Lengthy earlier than Subway was bought by the acquisitive personal fairness agency Roark Capital—a deal that closed in Spring 2024 with a price ticket of $9.6 billion—an entrepreneurial member of the StartupNation neighborhood posed a query concerning the big sandwich chain.
It was July 2006. The query to the StartupNation neighborhood discussion board was earnest and particular:
“I’m curious to know what’s the common revenue a Subway restaurant proprietor would make month-to-month? Or if anybody who owns a Subway, how a lot do they make month-to-month? Or if anybody who owns just a few Subway places, how a lot do they make month-to-month?”
Inside days, members of the StartupNation neighborhood started responding to the Subway questioner and discussing the price of a Subway franchise and whether or not proudly owning one was an excellent funding. Then, over the following 15+ years, they continued responding, layering questions on prime of feedback on prime of compliments like, properly, like a large Subway sandwich:
They mentioned and debated the whole lot from Subway franchise value to Subway franchise profitability to Subway guidelines, laws and non-traditional places.
‘The Subway Publish’
The Subway Publish,” because it got here to be recognized at StartupNation, grew into a number of pages over time as scores of neighborhood members—Subway franchise house owners, Subway managers, Subway lovers, Subway haters, you identify it—weighed in on the financials of proudly owning an outlet of the well-known restaurant chain.
Now, with Subway within the palms of Roark Capital after a Federal Commerce Fee assessment, StartupNation determined to revisit “The Subway Publish” and replace any data we may. We additionally needed to put Subway store possession within the context of franchising total.
However, first, what about that authentic query? How a lot can you make from proudly owning a Subway franchise?
Subway Franchise Profitability
Effectively, formally, Subway Eating places, the franchise enterprise operated by Physician’s Associates, Inc., is cautious to not predict what any single Subway location would possibly earn in gross sales or clear in earnings. In the event you’re seeking to purchase an present Subway franchise, chances are you’ll be supplied the precise information of revenue and loss for that particular retailer.
However a brand new location? Future revenue projections? You’ll need to do your individual analysis.
The truth is, sprinkled all through the paperwork {that a} purchaser should full when securing a franchise are phrases underlining that neither Subway nor its representatives can or ought to make any predictions or ensures about profitability.
Right here is a kind of disclaimers, for instance:
“We don’t make any representations a few franchisee’s future monetary efficiency or the previous monetary efficiency of company-owned or franchised shops. We additionally don’t authorize our workers or representatives to make any such representations both orally or in writing. Nonetheless, in case you are buying an present outlet, we could give you the precise information of that outlet. In the event you obtain some other monetary efficiency data or projections of your future revenue, you must report it to the franchisor’s administration. …”
Profitability Estimates from Posters
In responses to the unique publish in 2006, folks figuring out themselves as Subway franchisees or Subway workers conversant in franchise operations supplied varied revenue estimates.
Some stated franchisees ought to count on to see 20% revenue margins. Tightly managed outlets can push 25% money circulate, and ones with weaker operations would possibly clear solely 15% a yr.
Meaning a location on the excessive finish of the gross sales chart would possibly throw off $150,000 a yr or extra. A struggling Subway in a low gross sales location would possibly clear as little as $40,000.
One poster provided this recommendation:
The final rule of thumb is that if you happen to actually push it (work within the retailer your self, maintain meals and labor prices as little as potential, and keep on prime of loss prevention) you possibly can attain a revenue margin of about 25%. So, if in case you have a retailer averaging $10,000 every week in gross sales, you`ll make about $10,000 a month revenue. Take into account, this isn’t simple and most Subway house owners don`t do that properly.
A poster who recognized himself as “Subway Proprietor” was extra bullish on the chance:
I personal three Subway eating places. I don`t need to make anybody mad, however some issues posted listed here are both improper or deceptive. First off, I’ve been concerned with Subway for 17 years, since 1989, and it’s a good firm.
The common retailer within the US does a bit of shy of $8,000/week. So for straightforward spherical numbers let’s say the common retailer does $400k/yr. It’s comparatively simple to drag 20% revenue if you happen to regulate the enterprise. I averaged 22.63% for the primary quarter this yr and I used to be in my shops a mean of 10 hours or much less per week, so 20% shouldn’t be that onerous. However for the next estimate, let’s use 20% common revenue.
In case you have a retailer that’s merely common you must revenue within the ballpark of $80k/yr.
Now let’s say you had been fortunate sufficient to get an amazing location and also you retailer does $15k/week (the realm I’m in has a number of shops that do that and way more in gross sales so it is extremely potential), properly, you need to be making in extra of $150k per yr.
Now, one or two shops aren’t going to make you a multi-millionaire, however you may make a snug dwelling with out a lot of a time funding.
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Different posters pushed again, suggesting that earnings down within the $25,000-$30,000 vary had been widespread and that to make a dwelling off Subway franchising one needed to personal a number of places. They warned that except you can construct up your individual enterprise of Subway franchises, you would possibly simply be shopping for a job, and in some instances shopping for a low-paying job.
Changing these 2006 {dollars} to 2024 buying energy is fraught given the current excessive inflation and the specificities of meals prices and the restaurant enterprise. However a straight conversion primarily based on common inflation would put that vary of earnings at $46,000-$125,000 in at the moment’s {dollars}.
So, How A lot Do Subway Franchise Homeowners Make?
So, how would possibly we estimate at the moment’s Subway franchise financials by way of analysis of accessible documentation? Effectively, let’s begin with discovering what we are able to about product sales figures:
Whereas Starbucks and McDonald’s battle for the title for the world’s largest restaurant chain primarily based on complete gross sales, Subway is correct there battling for the highest spot by variety of shops (nearly 37,000 shops worldwide in 100 international locations, with about half of these in america).
On common, a typical Subway retailer will gross about $420,000 a yr, primarily based on Subway’s personal figures and trade estimates. Whereas which will sound like some huge cash, $420,000 is a small per unit income in contrast with different restaurant franchise alternatives. And Subway’s common income per retailer truly decreased for a lot of the 2010s, till a turnaround in 2021-22.
So, if our working quantity is $420,000 a yr in product sales, the place does that cash go?
(Subway does boast among the many lowest begin up prices for franchised shops. However we’ll have a look at the preliminary funding, such because the franchise payment, later.)
Subway Franchise Value: Royalty Charges
Begin with the Subway franchise royalties. The royalty payment is 8% of product sales, whereas the promoting payment is 4.5% of product sales, in line with Subway’s Franchise Disclosure Doc.
Like different franchise agreements, Subway’s consists of different small, recurring charges as properly, and so they’re listed in that disclosure doc. However the large charges are these two that add as much as 12.5% of product sales, and Subway is evident in its documentation about amassing these:
“Product sales” consists of all gross sales of each type constituted of your restaurant. … The royalty is payable to us and is nonrefundable. … The royalty is payable weekly and is due on or earlier than the Friday following the shut of the enterprise week which is often Tuesday. You will need to submit signed kinds to permit us to deposit drafts in opposition to your checking account for the total quantity of the weekly accruals of royalties, promoting charges, and different quantities you’ll owe us.
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Labor, Meals and Different Prices
Past these royalty charges lurk the opposite, typical prices of operating a meals franchise. You should have lease and utilities, in fact, or different bills comparable to property taxes and constructing upkeep if you happen to’re fortunate sufficient to personal the property. In case your Subway goal retailer is in a non-traditional location, you might need a concession payment as properly.
Labor prices will rely on prevailing wages in your neighborhood, together with any state or native minimal wage, in addition to how aggressive the labor market is the place you arrange.
You’ll have to account for what number of hours you because the franchise proprietor can put in, however don’t depend in your sandwich expertise to be the distinction maker. If monetary success requires you to take too many shifts behind the counter, you would possibly need to rethink the plan.
Meals prices are more likely to account for the largest chew of your bills. Within the Subway franchise system, house owners should purchase from Subway-approved suppliers.
Subway cites high quality management and buying energy because the positives of this association, and a few house owners of Subway franchises contributing to “The Subway Publish” praised the system for serving to them with account well being monitoring and stock monitoring. Others, nonetheless, pleaded for extra flexibility, questioning Subway’s “eat contemporary” slogan and saying they might supply higher elements at a fairer worth than these mandated by Subway company.
Put all these prices collectively, together with another miscellaneous bills, and you’ve got a stable image of what would come out of that common gross sales take of $420,000.
Your prices, once more, would rely largely in your location and your administration of the place. Your gross sales may also rely on location and the quantity of competitors, together with from extra places within the Subway household.
Franchisees have complained when Subway grows its retailer depend and recommend that Subway generally pushes for systemwide income development over the account well being of particular person franchises. As an alternative of contemplating their present Subway franchises, they push new shops even when an area space is oversaturated.
Some Subway franchisees complain about different company dictates as properly. The most recent is the demand by Subway that every one franchises honor digital coupons within the app, one thing that about 10% of franchises had been declining to do on a constant foundation.
Anticipate Extra Friction and Increased Prices If Franchise Labor Change Goes By means of
One Franchisee’s Numbers
A discussion board contributor who stated he owned three Subway franchises broke his P&L financials down this fashion:
- Meals: 33% (lowest retailer 30% and highest retailer 33%)
- Labor: 22% (lowest retailer 19% and highest retailer 22%)
- Hire: 9% (lowest retailer 3% and highest retailer 9%)
- Subway charges: 12.5%
- Utilities/Misc: 8.5%
- Revenue: 15% (lowest retailer 15% and highest retailer 22%)
He additionally gave an insider tip about company-owned gear: “I’d additionally recommend financing your gear as an alternative of leasing. The common Subway lease comes out to +20% curiosity the place as a standard mortgage can be within the 5-8% vary. Hope this helps!”
Guidelines for Subway Franchisee
So far as operating the enterprise, needless to say as a franchisee your freedom to function is constrained by the phrases of the settlement with the dad or mum firm.
Apart from mandating meals purchases and charging weekly royalty charges, Subway operates like most any restaurant chain with a franchise mannequin. Subway has groups that assist franchises get arrange (a website choice crew, for instance) and groups that monitor franchise efficiency.
Subway employs what they name a Improvement Agent. A Improvement Agent, in Subway’s description, is “an area, on-site consultant of the Subway idea” who will “present native help not solely all through the appliance course of however continued help as you use your restaurant.”
Our StartupNation neighborhood posters had combined views on these Subway DAs, as they referred to as them. One poster gave this recommendation relating to DAs: “If you’re contemplating Subway, speak to present franchisees within the space and ask about their satisfaction with the DA of that space. Improvement Brokers are additionally anticipated to make sure franchisees are working inside firm tips by having discipline reps that examine shops month-to-month. They do way more than simply open shops.”
Whereas one other poster put it extra succinctly: “There’s great variation amongst areas, with some native growth brokers being useful, and a few are downright horrible.”
Shopping for A Subway Franchise: Preliminary Franchise Charge
So, earlier than you even get to the stage of creating wealth from a Subway, it’s important to make in preliminary funding within the firm. Happily, if you happen to’re decided to pursue a Subway franchise, the corporate operates on a comparatively low funding enterprise mannequin, and new or present franchises are sometimes obtainable.
Subway units desk stakes at a web value of $150,000 and liquid belongings, or money available, of $100,000 per location. That’s what’s wanted simply to be thought-about for a Subway franchise function.
Subway Franchise Whole Funding
Then, your preliminary funding begins with the preliminary franchise payment of $15,000. On prime of that, you will want an estimated $207,000 to $477,000 to put money into your retailer, in line with Subway’s personal estimates. Your determine will rely on such components as constructing measurement, configuration and site.
Remember the fact that any transforming or renovation you do to your area should conform with Subway franchise tips. Some franchise house owners have ready their area forward of time solely to seek out out that Subway’s retailer design crew didn’t take into account them configured correctly for franchised shops.
So, with all that as primary background on the Subway franchise value and on what Subway franchise house owners would possibly make, what’s subsequent?
First, allow us to share just a few ideas from contributors to “The Subway Publish.”
- It’s one factor to think about proudly owning your individual enterprise, however if in case you have by no means executed it, you must assume exhausting about all of the tasks you’re taking over.
- Working a meals franchise is a grind. And despite the fact that Subway gives coaching lessons and help with issues like stock administration duties, the challenges of labor shortages and competitors are actual.
- The advantage of Subway shouldn’t be in proudly owning a Subway franchise a lot as proudly owning a number of Subway franchises. Posters say that multi unit house owners get essentially the most out of the expertise.
On prime of that, you must look exhausting at the way forward for Subway Eating places itself.
Based in Bridgeport, Connecticut, in 1965 by Fred DeLuca and Peter Buck (each now deceased), Subway went by way of a tricky decade within the 2010s earlier than turning issues round.
In April 2024, Subway accomplished the sale of itself to Roark Capital, a personal fairness agency that owns a bunch of different restaurant operators and franchises (together with Subway rival Jimmy John’s.) Roark reportedly paid greater than $9.55 billion for the sandwich chain. Then in early 2025, Roark Capital moved so as to add to its restaurant steady by signing a deal to amass Dave’s Sizzling Hen for roughly $1 billion, sources conversant in the matter instructed Reuters.
In saying its plans to promote itself earlier in 2023, Subway emphasised that, coming off a robust 2022 that noticed its same-store gross sales climb 9.2%, its technique was paying off.
“The administration crew stays dedicated to the long run and can proceed to execute in opposition to its multi-year transformation journey, which features a deal with menu innovation, modernization of eating places and enhancements to its total visitor expertise,” the corporate stated.
The mix of fewer shops and better gross sales per retailer stands as some extent in favor of changing into a Subway franchisee.
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Listed below are another execs, adopted by some cons:
Execs of proudly owning a Subway franchise:
- Subway is a longtime model with a big buyer base, excessive loyalty amongst a few of these prospects and sturdy model recognition.
- Subway gives franchisees with coaching, ongoing help, and entry to assets comparable to advertising and marketing supplies and operational manuals.
- Subway begins you off with comparatively low franchise charges, so the Subway franchise value is cheap as compared with different franchise alternatives.
- Subway permits some flexibility in creating menus to cater to native tastes.
- Subway has sturdy relationships with its distributors, which some franchisees tout as useful in shopping for high quality items for affordable costs.
Cons of proudly owning a Subway franchise:
- As our discussion board contributors talked about often, the Subway franchise royalty payment cuts into the revenue margin.
- Subway franchisees say menu flexibility doesn’t go far sufficient and that the requirements imposed restrict their means to create distinctive menu choices.
- Competitors from different quick meals shops is intense, and even when Subway is not the biggest restaurant chain on the earth by variety of shops, some franchisees say there are nonetheless too many new franchises popping up.
- The quick meals trade total has excessive worker turnover, and Subway isn’t any exception.
- The framework and guidelines that apply to Subway franchise house owners will be limiting.
Rules of Beginning a Franchise
Clearly, whether or not to pursue a Subway franchise is a sophisticated query stuffed with the standard uncertainties that encompass any enterprise enterprise.
The identical will be stated, in fact, for franchising generally.
With that in thoughts, we wish to go away you with one other checklist that may assist anybody contemplating a Subway franchise or some other franchise.
Franchising could be a nice alternative. However it must be best for you.
Listed below are 9 issues to learn about franchising. We primarily based this checklist on this text about beginning a franchise and this text about how franchising will help management your dangers.
- Analysis the franchisor: Earlier than investing in a franchise, analysis the franchisor’s historical past, financials, and popularity. Search for pink flags comparable to lawsuits, chapter, or adverse evaluations.
- Perceive the franchise settlement: The franchise settlement is a authorized contract that outlines the rights and tasks of the franchisor and franchisee. Perceive all phrases and circumstances.
- Consider the franchisor’s help: A very good franchisor ought to present help in areas comparable to coaching, advertising and marketing, and operations.
- Contemplate the franchise’s profitability: Take a look at the franchise’s financials, together with the preliminary funding, ongoing charges, and potential income. Be conservative when making projections.
- Know the franchise’s goal market: Be sure that the franchise’s goal market aligns with your individual pursuits and strengths.
- Analysis the competitors: Take a look at the competitors within the franchise’s market and consider how the franchise differentiates itself.
- Perceive the dangers concerned: Like all enterprise enterprise, there are dangers concerned in beginning a franchise. Be sure you and have a plan to mitigate the dangers.
- Discuss to different franchisees: Get an thought of the experiences and challenges confronted by different franchisees within the system.
- Get skilled recommendation: Contemplate consulting with a lawyer, accountant, or franchise guide. They’ll present helpful insights and make it easier to make an knowledgeable resolution.
Conclusion
Since touchdown the StartupNation neighborhood discussion board in 2006, “The Subway Publish” has not solely remained related, but it surely has engaged entrepreneurs and the business-minded again and again. Hundreds of Subway franchises have opened, closed or modified palms in that point, and Subway Eating places has gone by way of its personal twists and turns.
The unique poster’s query—”What’s the common revenue of a Subway restaurant proprietor?”—was by no means answered right down to the greenback. However the posters acquired shut, and we hope this text has executed the identical for a 2024 reader.
We additionally hope we’ve got supplied a transparent mind-set about Subway franchise possession and a few helpful tips on franchising generally.
This text was up to date in March 2025.
