Subway

Subway's Salad Days Are Past 
by: Julie Jargon
Aug 14, 2015
Click here to view the full article on WSJ.com

TOPICS: Strategy

SUMMARY: Subway, suffering through its biggest slump in years, is testing just how sprawling a fast-food chain can get before it becomes too big.

CLASSROOM APPLICATION: Students can evaluate the decision by a parent company like Subway whether to sell new franchises and the decision whether to own outlets or franchise them. Students can also evaluate the factors that have caused a decline in Subway's revenues.

QUESTIONS: 
1. (Introductory) What factors are causing Subway's reduced revenues?

2. (Advanced) How does a parent company determine the optimal number of franchises to sell? Consider the statement, "Subways aren't cannibalizing each other and that restaurants in the most Subway-dense markets actually have higher average sales."

3. (Advanced) Why have fast-food companies like McDonald's and Wendy's been selling corporate-owned outlets to franchisees?

Reviewed By: James Dearden, Lehigh University

Labels: Strategy, Organizational architecture