Fred DeLuca and His $1, 000 Dream
Fred DeLuca, founder of Subway
In the summer of 1965 Fred finally came to the right solution of his problem. A family friend Dr. Peter Buck, suggested that he and Fred open a submarine sandwich shop, as such business had been quite successful in his home town. The first sandwich shop – Pete’s Super Submarines was opened in August 1965 with a $ 1, 000 loan, taken from Dr. Buck.
“I walked to town hall and said, ‘I have to get some kind of license for the store I’m going to open’. The lady behind the counter said, ‘We need some kind of plans for your store’. I said, ‘Well I don’t have any plans’. She said, ‘If you could draw something out, that would be great’. So I drew a sketch, gave it to her, she stamped it, and that was it”.
Peter and Fred had a plan to develop their business and open 32 stores in the next 10 years. In a year they had their second shop. The first one was not going well, so they preferred to open a second one instead of closing the first one.
‘We thought, we can’t close because we’ve failed. We hadn’t met our goal of 32 stores. We decided to open up a second store, even though the first one was not successful’
They realised that visibility and marketing are main factors for the future success of their business. Consequently they changed the name of their stores to ‘Subway’, because the first name was very long and it sounded like ‘Pizza Submarines’. By the end of the second winter they already had three stores.
‘When winter came, instead of having one low-volume store, I had three extremely low-volume stores’. ‘I didn’t know enough about business to realize how bad we were doing. And I didn’t have the concept that you should quit at something. I can think of so many reasons why we shouldn’t have made it. We were on the edge continuously.’
Nine years later, he developed a pretty good system and built 16 stores, the only problem was that the goal of 32 stores was still an impossible mission.
Subway restaurant
In 1971 Fred DeLuca received a Bachelor’s Degree in Psychology that helped him in becoming a successful businessman. Fred decided to draw up a business plan and make Subway a franchise chain.
‘We didn't really know the franchising business, and it's a very different business from the store operations business. Just because we knew how to run stores didn't mean we knew how to run a franchising company – at that point, we were in the beginning stages of learning how to be a franchiser.’
The success came straight after the decision. In 1974 the first Subway franchise opened in Connecticut and in 1982 they had 200 stores. Several years later the first international franchise came up in Bahrain and Saudi Arabia. This franchise opportunity was given to people who wanted to succeed in their own business venture. After this rapid growth DeLuca’s goal was changed to 8, 000 stores by 1995.
The company has been on the market for half a century, and it became very popular, when the college student - Jared Fogle lost 111 kilograms after eating only Subway low fat sandwiches for a year.
Today there are more Subway than McDonald’s restaurants, making Subway the most successful world franchise system.
‘What’s happening to us is beyond whatever I imagined. If you told me 30 years ago that one day I’d be sitting in a Subway store in Russia, I’d have said you were crazy’
Fred could not have imagined that after store number 1, 2 and 3 Subway would become enterprise like it is today. DeLuca needed a start to achieve his dream, like most of small businesses including Subway, where they were and will be financed by family, friend and personal funds.
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