Subway Aims to Open 4,000 New Locations in China

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Subway is making waves with an ambitious expansion plan in China, with the popular fast food chain aiming to multiply its presence sevenfold by opening thousands of new locations. This strategic move comes as part of Subway's ongoing efforts to capitalize on the Chinese market, reports CNN.

Subway revealed on Tuesday its plans to establish nearly 4,000 new locations throughout China within the next two decades. This massive expansion is facilitated by a partnership agreement inked with Chinese corporation Shanghai Fu-Rui-Shi Corporate Development. Moreover, a new CEO will be appointed to manage Subway's business operations in China.

As stated by Subway in their announcement, this collaboration represents the most substantial master franchise agreement in the company's history and ranks among one of the largest in the entire fast food sector.

Under the terms of the agreement, Furuishi will obtain the exclusive rights to establish and operate all Subway outlets in China. Over the course of the next two decades, Furuishi has set an ambitious goal of launching approximately 4,000 stores throughout the nation.

Subway's Battle Against McDonald's and KFC 

Subway, made its foray into the Chinese market in 1995, trailing five years behind McDonald's and eight years behind KFC's entry, according to Caixin (https://news.10jqka.com.cn/20230607/c647861764.shtml). 28 years later, it appears being late to the game hasn't worked well for the brand, with Subway lagging significantly behind both McDonald's and KFC in terms of number of stores and overall business performance in China.

Using the scale of store locations as an illustration, the Caixin report continues, Subway initially set a goal to establish 3,000 outlets in China by 2020. However, recent data reveals that there are currently fewer than 673 stores in operation. Comparatively, as of February this year, McDonald's boasts over 5,000 locations in China, while KFC's presence surpasses 9,000 outlets.

One significant factor contributing to Subway's struggle to keep up with its competitors appears to be its inability to align its menu offerings with the preferences of Chinese consumers. A long-time Subway employee disclosed that many Chinese individuals find it challenging to embrace cold food items like Subway's sandwiches, which could hinder the chain's growth in China. Subway's sandwiches, which typically use cold vegetables, deviate from the warm culinary experiences that most Chinese customers are accustomed to, often making them less appealing.

Furthermore, since entering the Chinese market, Subway seems to have made little effort to adapt its offerings to cater to local tastes or to localize its products. This lack of adjustment may also contribute to the company's lagging performance in comparison to competitors like McDonald's and KFC.

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Additionally, it appears that Subway has failed to offer sufficient support to its franchisees. As reported by the publication China Chain Store, a franchisee in China was eager to introduce hot soup and localized items like roast duck sandwiches to the menu. However, the approval process has proven to be excessively lengthy, resulting in a stifled introduction of these region-specific dishes to Subway's offerings.

A New CEO in the Chinese Market

Subway has recently undergone numerous changes in its operational structure. Initially, a shift in ownership occurred, as evidenced by a report from Tianyancha, which revealed a transition from the exclusive shareholders, Subway International Holdings B.V., to Shanghai Furuishi Corporate Development.

Although Subway has not officially announced their new CEO for the region, numerous industry insiders cited by Interface News (界面新闻) have identified Zhu Fuqiang, Burger King China's CEO, as the top candidate for this position. Boasting more than three decades of experience in the restaurant industry, Zhu Fuqiang has previously held key roles at both Burger King and McDonald's for several years.

Furuishi has expressed a strong commitment to revitalizing and growing the Subway brand, reports Interface News. "Subway is poised to embark on a new chapter of development in China, focusing on redefining its brand identity, optimizing the menu offerings, and enhancing its digital experience," the company said in a statement.

In the meantime, Furuishi has established an ambitious objective of accelerating Subway's growth in the Chinese market by opening a significant number of new stores. With a target of operating no fewer than 1,500 locations across China by the end of 2023, they aim to double their store count within a six-year timeframe.

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Images: Unsplash, Courtesy of the venues

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