How much money you can make as a franchise owner is perhaps one of the most crucial inquiries you’ll have if you’re thinking about buying a Subway business. Although there is no universally applicable solution to this problem, there are some general rules and statistics that can give you a better notion of what to anticipate.
Recent research indicates that the most prosperous Subway franchise owners earn about $30,000 to $40,000 annually, or about 7% of the company’s yearly sales.
Naturally, this figure can change depending on a range of elements, including the location of your franchise, the size of your company, and your level of experience and industry knowledge.
However, it’s crucial to bear in mind that for individuals who are prepared to put in the time, effort, and commitment necessary to succeed, owning a franchise may be a lucrative and satisfying option.
There are numerous tools available to assist you in your research and comparison of other franchise options if you’re curious to learn more about the potential earnings and advantages of owning a Subway franchise.
Investment in a Subway franchise can be a wise and strategic move that can help you reach your financial and professional goals, whether you’re a seasoned business owner or a first-time business owner.
Understanding Subway Franchise
It’s critical to comprehend the fundamentals of the business strategy if you’re thinking about buying a Subway franchise.
A well-known fast-food restaurant franchise called Subway sells a range of sandwiches, salads, and other foods.
The business has more than 40,000 stores spread across more than 100 countries and has been franchising since 1974.
Before purchasing a Subway franchise, keep in mind the following important factors.
The initial outlay for a Subway franchise might change according on a number of elements, including the location, size, and equipment required.
The Wolf of Franchises estimates that a Subway franchise will cost between $222,050 and $506,900 as its initial investment.
This covers the price of goods, equipment, and leasehold improvements. Franchise costs $15,000, and ongoing royalties are equal to 8% of sales.
A legal document that describes the terms and conditions of the franchise partnership is the franchise agreement.
It contains details on the contract’s duration, its options for renewal, its geographic scope, and its costs.
The franchise agreement length is 20 years, and the renewal term is 5 years, according to Subway Franchise FAQs.
Training and Support
Subway offers its franchisees thorough training and assistance. Franchisees must finish a two-week training course at the business’ training facility in Connecticut before launching a new site.
Topics including food preparation, customer service, and business operations are covered in the training.
Additionally, Subway provides ongoing support to its franchisees in the form of assistance with product development, marketing, and advertising, and operations.
The potential revenue of a Subway franchise might differ depending on a number of variables, including the location, the level of competition, and marketing initiatives.
The average gross sales per Subway store in the US in 2021 were $422,000, according to Franchise Business Review.
However, depending on the individual region and other factors, the revenue potential may be larger or lower.
One of the first things you’ll need to know if you’re thinking about starting a Subway franchise is how much it will cost to get started.
Several variables, including location, size, and the franchise type you’re interested in, affect the initial expenditure needed for a Subway franchise.
Entrepreneur estimates that a Subway business will cost between $140,000 and $342,000 as its initial investment.
This covers the price of leasing or buying a site, as well as the cost of the franchise fee, inventory, and equipment.
Remember that this is only an estimate and that, depending on your individual circumstances, your actual costs may be greater or lower.
Notably, Subway provides both conventional and unconventional franchise opportunities.
While non-traditional franchises are found in locations like airports, hospitals, and convenience stores, traditional franchisees are standalone eateries.
A non-traditional franchise may have a lesser initial investment than a regular franchise, but it also may have a lower profit margin.
It’s crucial to take recurring expenses into account when estimating the initial investment needed for a Subway franchise.
You’ll be responsible for the cost of materials, labor, and other expenditures related to operating a restaurant, as well as ongoing royalties and advertising fees.
It’s crucial to have a sound business strategy in place and to be ready for the continuous expenses linked to franchise ownership.
Overall, opening a Subway franchise may take a sizable initial investment, but if you’re willing to work hard and have a clear plan in place, it may also be a wise choice.
You will be liable for ongoing expenses as a Subway franchisee to keep your company operating.
These are a few of the most typical continuous expenses:
- Royalty Fees: Subway charges a royalty fee of 8% of gross sales and an advertising fee of 4.5% of gross sales. These fees are paid weekly or monthly, depending on your agreement.
- Labor Costs: You will need to pay your employees, including yourself if you choose to work in the store. Labor costs will vary depending on the number of employees you have and their wages.
- Food Costs: You will need to purchase ingredients and supplies from Subway’s approved vendors. Food costs will vary depending on the number of sandwiches you sell and the prices you pay for ingredients.
- Rent: If you lease your store space, you will need to pay rent. Rent costs will vary depending on the location and size of your store.
- Utilities: You will need to pay for utilities such as electricity, water, and gas. Utility costs will vary depending on the size of your store and your location.
- Insurance: You will need to purchase insurance to protect your business from liability and other risks. Insurance costs will vary depending on the coverage you choose.
- Repairs and Maintenance: You will need to maintain your store and equipment to keep it in good condition. Repair and maintenance costs will vary depending on the age and condition of your store and equipment.
- Taxes: You will need to pay federal, state, and local taxes on your business income. Tax costs will vary depending on your location and the profitability of your business.
The continuing expenses of maintaining a Subway franchise might be high overall.
However, you can keep these costs in check and run a lucrative firm with the right planning and management.
How much money you can make is probably one of your first concerns if you’re thinking about buying a Subway franchise.
The location of your franchise, the size of your firm, and your capacity for successful management all play a role in the answer to that question.
Glassdoor estimates that a Subway franchise owner makes a total annual salary of $105,778. However, this amount is merely an estimate, and your real earnings may vary based on a number of variables.
The location of your business will have a significant impact on your revenue as a Subway franchise owner.
High-traffic places with subway franchises, such airports or shopping centers, are likely to bring in more money than less crowded ones.
The size of your business is another element that will affect your earnings. The size of a Subway franchise can range from a little kiosk to a full-service restaurant.
In general, bigger franchises are probably going to make more money than smaller ones.
Finally, your earnings will be significantly impacted by how well you manage your firm.
You will be in charge of supervising your staff, keeping tabs on your expenses, and reaching out to potential clients as the owner of a Subway franchise.
Your franchise is more likely to succeed the more skillfully you can accomplish these tasks.
Overall, even though there is no assurance that a Subway franchise will be successful, there is definitely the potential for large earnings if you’re ready to put in the work and manage your firm skillfully.
Factors Affecting Profitability
There are many things that can impact your profitability while operating a Subway franchise.
The following are a few of the most crucial ones to remember:
One of the most crucial elements that might impact your profitability is the location of your franchise. A busy region with lots of foot traffic might aid in increasing your customer base and revenue.
On the other side, if your franchise is situated in a less populous location, you can find it difficult to get clients and make enough money to pay your bills.
Rent and Overhead Costs
Rent prices as well as other overhead costs may significantly affect your bottom line. Rent that is excessively expensive might reduce your profits and make it challenging to maintain profitability.
When choosing a location for your franchise, it’s crucial to take your rent and other overhead expenditures into account.
Marketing and Advertising
To bring in new clients and expand your firm, marketing and advertising are crucial.
Without spending money on marketing and advertising, you can find it difficult to bring in new clients and make enough money to pay your bills.
To expand your business and bring in new clients, it’s critical to have a sound marketing and advertising strategy in place.
Cost of Ingredients
Your profitability may also be impacted by the price of the ingredients. It may be challenging to maintain profitability if the cost of the ingredients is too high.
It’s crucial to carefully manage your ingredient costs and come up with strategies for keeping them in check.
Your profitability can also be significantly impacted by labor expenditures. It may be challenging to maintain profitability if your labor costs are too high.
This will reduce your profits. It’s crucial to carefully manage your labor expenditures and come up with strategies for keeping them in check.
Frequently Asked Questions
What are the minimum financial requirements for owning a Subway franchise?
To own a Subway franchise, you’ll need to have a minimum of $80,000 in non-borrowed personal resources. Additionally, your net worth should be at least $250,000, and you should have a credit score of at least 700. These requirements may vary depending on your location and other factors, so it’s important to speak with a Subway representative to get more information.
How much does it cost to open a Subway franchise?
The estimated initial investment for a Subway franchise ranges from $116,000 to $263,000, depending on factors such as location, size, and equipment. This includes the franchise fee of $15,000, as well as costs for equipment, inventory, and other expenses. Keep in mind that these costs are estimates and may vary based on your specific situation.
How much can you make as a Subway franchise owner?
The earnings potential for a Subway franchise owner varies based on a variety of factors, including location, competition, and costs. According to Under30CEO, the most successful Subway franchise owners make over $30,000 to $40,000 per year, which makes up around 7% of the annual sales. However, this is not a guarantee, and your earnings may be lower or higher depending on your specific situation.
What kind of experience do you need to own a Subway franchise?
To own a Subway franchise, you or a partner with an equity stake must have restaurant, business, or franchising experience. This is important because owning a franchise requires a unique set of skills and knowledge. If you don’t have experience in these areas, it may be helpful to gain experience before applying to become a Subway franchise owner.
Can you own multiple Subway franchises?
Yes, Subway offers both single and multi-unit franchise opportunities. If you’re interested in owning multiple franchises, speak with a Subway representative to learn more about the requirements and costs involved.
Investing in a Subway franchise can be beneficial if you have the necessary skills and funds.
Depending on the store’s location and size, the initial investment can be anywhere between $222,000 to $500,000. Additionally, a $15,000 franchise fee is required.
Subway offers its franchisees thorough training and assistance. The business enjoys a strong brand recognition and a devoted clientele.
A typical Subway franchise generates about $400,000 in annual revenue, with a net profit margin of 6-8%.
However, a number of variables, including geography, competition, and operational expenses, might affect the actual revenue and profit margin.
You must successfully control your expenses if you want to maximize your revenues.
This includes keeping your food and labor prices under control, maintaining your buildings and equipment, and advertising your store to draw in new customers.
To ensure that your food and services are in line with client expectations, you need also stay current on industry trends.