Subway Founder Borrowed $1,000 To Sell Sandwiches, Now He Is a Billionaire

The Subway sandwiches chain got its start in 1965 in Bridgeport, Connecticut. A young man wanting to make some money for college borrowed $1,000 from a friend to open a store that sold healthy food alternatives.

The young man’s name was Fred DeLuca, a native of New York, and his friend was Peter Buck. Just three years later in 1968, their business grew to three stores. Ten years later, DeLuca and Buck had 100 stores, and nine years later in 1987, that number had grown to over 1,000.

Through the 1980s and 1990s, the chain grew exponentially, with the chain seeing over 50 new locations opening every week in 2013.

According to Celebrity NetWorth, there are currently 43,945 Subway shops operating in 110 countries around the world. It has become the world’s largest single-brand chain and holds the title of the largest restaurant operation in the world.

In the United States, if you combined all of the McDonald’s and Starbucks in the country, the number still would not equal the amount of Subway shops.

The $1,000 startup made DeLuca and Buck billionaires.

For many years, it seemed that Subway was unstoppable, reigning as the undisputed #1 food chain in America. Then, last year, Subway slipped to #3, making $400 million less than the year before.

While many food chains have had hard times during recent years, none of the top 25 chains had a decline in revenue as significant as Subway’s.

With an average of 2,800 sandwiches being made and sold ever single minute, and new stores being opened every week, how can the brand be in decline? Part of the issue is gross sales and profit margins. While Subway may have more stores than McDonald’s, each subway shop makes around $440,000 in annual sales, while the average McDonald’s store hauls in $2.4 million.

Subway has found that less people are visiting their stores. A large part of the equation is simple competition. Chipotle, Firehouse Subs, Jimmy Johns, Jersey Mike’s, and a whole slew of other healthy and gourmet sandwich shops are doing to Subway what Subway did to others for so many years — drawing away the customers.

Bad publicity has also played a role, with Vani Hari from making it public that Subway used the same material in their bread that is also used to make yoga mats. While the chemical was FDA approved, people still worried about eating yoga mat material.

Subway no longer uses the additive azodicarbonamide, but the damage had been done.

Perhaps the other part of the equation is what people view as “healthy” today. Twelve inches of bread doesn’t go down well on a low-carb diet, and meat that is processed and packaged is less appealing and healthy than fresh-cooked meat that is cut while you wait.

So, is the amazing run of Subway over?

Time will tell, but DeLuca, who is a leukemia survivor, isn’t going down without a fight. He wants to add another 8,000 new outlets to the 27,000 that are in America alone.


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