Subway Inks Four Partnerships, Dives Deep Into Delivery
Signing with one third-party delivery brand or working with as many as is practically possible is a hot topic in the franchised restaurant world. While players like McDonald’s, Yum Brands, Wendy’s and The Cheesecake Factory have exclusive delivery partnerships, mega-sandwich brand Subway is going its own way with new agreements with four of the largest delivery providers. These new partnerships could dramatically increase Subway’s overall share of delivery, and also shift the economics of restaurant delivery in smaller markets across the United States.
With more than 25,000 Subways operating in the U.S. and nearly 44,000 in total, the Connecticut-based franchise giant is the the world’s largest restaurant chain by unit count.
Michael Lang, Subway’s senior director of global convenience, said the brand first started experimenting with third-party delivery back in late 2016, which quickly expanded into a series of pilot programs that grew to include 700 restaurants in nine markets within the United States. With favorable results from those forays into delivery, Subway has aggressively doubled down with formal partnerships with DoorDash, Grubhub, Postmates and UberEats.
Asked why four delivery providers is better than one, Lang said “in order to get the geographic coverage we needed to support that franchisee network, we needed that combo of providers.” He added that consumer groups have become increasingly loyal to individual providers, which brings marketing benefits to the ubiquitous sandwich brand.
“We want to be everywhere that consumers are looking to engage with Subway as a brand,” he said. “It made sense that that sort of broader partnering was the right combination for us.”
Citing restaurant industry studies that show third-party delivery growing at more than 10 percent every year, Lang added that the company sees significant runway in the coming years. At this point, approximately 16,000 of Subway's locations are within the delivery footprint of one of those four providers, and 9,000 are currently delivering sandwiches to customers. As the delivery brands continue expanding their networks, Subway expects significant expansion of its own, which will rope in thousands more of the brand’s U.S. locations.
“The fact that we have locations in just about every place you can imagine makes us really interesting to those providers as a partner, because they need a certain level of volume and activity to make it worthwhile to go into some of those smaller markets,” he added.
Rather than requiring all restaurants to partner with all four providers, Lang said Subway’s franchisees are being encouraged to go at the pace they’re comfortable with, and to work with whichever providers that best suit their territory and customer base.
With some other prominent sandwich brands doing their own in-house delivery, especially arch rival Jimmy John’s, Lang said these partnerships should allow Subway to be “the quickest delivery meal you can get for most people simply because we’re that much closer in proximity to more of the population.”