Quote from bsparkyman:
Subway could never be a public company. First of all no growth story. McD's penetration rate is 1 per 30,000/population. Subway's is probally already 1 per 12,000. Starbuck's is targeting 1 per 10,000. They are over as a growth story as well and will be closing shops within 2 years.
McD's is a reit with a food business. Subway is a brand with a franchise fee. Do not own 1 sq inch of real estate. No depreciation benefits or return on equity. Just good solid cash flow from moderately content franchisees who works 80 hours a week running at least 5 units for $50,000 cash flow per unit. Not a great living being beholden to the S. Then you don't own shit after 5 years and everything is depreciated and nothing to recapitalize.
Quizno's tried to model the Subway concept, complete disaster. Lowest overall franchisee satisfaction in the industry, massive franchise turnover and near saturation in less than ten years.
These are lowbrow concepts and not worth the franchise fee or 10% royalty. The brand is not worth that much to the "wall mart" mentality whores anymore.
If you want a concept easy to model with some growth check out 5 guys burgers. $1m/unit selling hamburgers, fries, dogs and fountain pop. They will be a Subway in 5 years. They are in a hot segment with no brand recognition in most markets. Beat em to the market with the concept and you can cash out in 5 years.
