October 27, 2004

Ever the get the feeling that McDonald’s is trying to reinvent itself? Well that’s because it is! They have a story all about how they’re changing it - and lovin’ it. This story is available on their website as a PDF.

Quite apart from the absurdity of “one day we might be more famously known for our salads” (now with Hellmann’s mayo) - the emphasis is on specially selected Russet Burbank, Shepody and Portland Dell potato for their fries (have you EVER heard of these varieties of potato? They are obviously so exotic that my local famous-name supermarket doesn’t even carry them - so I guess they must be healthy) - and of course; the fish in Filet-O-Fish is either Icelandic or Norwegian cod (caught in the cold waters of the North Atlantic) or high-quality Hoki from New Zealand. Cool eh? And just look at their brand new breakfast line-up: it’s now not just coffee - it’s cappucino (With Kenco beans too). And that grotesque thing that they used to sell called “Big Breakfast” has now been replaced by hip and trendy “Oatso Simple” (i.e porridge) - and even those stodgy thingy-and-egg-MCMuffin’s have been de-emphasised in favour of - wait for it: fruit toast - and bagels - yes bagels - with optional Philadelphia Light cream cheese. (Doesn’t it seem as if McDonald’s are shifting to selling the sorts of breakfast things that you’d usually make for yourself at home?)

It’s kind of clever of Mac’s to go into cobranded partnership with the category-leaders in mayonnaise, coffee, porridge and soft-cheese. (Apologies for the deliberate use of corporate marketing jargon there.)

Perhaps this is all a sign that McDonald’s is no longer a category-leader itself? Perhaps not - for there is a not-so-new food retailing phenomenon that is making all the noise at the moment in our high streets crowded with brand haze and competing for our health-concious savvy - and that is the phenomenon called the “Subway franchise”. Opening near a McDonald’s near you. (If not already right now - there will be real soon.) American readers here will testify to that - practically every downtown street-corner and urban strip-mall has a Subway franchise. Almost as prolific as Starbucks. (Now there’s an idea for co-branding .…)

Anyway - here is the Subway franchise that suddenly appeared in my local London High Street a few weeks ago:

A Subway franchise suddenly appeared on my High Street.
(Notice the McDonald’s almost right next door!)

Is this the beginning of the end for McDonald’s? Some would say yes - because it is a FACT that there are more Subway’s in the USA than there are McDonald’s. It is a FACT that (in Europe) sandwiches outsell burgers by ten times to one. (Bear in mind that McDonald’s owns a piece of Pret a Manger.) It is also a FACT that Subway’s stated aim is to outnumber McDonald’s - and right now they are at 22,134 restaurants In 77 countries compared to McDonald’s 31,000 restaurants in 119 countries. HOWWEVER: it is a FACT that McDonald’s has the biggest fast-food market share by far - the next biggest being a company called Yum! Brands (owner of Taco Bell, Pizza Hut and KFC) - so Subway has a long way to go - but right now it is a FACT that Subway is the fastest growing franchise opportunity on the planet.

What makes the Subway franchising opportunity so compelling? A Subway franchise location needn’t be big - a Subway can fit in any small shopfront location - everything is as cookie-cutter as a franchise operation should be - the margins are relatively high (I’m hearing reports that Subway is the fastest way to become a millionaire in food retailing) - and most of the traffic (and the product) is targeted exclusively at the short and lucrative “eating” hours of “lunch”. (Which means no real need to work an 18 hour day.) For the customer - the opportunity is also great: it’s different - it’s seems healthy; because it’s made in front of you from what looks like healthy, freshly prepared ingredients, it’s not too far from the McDonald’s and you seem to get more for the price of a Big Mac Meal than a Big Mac Meal.

And this, along with the relatively high cost of franchise acquisition: circa 130,000 UK Pounds (around 200,000 Euro) is the reason why many wealthy second-generation Asians in the UK are shifting their aspirations from continuing with the first-generation legacy of that most Great British an institution: the corner shop newsagent/convenience store - to the Subway franchise: It’s easier (no working around the clock) - it’s more professional (you employ people to run the store whilst you are out playing golf) - and providing you have a good location (near a McDonald’s) then you’ll make your million in no time at all.

It was the first-generation Gujurati, Punjabi and Pakistani immigrants of the 1960s that saved the Great British corner shop from extinction - as these folks had every incentive to work it in order to make a living - providing such great services to community along the way. Consequentially - the next generation have it made. And they are no longer “foriegners” - they have become British - and middle class - and they want professional careers - or at least a taste of the corporate life etc. whilst their parents continue running the “shop”. However, right about now - these first-generation Asian parents are fast approaching retirement - and the second generation have some hard choices to make: What should we do with the shop? What should I do with my corporate job? The Subway franchise provides a fantastic answer to the problem: sell the shop for a Subway franchise - and ditch the corporate job to run the business. I mean - admit it: you’re never going to make it to CEO anyway.

Will this be the demise of the corner shop? Almost certainly not - there are plenty others who will fill that void - and are already doing so - notably the more recently arrived immigrants - e.g. Eastern European, African, South Asian etc. But one thing is for sure - you can bet your bottom Dollar/Euro that behind many Subway franchises here in UK - stands a new generation of Asian businessman/businesswoman.

Posted by jag at October 27, 2004 09:27 PM

Having had one of the salads I can say that if they ever become famous for their salads it won’t be for the right reasons.

Posted by: stroppycow on October 27, 2004 09:33 PM

Subway have got the right recipe at the right time: healthy food, good value, fast. They’re popping up all over the place here, too - particularly in food courts and next to big petrol stations.

Meanwhile McDs are bombarding the tele with ads for salads and their McCafe franchise.

Posted by: Fi on October 27, 2004 10:22 PM

I hate, loathe and detest beyond all imagination the way Macdonalds think they have a god given right to penetrate the world with their revolting food that is specifically targetted to children. All this so-called ‘healthy’ salads etc is a farce. Their chicken caesar salad for example has as much fat as a burger mainly because of the stabilisers/gum and other noxious substances that make up the dressing. Don’t get me started - they are the biggest child abusers of the century.

Posted by: astrid on October 27, 2004 11:47 PM

were we live here in our oz suburb - we’ve had a subway for about 3 years now. Their slogan here is ‘subway - eat fresh’ AND I must say their subs are really good. again stuff you’d prepaer at home if you can be bothered, and buy all the ingredients. Somtimes its nice to get a take away!! easy! But…the subs tillnow have been fairly cheap, a few weeks ago their prices shot up, now I will have to think twice before I go there to buy! shame!

Posted by: krissie on October 28, 2004 02:47 AM

I think you’ve hit the nail on the head regarding McDonalds: the parameters of fast food have shifted and they don’t know how to respond. The slogan “I’m loving it” smacks of desperation (even more so in German “Ich liebe es”); it’s just too unspecific and bland. Subways are springing up all over the place here but I’ve yet to try them. Personally, I find the corporate identity off-putting: it’s too hard, artificial and sterile for my taste and doesn’t suggest healthy, tasty food at all. But my taste is hardly the benchmark for mass-market success. In fact it’s always very intriguing to see what combinations can suddenly open the floodgates of mainstream success.

Posted by: David on October 28, 2004 08:29 AM

i noticed that subway there and was pretty excited actually. i like the fact that maybe they’ll be more of these places around here. i get funny enough looks when i carry a pret a manger bag home with me from uni, with my lunch in it.

Posted by: Jaina on October 28, 2004 10:34 AM

sorry to be a comments box hog, but I just went and saw your lucozade sign - OMG!!!!! I used to see that so many times on the way to kensington when I lived there and my dad used to drive me back to college along that m4. there was always a traffic jam there and he used to get mad!! lol!
Once you saw the luxcozade sign it meant that you were nearly in London! for a slough girl - that was sheer excitment!

Posted by: krissie on October 28, 2004 12:51 PM

For the good of humanity the world over we can only pray that McDonalds implodes at some point. Speaking of fast food, have you ever done any cooking with a pressure cooker? They cut the cooking times in half and might work well for some of the bean recipes that take alot of time. I am shopping for one right now.

Posted by: Fritz on October 28, 2004 03:00 PM

Strop: Agreed. It’ll be all about how much money they spend on the marketing.

Fi: You confirm my theory that McD’s will try to use their deep pockets marketing budgets to advertise us to death about their salads!

Astrid: I can see that McD’s target segments are the younger folks (and their mothers) - this is clear from their strategy blurb - but I can also see that they appear to be going out of their way to try to not be seen as negatively exploiting these segments. I do agree with you about their ceasar salad - I had that once - and the dressing wasn’t very nice - so I didn’t eat it!

Krissie: Yes - Subway’s prices are NOT cheap! (But then - neither is McD’s)

David: you should perhaps try Subway some time. You will probably conclude what I did: which is that it’s nice (for most of their subs that don;t involve meatballs) - but you can make it yourself much cheaper!

Jaina: You carry your Pret bag home? You mean you never eat your lunch? (Or perhaps you come home at lunch time! :-) )
Anyway - I, too, am excited to see more variety in terms of eating places in our area - there’s just too many kebab shops and veggie Indian places - it’s nice to see more non-Asian stuff - e.g. Nandos, Subway etc. (PS - quite by coincidence Jaina - I took an interesting pic of a new Pret near Bond Street - see my next posting! )

Fritz: My mum used to use a pressure cooker all the time when I was a kid. I have one now - but I only really use it for cooking dishes that take a LONG time - e.g. saag. Mine pressure cooker is a “Prestige” if that helps - this seems to be the most common brand amongst Asian/Indian families!

Krissie: Glad you have fond memories of the Lucozade sign! (For those wondering what we’re talking about - go see: http://www.route79.com/journal/archives/000014.html )

Posted by: Jag on October 28, 2004 09:05 PM

I like the Maccy D Big Breakfast. Subway food is mank.

Astrid: child abuse means something more serious than selling bad food. That comparison is beneath you.

Posted by: Vanessa on October 31, 2004 04:37 PM

The problem with McDonalds is not that they sell unhealthy food, it’s that people like to buy unhealthy food. One of the interesting things about McD’s rebranding is that by advertising salads they’re selling more burgers. You walk in with something healthy on your mind, then end up buying something you like. If you don’t like people buying fatty food, talk to the fat people, not the happy clown.

I must say that I was pleasantly surprised to find that a 6” sub (which is all an average person needs :-) ) costs £1.95.

It’s nice to think that NZ fish is getting such a big contract, but personally I try to avoid eating fish as much as I can. The sea is being turned into a desert because we have extremely efficient ways of taking fish out of the sea, but no-one’s trying to put any back.

Posted by: Rhys Lewis on November 1, 2004 10:10 PM

That’s the Subway in Kingsbury right? I think that it was opened by the same guy who owns the one opposite Wembley Park station.

He owns the Phone/Food city brands too, and as you predicted, he’s Asian - and drives a stunning black Lamborghini. He must be raking it in…

When the Wembley one opened, it had queues of 5+ consistently for the first 2 weeks - morning til night! Subway’s USP amongst other things is that it is so damned new! Even though Subway has been around for a while, in a saturated fast-food market (no pun intended) it’s newness combined with it’s healthyness, trendy coffeeshopness and annoying tastyness is just so fresh that its bound to pull in those customers who have eaten so much McDonald’s their blood is part Strawberry Shake. I speak from experience.

(I’ve just re-read this before posting, and it sounds like i am a Subway anorak/fan/nerd/stalker or something very similar. The type of nutter able to recognize Subway stores around the world, just from a vague picture of the storefront, while pulling facts and figures about not only the Subway owner, but his choice of car and investments from memory. Well…maybe i am…)

Posted by: nosa on November 2, 2004 12:40 PM

Vanessa: Disappointed: MaccyD Big Breakfast was awful - the colour of the so-called scrambled egg put me off (bright orangey yellow) - and the muffin was, well how shall I say: so … chewy! Yuk. I have to say though - the breads used in Subway are a little manky - but the cheesy bread is nice like that.

Rhys: Yes - I believe you are right: the “healthy” promotion thing sells more “unhealthy” stuff. That 1.95 sub you are talking about is probably the cheapest of the lot. I always end up spending 3 pounds something at Subway - perhaps I am buying the wrong type of sub?

Nosa: Yep - it’s Kingsbury. Wow - owned by an Asian tycoon eh? I like your term “annoying tastiness” - as this is definitely my own experience too!

Nothing wrong with being a Subway geek! Cheers!

Posted by: Jag on November 2, 2004 10:46 PM

Exeter has two Subways and I’m afraid I avoid them for the same reason I avoid burger chains: I just don’t like the look of them and I distrust the vegetarian stuff (luckily there is a sandwich bar run by hippies by my office). Yesterday a friend had a burger from BK and I was surprised by how small it was.

re cornershops: our local corner shop was run by an old English bloke until two years back when he retired and it was taken over by an Iraqi couple.

Posted by: Mags on November 7, 2004 12:29 PM

Hi Mags: sandwich bar run by hippies: luxury! Well - subway isn’t so bad in my experience - but I, too, distrust their ability to separate veg from non-veg processes.

Posted by: Jag on November 7, 2004 09:06 PM
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