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Secretary of Sandwich

Video
Larry Feldman, CEO of Subway Development Corp. of Washington, which owns more than 1000 Subway franchises in the Washington area, on opening his first Subway in this interview with Washington Post Staff Writer Tom Heath.Video by Nancy Donaldson, Megan Rossman/washingtonpost.com

With help from his team, which includes Warmund, Feldman has built a sprawling and hugely profitable business. He won't discuss numbers, but his 1,000-plus stores generate half a billion dollars in annual revenue, based on average store sales of $500,000 to $600,000 a year. Subway world headquarters gets about 8 percent of that revenue and gives about a third to Feldman's Subway Development, which this year will amount to $12 million to $15 million, Warmund said.

Warmund said the cost to open a store is around $200,000. "We take small spaces; we aren't building buildings; we keep costs low," Warmund said. "The more money owners make, the more they are apt to expand to more stores. That makes expansion easier for us and less work."

Feldman has a 55-person staff and three offices in Virginia and one in Maryland. Most franchise owners operate multiple stores, which helps keep the success rate on new franchises at around 98 percent, Warmund said. With 12 employees at an average Subway, where they earn around $7 per hour, Feldman's stores employ more than 12,000 people.

Feldman can wax for hours on the merits of Subway sandwiches. He has been known to get behind the counter, eyeballing the amount of tuna that a sandwich-maker spreads on the bread. He makes surprise visits at stores and eats at Subway about once a week.

Competitors said they respect what Feldman has built.

"We have some franchisees in our system who were Subway franchisees, and they understand the restaurant business and have only good things to say about their experience with Subway Development Corp. of Washington," said Bob Phillips, president of California Tortilla Group, a chain of 38 fast-casual restaurants on the East Coast.

Feldman plans to open 60 stores this year, many of which will be in nontraditional locations. The Dulles International Airport Subway, his busiest, has taught him the value of captive audiences. There are now three units in the Pentagon, and there are even some in development at high-security government facilities that Feldman cannot identify.

Dennis Lombardi, executive vice president for foods service strategies at WD Partners, a design and development firm for retail and food chains near Columbus, Ohio, said Subway hasn't hit its limit in the United States.

"Fifteen years ago, no one would have believed there could be 10,000 Subways in the U.S. Now there are more than 20,000," he said. "So I am not going to guess what the saturation number is, but it's certainly some number bigger than where we are now."


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