in loves with subway

The sandwich business is driving foodservice profits at Love’s Travel Centers.

By John Lofstock, Editor

Serving thousands of foodservice customers a day requires more than having the right location. It demands a commitment to service and quality and, most importantly, products customers want.

“Foodservice is the biggest component of our business and SUBWAY is an ideal fit because it caters to a lot of different demographics,” says Buster Walker, director of restaurant services for Love’s Travel Centers in Oklahoma City. “Since we operate travel plazas we need to appeal to truckers, families and commuters. SUBWAY offers the variety and value that has something for everyone.”

Love’s, which has 180 locations in 29 states, operates 79 SUBWAY restaurants with plans to open 10 more by next February. Love’s foodservice strategy revolves around offering multiple food brands in one food court anchored by the sandwich chain. Its other food brands include Chester’s, Godfather’s Pizza, A&W, Arby’s, Carl’s Jr. and Hardee’s.

With its multiple brand strategy, Love’s is able to attract a wide variety of customers.

“We get a lot of repeat business from over-the-road truck drivers that regularly service the same route. They have come to expect quality and consistency,” Walker says. “But more importantly, we understand what their needs are. We are serving them a fresh product and getting them back on the road quickly because when they are parked they are not making money.”

SUBWAY offers the product diversity to drive volume by also reaching daily commuters, families and even local business. To boost its chances of capturing this business, Love’s is offering package deals catering to the lunch and dinner dayparts. For example, sandwich deals include two 6″ subs for $7.99 or four 6″ subs for $10.99.

Love’s is also benefiting from SUBWAY’s recent emphasis on the morning daypart since it caters to around-the-clock traffic. “This is important to us because our units are open 24 hours,” Walker says. “Customers see this as an added convenience because they can get food, fuel and other c-store items anytime of the day, all at the same place.”

Brand requirements
To open a co-branded SUBWAY location, space and equipment requirements are minimal considering the depth of the brand. The company’s average unit is 1,200 to 1,400 square feet, with some units as small as 300 square feet.

“In a c-store we can design a full-service restaurant based on any room available,” says Allison Morrow, account managerof SUBWAY’s convenience store, truck stop and travel center division. “The operation is also simple to operate. It requires no cooking, grilling or frying, so there is no need for hood vents or grease traps. In short, SUBWAY is a great fit for the convenience store industry.”

The company estimates start-up costs for non-traditional locations to range between $72,000 and $184,000. This includes the franchise fee of $15,000. Royalties are 8% plus 4.5% for advertising. SUBWAY, which was founded in 1965 and began franchising units in 1974, has evolved into a major player in convenience store foodservice circles with more than 3,200 co-branded units and plans to open another 500 over the next five years. U.S. sales in 2005 were $7.17 billion.

“We learned early on that developing convenience store locations was a great way for the chain to grow and, at the same time, give c-store operators a way to provide customers with a made-to-order foodservice option,” Morrow says. “Plus, by developing SUBWAY restaurants at c-stores, we are also able to bring the brand to new customers.”

SUBWAY is continuously looking for new opportunities to develop non-traditional restaurants. “On both a corporate and local level, we are encouraging existing franchisees to develop more units,” Morrow says. “In areas with many SUBWAY restaurants, it may be difficult to develop additional free-standing, traditional stores. In these areas, convenience stores may be a great way to fill in the spaces because of their semi-captive nature.”

Labor issues
With labor an ongoing problem in convenience stores, SUBWAY’s operating model is easy on employees. “The simplicity of our operating system gives us an advantage here. We require no previous foodservice experience and because there is no cooking involved, positions at SUBWAY restaurants are perfect for students, retirees and homemakers,” Morrow says. “Our experience has been that there is no difference in the customer experience between c-store locations and the more traditional locations.”

In addition, if c-store operators do not wish to take on the responsibility of running the on-site SUBWAY restaurant, they can always lease the space to an existing local SUBWAY franchisee, allowing them to enjoy the same benefits of an onsite foodservice operation and collect the rent as a landlord, Morrow adds.

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