Why Is Subway So Expensive?

Why Is Subway So Expensive? (Top 10 Reasons)

Why Is Subway So Expensive? In the past decade, Subway has surged to the top of the sandwich food chain. With more than 44,000 locations in 108 countries and $11 billion in annual sales—the franchise is not only one of the fastest-growing fast-food joints in history, it’s also one of the most expensive.

So why is Subway so expensive? It turns out there are many factors at play. From regional variations to ingredients and sizes, here are 10 possible explanations for why your Sub costs so much.

1. Franchising is costly.

Subway is the only fast-food franchise that doesn’t have a single centralized headquarters—nor does it own its stores outright. Instead, Subway is owned by a holding company called TS Entertainment, which operates under eight subsidiaries including Subway Franchise Management Co., Inc., and its corporate offices are located in New York. It comes as no surprise that franchising is the costliest way to open one of these restaurants. If you’re a small business owner, you’ll have to shell out between $116,000 and $262,000 to open a single store.

2. Rent is expensive.

Since Subway doesn’t have its stores, it rents the space from other businesses that are already established in the area (usually convenience stores or gas stations). In 2011, rent for a typical Subway location averaged about $764 per month—giving landlords more bargaining power when it comes to leasing renewals.

3. Employees make more money with less work, which keeps costs high.

Subway franchises have to be extra careful when it comes to hiring employees. Subway is famously known for its “sandwich artists” (their employees are called ‘sandwich artists’), who prepare the food and assist in taking orders from customers. Because Subway has such a low ratio of staff to customers, their workers are required to serve 150 percent of their time, otherwise, they will lose their job. And this is with minimal work. A former employee revealed that she was required to spend the first 15 minutes of her shift sweeping and mopping.

4. Sandwiches are sold by weight, not by price.

As a result of Subway’s $5 Footlong promotion, some customers have complained about the inconsistency of their sandwich sizes. In 2010, a pair of New Jersey men sued Subway for false advertising because their 12-inch sandwiches fell short of the advertised 12 inches (they were 11 inches). Subway lost the case and had to pay the pair $800 in damages. Most other chains sell sandwiches at a flat price per item, but Subway sells sandwiches by the pound. This means that they can charge more for larger sandwiches and less for smaller ones—and they often do. According to an informal study posted by Business Insider, a foot-long subway sandwich costs roughly $8 (or 25 cents per inch).

5. There’s no tipping at Subway.

Because of the low turnover rate and high employee turnover rate, Subway employs fewer workers than other fast-food chains. This saves them money on employee salaries—which means that Subway doesn’t have to pay employees as much. When it doesn’t have to pay its employees as much, Subway doesn’t have to provide its workers with the same benefits that other fast-food chains do. And according to Business Insider, that includes tips. By paying its workers less, Subway keeps its costs down and passes those savings on to you—which is why you pay more for your sandwich than the person eating at a local fast food joint next door (where employees are usually tipped).

6. The term “natural” isn’t regulated.

One of the most expensive ingredients at Subway is its bread—the company sells roughly 300 million pounds of it each year. For a sandwich, bread accounts for up to 80 percent of the total bill. On top of that, Subway will spend upwards of $8 million each year on refrigerated bread. And since it can’t get its hands on only the freshest ingredients, it must rely on chemical additives to produce its food. Subway uses brominated vegetable oil (BVO), which is a chemical used in flame retardants. The additive is okay to put in food, but it can cause serious health problems for small children and pregnant women. Subway’s bread also has to look good. Thanks to the large number of ingredients used—among them starches, dextrin, vegetable oil, sodium stearoyl lactylate (SSL), cellulose, and other additives—Subway bread is a work of art, according to MSNBC.

7. Prices at Subway vary regionally, but not by much.

The prices of groceries are always changing, but the prices at Subway remain almost the same no matter which state you’re in. A quick study in Yahoo! reveals that an average six-inch vegetarian sub costs around $5.65—and that’s with tomato, cheese, and veggies included. The cost of a foot-long sub varies depending on the type of meat and bread used, but it can cost as much as $12 in some areas.

8. It’s a healthy alternative to other fast-food chains.

Even though Subway is known for its fresh-baked bread, most subway sandwiches are also higher in calories and sodium than their competitors. And if you’re a vegetarian, it’s probably best to avoid meat altogether. According to a study published in the Journal of the American Dietetic Association, meatless sandwiches at Subway were higher in calories than those that contained meat.

9. The products you buy at Subway are imported.

It’s obvious that this is something Subway would want to keep secret, but it’s something they advertise on their website. The company proudly lists the countries where its ingredients are imported from—Mexico, Argentina, France, Australia, and more.

10. The company sued Quiznos for lowering its prices.

Subway was once a smaller chain known for its Italian sub sandwiches and foot-long subs, but since Quiznos began selling six-inch sandwiches for $5, Subway has struggled to stay relevant in the fast-food industry. As part of their promotion, Quiznos began giving out coupons that allowed customers to buy six-inch subs at a discount price of $4.99 and a free sub with each purchase. In response, Subway sued the sandwich chain in 2009, claiming that Quiznos’s subs were not up to par with those served at Subway. At that time, many Subway locations had to close down due to significant losses.

So there you have it, the top 10 reasons why the subway is so expensive. If you found this article helpful, please share it with whoever might find it interesting as well. I hope this was able to answer your question about why the subway is so expensive. Thanks for reading!