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UNIVERSITY OF SANTO TOMAS

COLLEGE OF BUSINESS AND ADMINISTRATION

TOTAL QUALITY MANAGEMENT


Subway
(Fast food Restaurant Company)

Linsao, Carilla Gale S.


Mojica, Robinson S.
Pangilinan, Cathryn Audrey
Romero, Kathrina Chelsea P.
Termulo, Stephanie Shyryl
3FM2

March 9, 2018
I. Brief History

The founder of Subway Fred DeLuca started off in the food industry by

opening a sandwich shop at the age of 17 in order to raise funds for paying his

college fees. Young Fred did not want to be a businessman but a medical doctor. He

got a loan of $1000 from a close friend who encouraged him to go ahead in setting

up a restaurant. In 1965, he and his friend Peter Buck started their first venture

together which they called ‘Pete’s Super Submarines’. The long oblong shaped bun

dish was a novelty and they hoped that it would click with the neighborhood crowd.

They formed Doctors Associates Inc. to oversee the running of their shops as

a tongue in cheek reference to Fred’s Medical aspirations and Peter Buck’s

Doctorate that they had originally thought of funding through this idea.

History and Early Days

But by the end of the summer instead of making their first profits they had only

$6 remaining with them. Instead of being disappointed and dropping out they went

on to open another restaurant nearby. Again this was not able to reach the

expectations that they had set for themselves. They defied logic and went on to open

a third store this time renaming it as ‘Subway’. This time they were able to make

profits of $7000 in its first full year of running. After experiencing their first success,

Fred decided that he wanted to pursue his career in the food industry.

Milestones

He decided that by 1974 they would open 30 similar stores in their state. But

10 years passed and they could open only 16 stores in Connecticut. But again they

found maintaining the quality of all the stores at the same level a difficult

task. DeLuca realised that the franchise model was the best for any store looking for
rapid expansion. So he persuaded his friend Brian Dixon to open the first Subway

franchise in Walling ford, New Haven. In that same year they were able to open

another 14 restaurants using the franchise business model.

In 1984, they opened their first restaurant outside North America and that was

in the island of Bahrain. In 1987, Subway had opened its 1000th store, and in the

year 1998, it opened its 10,000th store. Now it started expanding itself to almost all

the countries in the world including U.A.E., Norway, Pakistan, Hong Kong,

Switzerland, etc. In 2000 it began a media campaign that would impact sales of

Subway products everywhere in the world. In the campaign a 22 year old Jared

Fogle claimed that he had lost 111 kilos eating only Subway sandwiches.

This boosted Subway’s fresh food ideology. As America was struggling with

high obesity levels due to fast food eating trend, Subway became the best option to

choose. In 2002, Subway became the franchise with the highest number of outlets

overtaking long-time leader McDonalds. As of 2013, Subway has branches in 102

countries and yearly revenue of $9 billion. From being a part time business, Subway

has become one of the most popular chain restaurants in the world. Their consumer

oriented approach has made them one of the most successful companies of all time.

II. Services Offered

Subway offers a wide variety of sandwiches, along with Fresh Fit Choices,

Breakfast, Salads, Fresh Fit for Kids, Sides, Drinks & Extras, Footlongs, and Bread &

Toppings.

Its core product is the submarine sandwich, or better known as “sub”. In

addition to these, Subway also offers wraps, salad, paninis, and baked goods,

including cookies, doughnuts, and muffins.


Subway’s best-selling sandwich, the B.M.T., or the Brooklyn Manhattan

Transit which now stands for “Bigger, Meatier, Tastier”, contains pepperoni, salami,

and ham.

Subway also offers breakfast sandwiches, English muffins, and flatbread. In

2006, its personal pizzas made a debut in some of its US markets. These are made

to order and heated for 85 seconds. Breakfast and pizza items are only available in

some stores. In November 2009, Subway signed a deal to serve exclusively

Seattle’s Best Coffee’s coffee as part of its breakfast menu in the United States.

Recently, this April 18, 2017, Subway announced the addition of paninis to its

menu. Chipotle Steak & Cheese, Triple Cheese, Chicken Cordon Bleu, and Italian

B.M.T. Melt were the four variations of the said sandwich.

III. Institutional Awards

1. Forbes’ Number 92 World’s Most Valuable Brand (2017)

Subway is owned and operated by Doctor’s Associates. The company doesn't

own a single location, but collects 8% of revenue from each franchise. Fred DeLuca

borrowed $1,000 from family friend Peter Buck, to open his first sandwich shop in

Bridgeport, Connecticut in 1965. Today, there are more Subways than any other

restaurant brand with nearly 45,000 stores in 113 countries. DeLuca oversaw day-to-

day operations of the company until he died in 2015. Buck and DeLuca's heirs each

own 50% of the company. The brand controls 60% of the quick-service sandwich

market in the U.S. Subway has a robust social community with more than 25 million

Facebook fans.

2. Most Innovative Award for Quality Engineering & Assurance Practices

(2016)
Subway restaurants were recently presented with the “Most Innovative” Award

for their Quality Engineering & Assurance practices at LiQE 2016, one of the most

prestigious and global Quality Engineering (QE) event held in Texas. Leadership in

Quality Engineering (LiQE) has become one of the leading Quality Assurance (QA)

platforms, giving QE & QA professionals a forum to learn and share their views on

software testing trends.

3. Franchisee of the Year Award (2015)

The Subway chain, which has more than 20,000 outstanding franchisees

worldwide committed to providing a great product and exceptional service, recently

recognized seven franchisees as recipients of its 2015 Franchisee of the Year

awards.

Competing among 49 finalists from 22 regions around the globe, Subway

Franchisee of the Year awards are presented to the overall winners of the chain's

multi-unit and single unit owner categories from the brand’s North American, and

international emerging markets and international developed markets.

4. Franchisee of the Year Award (2014)

The Subway chain, which has more than 20,000 outstanding franchisees

worldwide committed to providing a great product and exceptional service, recently

recognized six franchisees as recipients of its 2014 Franchisee of the Year awards.

Competing among 48 finalists from 22 regions around the globe, Subway

Franchisee of the Year awards are presented to the overall winners of the chain's

multi-unit and single unit owner categories from the brand’s North American, and

international emerging markets and international developed markets.

5. Produce for Better Health (PBH)’s Industry Champion (2014)


For the second consecutive year, the Subway chain was honored by PBH for

their efforts to promote healthier eating and vegetable consumption.

6. Zagat Survey Awards in Three Categories: Health Options, Best Service, and

Most Popular Restaurant (2012)

For the fourth consecutive year, Subway restaurants, the world’s largest

restaurant brand, emerged as the mega chain leader in three categories: “Healthy

Options,” “Most Popular” and “Top Service”, according to the recently released 2012

Zagat Fast-Food Survey.

Zagat Survey is the world’s leading provider of consumer survey-based

information on Where to Eat, Drink, Stay and Play Worldwide.

7. American Heart Association’s Heart-Check Meal Certification (2012)

Eating healthier just got easier at Subway restaurants. The world’s largest

restaurant chain, announces that they are the first and only quick service restaurant

to apply and meet the American Heart Association’s Heart-Check Meal Certification

Program nutritional criteria.

8. Number 1 Franchise Opportunity by Franchise Direct (2012)

The Subway chain is recognized for possessing a “clear business plan, a

commitment to training and support, an ability to innovate, and sensitivity to

environmental issues.” The chain also reaches 25,000 US locations and 100

countries.

9. Zagat Survey Awards in Three Categories: Top Health, Service, and Most

Popular Restaurant (2011)

For the third consecutive year, Subway restaurants have been received top-

billing in three categories: “Healthy Options” “Most Popular” and “Top Service” –

according to the recently released 2011 Zagat Fast-Food Survey.


The Zagat Survey is the world's leading provider of consumer survey-based

information on Where to Eat Drink Stay and Play Worldwide.

10. NRN MenuMasters Award (2011)

The Subway restaurant chain which has long lead the restaurant industry by

providing nutrition information and healthier options has been named the 2011

recipient of the MenuMasters award by Nation’s Restaurant News magazine in the

“Healthful Innovations” category.

11. Number 1 Franchise of Entrepreneur Magazine’s 26 th Annual Franchise 500

Rankings (2005)

For the 13th time in 17 years, the Subway chain grabs top slot in Entrepreneur’

Magazine’s 26th Annual Franchise 500 Rankings in 2005.

IV. Application of Total Quality Management

Sourcing Procurement

Restaurant chain’s purchasing arm works with Instill to develop management

quality app. Since 2003, the purchasing co-op that handles supply chain duties for

Subway restaurants has signed an agreement for new quality management solution.

Dedicated to ensuring product quality and food safety to protect the Subway

brand and their customers has always been the main concern of the Subway.

Independent Purchasing Co-op (IPC) is owned by Subway franchisees and provides

purchasing and supply chain management services to the Subway restaurant

system. IPC’s mission is to negotiate the lowest cost for purchased goods and

services to ensure quality and improve the chain’s competitiveness.

Quality Management solution is a web-based application suite design to

ensure product quality and regulatory compliance by providing a central repository


and trading partner visibility to the logging, tracking and resolving of franchise

complaints. Quality Management solution is based on a scalable workflow platform.

The IPC is currently using the site audit, product audit and complaint modules. Other

modules ready for implementation include training and certification, equipment

maintenance, document handling, and corrective action and preventive action

(CAPA).

Quality Management was developed in conjunction with IPC to meet its

specific needs. The solution can improve vendor management and quality by

allowing for the scheduling, tracking and scoring the audits and product inspections.

Also, the solution includes historical trend analysis and supplier scorecards to assist

the management of decision-making.

The solution enables the franchisees and trading partners to collaborate with

Subway corporate in delivering the highest possible quality products.

Conformance

Subway delivers their ultimate product to customer as shown in the

advertisements (high resemblance). Also, the standards of hygiene, food

temperature maintained at -18 degree Celsius, and safety are ensured.

Reliability

Subway values the consistency of its product, to as to the quality they are

known for. Being an international company, maintaining the quality of the products

and services are on a serious note. But with assurance, Subway has served with

reliability and consistency on the hygiene of the food, flavors, sauces, high quality

beef meat and turkey from Jordan, and high availability of Halal food. They also

succeeded in maintaining the efficiency of the supply chain as they ensure no

shortage of the ingredients in every branch.


Services and Training

Subway offers not just high quality and delicious food sandwiches. In terms of

the quality of the service, they have the highly cooperative staff, ensures customer

ease at every level from choosing bread to finalizing the order, and explain the meat

variety to customers as to better help the customer decide on what to purchase from.

They also give trainings to the employees locally to ensure the services offered and

product quality are well-maintained.

Aesthetics

To put the customers in mood for the products, they also have an upgrade to

entice the customers in buying the products. They maintained the oven-warmed

fresh sandwich, fresh vegetables to add sense of freshness, has a pleasant

environment at restaurants, import furniture from America, wallpaper also

recommended by Subway International according to its standards, and renovate the

store after every 6 years.

V. Rationale for Selecting the Company

The researchers selected Subway as the focus of the research because of its

continuous worldwide growth. Subway is the undisputed leader in fast, healthy food.

Taste, high quality ingredients and convenience are the competitive attributes of

Subway which also foster customers from different parts of the world.

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