Subway grows with suppliers as its expansion continues
03 February, 2006
Sandwich chain Subway is predicting it will sell 150 million submarine rolls in the UK and Ireland and in continental Europe in 2006, as its rapid expansion continues.
The chain sold 53.3m sticks in its 617 stores in the UK and Ireland in 2005 and 46.6m in its 500 continental European outlets, said Bryan Griffiths, MD of the European Independent Purchasing Company (EIPC), which manages the buying for Subway’s franchises for those markets. “For Subway, 2006 will be all about increasing store numbers and making strides towards our growth goals,” Mr Griffiths stated. “We want to have 2,010 stores in the UK and Ireland by the year 2010.”The sandwich chain sources its bread for the UK and Ireland from frozen and chilled bakery supplier Evron Foods, based in Portadown, Northern Ireland. In the last 12 months, EIPC has enlisted a bakery supplier in Eastern Germany, which supplies all bread to Subway in continental Europe, he said.As the chain grows, EIPC is increasingly working collaboratively with its suppliers, Mr Griffiths added. “We are sharing store and volume growth information with them, developing joint business plans. You can’t hit your stores goal if you don’t get your supply chain right. We need to understand the costs so that everyone in the chain can be profitable.”The company is also making investment decisions with its suppliers, he said. “For example we can tell them that we know that, by 2007, they would need another production line installed to keep up with our projected store growth.”Mr Griffiths told British Baker: “As we are doubling in size, we are finding some suppliers have the capacity to expand and we are growing with them. In other cases, we are bringing other suppliers on.” Subway offers suppliers long-term contracts of between one year and five years as it grows with them, he said. The stability of prices is important, Mr Griffiths said: “We will not change retail prices based on what’s happening in the market.”The EIPC has rolled out centralised leasing, insurance, cleaning chemicals and equipment buying functions to franchisees over the last year, as it cuts costs out of the Subway operation, he added.Mr Griffiths said the key challenges Subway faces in the UK are rising energy and transport costs. He commented: “Energy costs are, without a doubt, a challenge in the UK in particular. Fuel costs are higher and there is more congestion. There is a prevalence of parking fines here, which is reflected in costs.”