 

This contract establishes the obligations of both the franchisor and the franchisee. Recognize all the terms and conditions.

3. Assess the Support Provided by the Franchisor. 

A competent franchisor should offer assistance with things like operations, marketing, and training.

4. Take into Account the Franchise’s Profitability: 

Examine the franchise’s financials, paying particular attention to the original investment, ongoing costs, and future earnings. When estimating the future, be cautious.

5. Recognize the Franchise’s Market Niche: 

Ensure that your hobbies and strengths are compatible with the franchise’s target market.

6. Examine the Competitors in the Franchise’s Market and consider how the Franchise Sets itself Apart from the Competition.

7. Recognize the Hazards Involved: 

Opening a franchise has risks, just like any other type of business enterprise. Ensure that you have a plan in place to reduce the risks.

8. Speak to Additional Franchisees: 

Learn about the difficulties and experiences that other franchisees have had with the system.

9. Get Expert Guidance: 

Think about speaking with a franchise consultant, lawyer, or accountant. They may offer insightful information that will aid in your decision-making.

Conclusion: Is Subway Franchise Profitable?

So, if you’re considering starting a Subway business, you may expect to profitably do so. 

However, how persistent and hardworking you are with product delivery will ultimately determine how successful your own business or franchise is.

Don’t make hasty decisions while determining whether to invest in a Subway opening. 

It would also do you a lot of good to know that the Subway franchise is a profitable business you can get into at any time.

Before committing your entire life to this venture, make sure you have done a thorough study.

Frequently Asked Questions on Is Subway Franchise Profitable?

In 2023, what is Subway worth?

The family disclosed their plans to transfer ownership of the business to private investors in 2023. 
With the sale, the corporation has enlisted JP Morgan’s assistance. Approximately $10 billion is said to be the company’s price.

Who owns the most Subway franchises?

Hardy Grewal, 60, has owned a Subway franchise since 1989 and serves as the company’s top growth agent in the United States. 
Along with his sons Jesse, 29, and Shawn, 24, he is in business with his nephew Bob, 38, who joined the franchise industry in 2002.

What is the annual salary of a UK Subway franchise owner?

Franchises of the UK’s Subway brand produce yearly gross profits of about £35,000 on revenues of about £300,000. 
Given that the brand experienced record-breaking sales in 2018, 2022 is a fantastic time to work with them. 
96 million sandwiches, or about 180 subs every minute, are sold in the UK alone each year.

Why is the NYC Subway so expensive?

The expansive network is bigger and has an older fleet than any other transit system in America, which may help to explain why NYCT has the highest maintenance expenditures per vehicle mile in the nation despite ranking third in overall operating costs per vehicle mile behind Los Angeles and Boston.

What is the yearly salary of a McDonald’s franchise owner?

Before taxes and loan payments, franchisees should anticipate making between £50k and £550k in their first year of business. 
A typical annual sales amount at McDonald’s is between £1.5 million and £4.3 million, according to their website.

Is owning a franchise a wise decision?

Greater Purchasing Power is available.
Access to more purchasing power is one clear benefit that large companies have over tiny ones. You’ll save money by getting these crucial assets from the franchise because it may purchase large quantities of inventory and equipment on behalf of its franchisees.

References

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