Subway Franchise Profit Margin & Owner Salary 2024

Franchises are a great way to get into the world of business and generate revenue without much risk.

Many people looking to have a business are looking into starting by buying a franchise to learn how to run a business without too much risk.

Franchises are generally a very profitable way of doing business if you go for a popular brand like Subway.

Subway is one of the world’s most popular and largest restaurant chains, with about 10 billion sales annually throughout its franchise system.

Since its market is huge, there is a great chance of success. If you are thinking of owning your Subway franchise, you might wonder about its profitability.

Let’s take a look at the average revenue, profit margin, number of Subway franchises, and every other detail about Subway franchises’ profitability.

Subway Franchise Profitability

About Subway

Subway is a fast-food restaurant franchise that primarily sells submarine sandwiches, wraps, salads, and beverages.

The story of Subway began when Fred DeLuca, a 17-year old asked a family friend, Dr. Peter Buck, to advise him on how he could pay his tuition fees.

With Dr. Peter’s help and $1,000 investment, the duo formed a partnership to start a submarine sandwich shop. And this is how Subway was formed in 1965 in Bridgeport, Connecticut.

Today there are more than 37,000 Subway restaurants in 100+ countries, and if you too want to be part of this network and open your own Subway franchise, then keep on reading.

((https://www.subway.com/en-US/AboutUs))

Average Revenue & Profitability Per Subway Outlet

When you own a Subway franchise, the outlet’s revenue and profitability are generally very high because of the brand’s name.

However, it has its own costs that reduce the profitability of your revenue. Although, with both the revenue and the profitability, there are many things that change the number.

The location, business, charges in your country by Subway, and other details all play a major role in your numbers.

However, looking at the average numbers of all Subway franchise outlets, we can have an idea of how much Subway franchises can expect to make in revenue and how much you can profit.

An average Subway franchise outlet generally makes around $400,000 annually in revenue.

When you subtract the franchise’s costs, fees, and salaries, the average profitability of a Subway outlet is about $40,000 to $50,000 annually.

Subway has low start-up costs when you compare its start-up costs to similar franchise brands. However, you have to pay more in fees every month and year. Their fees are like this:

  • Franchise fee of $15,000
  • 12% of gross sales every week for franchise royalties and advertising fees

Interested In a Subway Franchise?

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Estimated Subway Franchise Outlets

Estimated Subway Franchise Outlets

Subway is one of the biggest franchise brands in the world. They have tens of thousands of stores worldwide. They are always growing, adding hundreds of stores each year.

The numbers always change, but the latest data gives us a glimpse of how many stores there are globally and also in the United States.

As of 2023, there are approximately 36,000 Subway franchises globally in over 100 countries.

About 20,000 of these stores are in the United States across 54 states and territories. 10% of these outlets in the United States are in California, which makes it the state with the most Subway locations in the United States.


Failure Rate of Subway Franchise Outlets

Not every franchise makes revenue and profit after it starts working and achieves success.

Franchise outlets, even Subway franchises, can also fail due to various reasons like bad management, not enough revenue, and so on.

Failure rate includes franchise unit terminations, non-renewal franchise outlets, and also every outlet that stopped their operations for any reason in a year.

This rate mostly focuses on the number of franchise outlets that basically stopped working, no matter the reason.

For Subway franchises, the last data in 2021 shows us that Subway’s failure rate was around 10%.

There were about 1,500 ceased Subway franchise operations and 500 new store openings in 2021 alone.

This means that the overall Subway franchise outlets decreased by about 1,000 in 2021. Over the past three years until 2021, Subway’s failure rate has been over 20%.

This means that Subway lost more franchise outlets in net numbers in the past three years preceding 2021.


How Much Does a Subway Franchise Owner Make a Year?

The estimated Subway franchise owner’s salary is approximately $31,000 per year. This estimation is derived by dividing the total annual revenue of Subway in 2021, which amounted to $9.4 billion, by the total number of franchises, which was 21,147.

The resulting average annual sales per franchise is $444,507. Successful franchise owners typically earn a profit margin of around 7% of their annual sales, translating to an estimated profit of $31,000 per year.

The average income of a Subway franchise owner is about 35% higher than the national average in the United States.

Subway franchise owners outside of the United States could look at different numbers depending on the country of the outlet. However, overall, it will be close to this number.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%444507.00
Rent11.63%(51673.94)
Insurance5.81%(25836.97)
Salaries23.25%(103347.88)
Franchise Royalty Fees5.81%(25836.97)
Utilities2.33%(10334.79)
Cost of Goods Sold (COGS)29.06%(129184.85)
Labor (Variable)15.11%(67176.12)
Total (Expenses)93.00%(413391.51)
Net Profit7.00%31115.49

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Subway Franchise Failure Rate

To determine the Subway franchise failure rate, let us see the data below:

System-wide Outlet Summary of Subway Franchise U.S. for years 2019 to 2021

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
201924,79823,799-999
202023,79922,190-2,608
202122,19021,147-1,043

For the Franchised outlets:

  • In 2019, the growth rate was (999)/24,798×100≈4.03%
  • In 2020, the growth rate was (2,608)/23,799×100≈6.76%
  • In 2021, the growth rate was (1,043)/22,190×100≈ 4.70%

According to the above-mentioned data, we can see that the franchised outlets for Subway declined from 2019 to 2021, showing a failure rate between 4.03% and 4.70%.

Overall, we can see that the Subway franchise has faced declined in the years 2019-2021 showing a total failure rate between 4.03% and 4.70%.

This high failure rate points to the poor performance of the franchises or dissatisfaction because of lower net profits.


Interested In a Subway Franchise?

Subway-Franchise-Average-Revenue-Profit-
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How Much Does Subway Employee Earn?

The salary of a Subway employee varies based on their skills, location, designation, experience level, etc.

According to Indeed, the average hourly pay of a Subway employee ranges from $8.49 per hour for the position of a Buser to $20.45 per hour for the position of a Customer Service/Sales Representative.

In yearly terms, the average pay of a Subway employee ranges from $20,000 per year for the position of Night Auditor to $95,966 per year for the position of Environmental Manager.


Pros And Cons of the Subway Franchise

Pros Of Subway Franchise

  • A well-established brand.
  • Offers training and support.
  • Low-cost franchise.
  • Multiple franchise models.

Cons Of Subway Franchise

  • Does not offer financing.
  • High royalty fees of 8%.
  • Low profit margin.
  • Competition.

Subway Franchise Payback Period

To find out the Subway franchise payback period, see this table below:

AVERAGE INVESTMENT$341,975
AVERAGE REVENUE PER OWNER$454,877
AVERAGE PROFIT PERCENTAGE7%
AVERAGE PROFIT PER YEAR$30,000
AVERAGE PAYBACK PERIOD11 years

PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR

= 341975/30000 = 11.3 = 11 Years based on median

The average investment for a Subway Franchise is $341,975.

With an average profit percentage of 7%, the average profit per year is $30,000.

This means that the average payback period for a Subway franchise is 11 years, and the total investment of $341,975 would be recovered within this period.


Facts About Subway

Facts About Subway
  • Every minute, Subway serves approximately 5,300 sandwiches.
  • There are 38 million ways to make your Sub.
  • Every day, Subway uses 16 acres of lettuce.
  • One of the founders of Subway, Fred DeLuca, was merely 17 years old when he started Subway.
  • All the Subway franchises smell the same, and it is said that it is because of their bread.
  • Suway owns more resturants than McDonald’s.
  • Subway restaurants in Los Angeles offer free six-inch subs if it rains.
  • In 2014, Subway sold 7.6 million subs per day. 

((https://www.entrepreneur.com/franchises/20-subway-facts-that-may-surprise-you/280957))


What Is Subway Best Known For?

Subway is known for its submarine sandwiches that are made from fresh bread and fresh ingredients always. Their menu also includes a variety of fast food options and beverages.

And the best part of Subway is that they also serve low-fat menu options, which also have great taste.

Here are the most popular Subs at Subway:

  • Turkey Breast
  • Tuna
  • Oven Roasted Chicken
  • Sweet Onion Chicken Teriyaki
  • Veggie Delite
  • Subway Club
  • Italian B.M.T
  • Black Forest Ham

Is The Subway Franchise Profitable?

Is The Subway Franchise Profitable?
Is The Subway Franchise Profitable?

Although Subway is a profitable franchise, its profit margin is not very high because of the high royalty fees, marketing fees, and other costs.

As such, a Subway franchise owner makes an annual net profit lying in the range of $20,000 to $40,000 only.

Some poor-performing Subway franchise outlets may make even lesser amounts, as you can see from the image shared above.


Subway Franchise Earning Potential

Before investing in any franchise, a potential candidate will be interested in finding out the earning potential of the franchise.

Subway is a very popular restaurant and sells a lot of subs and sandwiches daily. As such, franchise owners might think that they will get to make a lot of money.

However, the franchisor charges various high fees, such as 8% in royalty fees, 4.5% in advertising fees, and so on, which take up a large portion of the profits earned.

As such, there is not much potential to earn high profits from the Subway franchise.


Wrap Up

Subway is a big fast-food chain brand, and many entrepreneurs think of it as a good investment opportunity, but unfortunately, that is not the case.

A Subway franchise is definitely affordable as the investment cost range between $207,050 – $476,900.

However, it has a very low-profit margin of 7%, and franchise owners earn only $30,000 in profits on average.

Even the franchise failure rate of Subway is high (10%), and the payback period is a lot (10 years).

Overall, we do not think Subway is a good franchise to invest in, and you should consider other alternatives instead.


FAQs

Who owns Subway?

Subway restaurants are owned and operated by a franchisee network that includes 20,000 dedicated entrepreneurs and small businesses.

Where is Subway Headquartered?

The headquarters of Subway is in 325 Sub Way Milford, CT 06461-3059 USA.

Who are Subway's main competitors?

Mcdonald’s, Starbucks, Domino, Pizza Hut, Yum China, and Inspire Brands are some of the main competitors of Subway.

Sources

https://www.scrapehero.com/location-reports/Subway-USA

https://www.indeed.com/cmp/Subway/salaries/Business-Owner

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