Healthy options and niche markets will strengthen demand for sub shops
Los Angeles, CA (PRWEB) March 08, 2012
During the past five years, the sandwich and sub store franchises experienced consistent and aggressive growth despite a struggling economy. Over the five years to 2012, IBISWorld expects revenue to grow at an average annual rate of 4.3% to $18.9 billion. Industry revenue grew 5.2% in 2008 and 6.8% in 2009, largely on the back of major player Subway's success with the Five Dollar Footlong promotion. Revenue managed to maintain that momentum through the end of 2011. In 2012, revenue is expected to grow an additional 1.5%. According to IBISWorld industry analyst Nima Samadi, “The industry has thrived by developing new menu options that capitalize on society's increasing awareness of the health risks associated with a high-fat diet.”
As the economy fell deeper into a recession and unemployment numbers rose, consumers became more selective about how they spent disposable income. Samadi says, “In 2009, consumer spending declined 1.9%, and luxuries like eating out were among the first expenditures to go.” The sandwich and sub store franchises avoided these downward trends primarily due to the industry leader, Subway and its wildly successful Five Dollar Footlong promotion which began in 2008. Because Subway offered sandwiches at an attractive price point, the company generated enough consumer interest to help negate the effect of the weak economy. The consumer spending trends reversed in 2010 and 2011. As a result, IBISWorld anticipates that more consumers are treating themselves to eating out, encouraging consumers to visit sandwich and sub store franchises.
The industry was one of the first quick service segments to capitalize on consumers' health and weight concerns. In 2000, Subway began an extremely successful advertising campaign using Jared Fogle, a man who lost a significant amount of weight by eating Subway sandwiches. Because of the campaign, many sandwich franchises avoided the declines that the rest of the quick service segment experienced. Other industry operators include Quiznos, Jimmy John’s Gourmet Sandwiches and Jersey Mike’s. Many firms have expanded their menu options to ensure that they can retain as large a portion of their customers' dining out dollars as possible. For example, in 2010, Subway added breakfast items to their menu, and in 2011, it introduced Subway Cafes, which offer coffee, paninis, muffins and other pastries. Over the five years to 2017, these trends are expected to contribute to further revenue growth.
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This industry is composed of franchise establishments that prepare or serve custom sandwiches and subs. IBISWorld’s Business Franchise reports provide data and analysis on industries made up of business franchises. Report titles are similar to NAICS collection titles, but the reports in the Business Franchise collection focus solely on the operation of franchised outlets and exclude non-franchise data. Business Franchise reports show the total number of franchise outlets, total franchise revenue, average profit margin earned by franchisees, as well as key threats, opportunities and costs. IBISWorld’s reports highlight the largest franchisors by market share. The reports are vital for existing or potential franchisees looking to stay ahead of key industry trends and franchisors seeking to strengthen sales and marketing intelligence.
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