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Subway announces an unprecedented deal with franchisee Shanghai Fu-Rui-Shi Corporate Development Co Ltd (FRS) to open 4,000 stores in mainland China over the next 20 years, marking its largest expansion yet.
FRS will get exclusive rights to manage and develop all Subway locations in China. The franchisee is funded by a consortium of private investors, including Asia Investment Capita. The expansion deal is the largest in Subway's history, and the 4,000 new restaurants would be a seven-fold increase in the chain's footprint there.
The investor group, known as FRS, brings years of experience running significant international QSR franchises throughout Asia to the Subway family. The group will also appoint a chief executive officer with extensive QSR experience in the Chinese market.
Since recovering from the COVID-19 pandemic, Subway stores have seen increased sales throughout Mainland China. This growth has been fueled by a sound digital strategy, which includes third-party delivery and significant partnerships with digital platforms, as well as the addition of new menu items.
The new master franchise agreement will hasten improvements to the customer experience, strengthening Subway's market position and adding value for customers in Mainland China. The arrangement represents Subway's 13th master franchise and development agreement in the last two years, resulting in more than 9,000 potential restaurant commitments worldwide as part of the brand's multi-year transformation path and focuses on international expansion.
As it rapidly expands its current network of restaurants in the region from about 3,500 restaurants to more than 6,000 stores over the next five years, Subway continues to look for solid partners with experience in local markets.
The privately held US brand is amid a turnaround plan that also depends on renovated locations, modernized menus, and a flashy marketing campaign. One of its primary development strategies is international expansion.
The corporation has been closing thousands of US sites while attempting to expand abroad due to various issues, including over-expansion and discounts that reduced franchisees' revenues. However, comparable sales for Subway globally increased by 12.1% in the first quarter.
In a statement, Subway Chief Executive John Chidsey noted that China is a key market with significant long-term growth opportunities. He added that they are looking forward to bringing the Subway experience to even more regional guests.
Photo: Phil Hauser/Unsplash
