Lengthy earlier than Subway was bought by the acquisitive non-public 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 large 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 you understand anybody who owns a Subway, how a lot do they make month-to-month? Or if you understand anybody who owns a number of 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 a very good funding. Then, over the following 15+ years, they continued responding, layering questions on high of feedback on high of compliments like, nicely, like a large Subway sandwich:
They mentioned and debated every little thing from Subway franchise price to Subway franchise profitability to Subway guidelines, laws and non-traditional places.
‘The Subway Submit’
The Subway Submit,” because it got here to be recognized at StartupNation, grew into a number of pages over time as scores of neighborhood members—Subway franchise homeowners, Subway managers, Subway lovers, Subway haters, you title it—weighed in on the financials of proudly owning an outlet of the well-known restaurant chain.
Now, with Subway within the fingers of Roark Capital after a Federal Commerce Fee evaluate, StartupNation determined to revisit “The Subway Submit” and replace any info we may. We additionally wished to position Subway store possession within the context of franchising total.
#mc_embed_signup{background:#fff; false;clear:left; font:14px Helvetica,Arial,sans-serif; width: px;}
/* Add your personal Mailchimp kind fashion overrides in your website stylesheet or on this fashion block.
We advocate shifting this block and the previous CSS hyperlink to the HEAD of your HTML file. */
Signal Up for The Begin Publication
(perform($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]=’EMAIL’;ftypes[0]=’e mail’;fnames[1]=’FNAME’;ftypes[1]=’textual content’;fnames[2]=’LNAME’;ftypes[2]=’textual content’;fnames[3]=’ADDRESS’;ftypes[3]=’handle’;fnames[4]=’PHONE’;ftypes[4]=’cellphone’;fnames[5]=’MMERGE5′;ftypes[5]=’textual content’;}(jQuery));var $mcj = jQuery.noConflict(true);
However, first, what about that authentic query? How a lot are you able to make from proudly owning a Subway franchise?
Subway Franchise Profitability
Properly, 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 income. In case you’re seeking to purchase an current Subway franchise, it’s possible you’ll be supplied the precise data of revenue and loss for that particular retailer.
However a brand new location? Future revenue projections? You’ll need to do your personal analysis.
Actually, 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 retailers. We additionally don’t authorize our staff or representatives to make any such representations both orally or in writing. Nonetheless, if you’re buying an current outlet, we could give you the precise data of that outlet. In case you obtain another monetary efficiency info or projections of your future revenue, it is best to report it to the franchisor’s administration. …”
var appWikiRequestUrl = “
Profitability Estimates from Posters
In responses to the unique submit in 2006, folks figuring out themselves as Subway franchisees or Subway staff acquainted with franchise operations supplied varied revenue estimates.
Some stated franchisees ought to anticipate to see 20% revenue margins. Tightly managed retailers can push 25% money movement, and ones with weaker operations would possibly clear solely 15% a yr.
Which means 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 supplied this recommendation:
The overall rule of thumb is that in the event you actually push it (work within the retailer your self, preserve meals and labor prices as little as attainable, and keep on high of loss prevention) you may attain a revenue margin of about 25%. So, you probably have a retailer averaging $10,000 per week in gross sales, you`ll make about $10,000 a month revenue. Be mindful, this isn’t straightforward and most Subway homeowners don`t do that nicely.
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 fallacious 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 little bit shy of $8,000/week. So for simple spherical numbers let’s say the typical retailer does $400k/yr. It’s comparatively straightforward to drag 20% revenue in the event you 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 arduous. However for the next estimate, let’s use 20% common revenue.
When you’ve got a retailer that’s merely common it is best to revenue within the ballpark of $80k/yr.
Now let’s say you had been fortunate sufficient to get a fantastic location and also you retailer does $15k/week (the world I’m in has a number of shops that do that and way more in gross sales so it is extremely attainable), nicely, you ought to be making in extra of $150k per yr.
Now, one or two shops usually are not going to make you a multi-millionaire, however you can also make a cushty residing with out a lot of a time funding.
Quicken
The powerfully easy approach to keep on high of your funds. Budgeting, automation instruments, portfolio evaluation, tax reviews, and extra. For a restricted time: 50% off on Quicken Simplifi and 25% off on different Quicken merchandise.
Different posters pushed again, suggesting that income down within the $25,000-$30,000 vary had been widespread and that to make a residing off Subway franchising one needed to personal a number of places. They warned that except you would construct up your personal enterprise of Subway franchises, you would possibly simply be shopping for a job, and in some circumstances shopping for a low-paying job.
Changing these 2006 {dollars} to 2024 buying energy is fraught given the latest 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 in the present day’s {dollars}.
So, How A lot Do Subway Franchise Homeowners Make?
So, how would possibly we estimate in the present day’s Subway franchise financials via analysis of obtainable documentation? Properly, let’s begin with discovering what we will about product sales figures:
Whereas Starbucks and McDonald’s battle for the title for the world’s largest restaurant chain primarily based on whole gross sales, Subway is correct there battling for the highest spot by variety of retailers (virtually 37,000 shops worldwide in 100 nations, 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 business 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 really 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 retailers. However we’ll take a look at the preliminary funding, such because the franchise price, later.)
Subway Franchise Value: Royalty Charges
Begin with the Subway franchise royalties. The royalty price is 8% of product sales, whereas the promoting price is 4.5% of product sales, in accordance with Subway’s Franchise Disclosure Doc.
Like different franchise agreements, Subway’s contains different small, recurring charges as nicely, and so they’re listed in that disclosure doc. However the massive charges are these two that add as much as 12.5% of product sales, and Subway is evident in its documentation about gathering these:
“Product sales” contains all gross sales of each type made out 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 normally Tuesday. You should 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.
Shopify – eCommerce
Making Commerce Higher for Everybody
Shopify is supporting the following era of entrepreneurs, the world’s largest manufacturers, and everybody in between
Labor, Meals and Different Prices
Past these royalty charges lurk the opposite, typical prices of working a meals franchise. You’ll have hire and utilities, in fact, or different bills similar to property taxes and constructing upkeep in the event you’re fortunate sufficient to personal the property. In case your Subway goal retailer is in a non-traditional location, you may need a concession price as nicely.
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 abilities 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 most important chunk of your bills. Within the Subway franchise system, homeowners should purchase from Subway-approved suppliers.
Subway cites high quality management and buying energy because the positives of this association, and a few homeowners of Subway franchises contributing to “The Subway Submit” praised the system for serving to them with account well being monitoring and stock monitoring. Others, nevertheless, pleaded for extra flexibility, questioning Subway’s “eat contemporary” slogan and saying they might supply higher components 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 strong 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 counsel that Subway typically pushes for systemwide income development over the account well being of particular person franchises. As a substitute of contemplating their present Subway franchises, they push new retailers even when a neighborhood space is oversaturated.
Some Subway franchisees complain about different company dictates as nicely. The newest 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 Larger 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 manner:
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 counsel financing your gear as a substitute of leasing. The common Subway lease comes out to +20% curiosity the place as a conventional mortgage can be within the 5-8% vary. Hope this helps!”
Guidelines for Subway Franchisee
So far as working the enterprise, understand that as a franchisee your freedom to function is constrained by the phrases of the settlement with the mother or father firm.
In addition to 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 staff, for instance) and groups that monitor franchise efficiency.
Subway employs what they name a Growth Agent. A Growth Agent, in Subway’s description, is “a neighborhood, on-site consultant of the Subway idea” who will “present native assist not solely all through the applying course of however continued assist as you use your restaurant.”
Our StartupNation neighborhood posters had blended views on these Subway DAs, as they referred to as them. One poster gave this recommendation concerning DAs: “In case you are contemplating Subway, discuss to current franchisees within the space and ask about their satisfaction with the DA of that space. Growth Brokers are additionally anticipated to make sure franchisees are working inside firm pointers 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 may be great variation amongst areas, with some native improvement brokers being useful, and a few are downright horrible.”
Shopping for A Subway Franchise: Preliminary Franchise Payment
So, earlier than you even get to the stage of earning profits from a Subway, you need to make in preliminary funding within the firm. Fortuitously, in the event you’re decided to pursue a Subway franchise, the corporate operates on a comparatively low funding enterprise mannequin, and new or current franchises are sometimes accessible.
Subway units desk stakes at a internet value of $150,000 and liquid belongings, or money readily available, of $100,000 per location. That’s what’s wanted simply to be thought of for a Subway franchise function.
Subway Franchise Complete Funding
Then, your preliminary funding begins with the preliminary franchise price of $15,000. On high of that, you will want an estimated $207,000 to $477,000 to put money into your retailer, in accordance with Subway’s personal estimates. Your determine will rely on such elements as constructing measurement, configuration and site.
Needless to say any transforming or renovation you do to your area should conform with Subway franchise pointers. Some franchise homeowners have ready their area forward of time solely to seek out out that Subway’s retailer design staff didn’t contemplate them configured correctly for franchised retailers.
So, with all that as primary background on the Subway franchise price and on what Subway franchise homeowners would possibly make, what’s subsequent?
First, allow us to share a number of ideas from contributors to “The Subway Submit.”
It’s one factor to think about proudly owning your personal enterprise, however you probably have by no means achieved it, it is best to assume onerous about all of the duties you’re taking up.
Working a meals franchise is a grind. And regardless that Subway gives coaching courses and assist with issues like stock administration duties, the challenges of labor shortages and competitors are actual.
The good thing about 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 homeowners get probably the most out of the expertise.
On high of that, it is best to look onerous 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 via a troublesome decade within the 2010s earlier than turning issues round.
In April 2024, Subway accomplished the sale of itself to Roark Capital, a non-public 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 secure by signing a deal to amass Dave’s Sizzling Rooster for roughly $1 billion, sources acquainted with the matter instructed Reuters.
In saying its plans to promote itself earlier in 2023, Subway emphasised that, coming off a powerful 2022 that noticed its same-store gross sales climb 9.2%, its technique was paying off.
“The administration staff stays dedicated to the longer term and can proceed to execute in opposition to its multi-year transformation journey, which features a give attention to menu innovation, modernization of eating places and enhancements to its total visitor expertise,” the corporate stated.
The mixture of fewer shops and better gross sales per retailer stands as some extent in favor of changing into a Subway franchisee.
Verizon Digital Prepared: Offering Entrepreneurs the Expertise and Data They Want
Listed here are another execs, adopted by some cons:
Professionals of proudly owning a Subway franchise:
Subway is a longtime model with a big buyer base, excessive loyalty amongst a few of these clients and powerful model recognition.
Subway gives franchisees with coaching, ongoing assist, and entry to assets similar to advertising and marketing supplies and operational manuals.
Subway begins you off with comparatively low franchise charges, so the Subway franchise price is affordable as compared with different franchise alternatives.
Subway permits some flexibility in creating menus to cater to native tastes.
Subway has robust 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 regularly, the Subway franchise royalty price 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 retailers is intense, and even when Subway is not the biggest restaurant chain on the earth by variety of retailers, some franchisees say there are nonetheless too many new franchises popping up.
The quick meals business total has excessive worker turnover, and Subway is not any exception.
The framework and guidelines that apply to Subway franchise homeowners 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 basically.
With that in thoughts, we wish to go away you with one other listing that may assist anybody contemplating a Subway franchise or another franchise.
Franchising could be a nice alternative. Nevertheless it needs to be best for you.
Listed here are 9 issues to find out about franchising. We primarily based this listing on this text about beginning a franchise and this text about how franchising might help management your dangers.
Analysis the franchisor: Earlier than investing in a franchise, analysis the franchisor’s historical past, financials, and popularity. Search for crimson flags similar to lawsuits, chapter, or unfavourable evaluations.
Perceive the franchise settlement: The franchise settlement is a authorized contract that outlines the rights and duties of the franchisor and franchisee. Perceive all phrases and situations.
Consider the franchisor’s assist: A great franchisor ought to present assist in areas similar to coaching, advertising and marketing, and operations.
Contemplate the franchise’s profitability: Have 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 personal pursuits and strengths.
Analysis the competitors: Have a look at the competitors within the franchise’s market and consider how the franchise differentiates itself.
Perceive the dangers concerned: Like several 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 concept of the experiences and challenges confronted by different franchisees within the system.
Get skilled recommendation: Contemplate consulting with a lawyer, accountant, or franchise marketing consultant. They’ll present helpful insights and assist you to make an knowledgeable determination.
Conclusion
Since touchdown the StartupNation neighborhood discussion board in 2006, “The Subway Submit” has not solely remained related, however it has engaged entrepreneurs and the business-minded repeatedly. Hundreds of Subway franchises have opened, closed or modified fingers in that point, and Subway Eating places has gone via its personal twists and turns.
The unique poster’s query—”What’s the typical revenue of a Subway restaurant proprietor?”—was by no means answered right down to the greenback. However the posters bought shut, and we hope this text has achieved the identical for a 2024 reader.
We additionally hope we now have supplied a transparent mind-set about Subway franchise possession and a few helpful tips on franchising basically.
This text was up to date in March 2025.
The submit What Is the Common Earnings of a Subway Restaurant Franchise Proprietor? appeared first on StartupNation.
