Essay on "Subway Sustainability Analysis"

Essay 10 pages (2878 words) Sources: 11

[EXCERPT] . . . .

Subway was founded in 1965 when a medical student named Fred DeLuca opened a submarine sandwich shop in Connecticut in order to help pay for his education. The business became a full-time venture and the company began to expand. Soon, the franchising model was adopted. Forty years later, Subway now has 34,000 locations around the world and is one of the world's largest fast food restaurant chains (Subway.com, 2011). Most of the company's locations are in the United States (24,152) and Canada (2616) but the company's global reach also creates some interesting issues with respect to sustainability. Subway operates in a total of 98 countries.

Almost all Subway restaurants are franchised operations. The company supplies almost everything that the franchisee needs save for the labor. The company supplies its restaurants with frozen bread as well as packaged meats, cheese, sauces and vegetables, so that the individual restaurant only needs to bake the bread and assemble the sandwiches. The food is provided by an approved vendor and all franchisees must order the food from the list of approved vendors (Subway.com, 2011). The company's other activities include national and regional advertising campaigns, support for franchisees and training. Because Subway franchisees receive store designs, the company also bears some responsibility for the waste management practices of its outlets, as it has the means to initiate recycling and other sustainability-related programs.

This paper will examine sustainability at Subway. Some attention will be paid to providing an overview of what Subway does with respect to sustainability. This will then be benchmarked against some best practices in the industry. This will allow for a better analysis of Subway's sustainability program. There will also be a discussion of the prevailing legal and regulatory environment in which the company operates, as this will have some impact on the company's sustainability practice. For that discussion, the focus will be on the company's U.S. operations, since two-thirds of all Subway stores are in the United States.

Sustainability is a fairly broad concept, so the paper will gain some focus by highlighting the key areas of sustainability that are most applicable to fast food restaurants. These include waste management, water usage, ethical food, ethical treatment of workers and public relations. Subway's policies with respect to each will be analyzed, again in the context of the prevailing regulatory environment and the industry benchmark best practices.

Part 2: The PESTLE analysis is a tool by which an organization's prevailing external environment can be understood. The analysis essentially serves to provide an overview, but does not provide a means to understand the information presented therein. The interpretation of the material contained in the PESTLE analysis, therefore, is entirely up to the beholder. The elements of the PESTLE analysis are the political, economic, social, technological, legal and environmental aspects of the external environment (QuickMBA.com, 2010).

The political environment is largely favorable to Subway's operations. The prevailing political sentiment in the United States is one that is oriented towards minimal regulation of normal business activities, including the operation of restaurants. Politician at various levels may, at times, place an emphasis on environmental issues, but the prevailing political climate has effectively sidelined that debate. Internationally, the issue may be more prevalent. Again, however, Subway's business is not typically subject to stringent environmental regulations, as the main concern of the political community is food safety, and that is generally the purview of local politicians. Environmental regulations in particular are highly variable. In some markets -- notably those in Europe -- these regulations may be stricter than in the domestic market.

The economic environment is an important one for Subway's business, but is perhaps less important for sustainability issues. Subway is a low cost provider of lunch and dinner, as with most of its fast food competition. Subway is, as with other restaurants, a discretionary expense for most consumers. This gives the industry a unique proposition with respect to price sensitivity. During the most recent economic downturn, many fast food chains saw their revenues decline. While some customers traded down from casual dining restaurants, others traded down from fast food to eating at home (the Economist, 2010). Subway is not a publicly traded company, so its sales figures are not published, but it is assumed that Subway's revenues trade roughly in line with those of the industry. This means that the company may have seen revenue and profit declines in the recessionary period of 2008-2009, but has likely seen an increase in both revenue and profit in 2010.

The social environment is important with respect to sustainability.

Corporations often take their lead with respect to corporate social responsibility from Milton Friedman (1970), implying that earning profits for shareholders is the paramount responsibility of business. Thus, the social sentiment with respect to sustainability is primarily important when it begins to impact profit. A firm's reputation, therefore, with respect to social initiatives, is important. If Subway earns a poor reputation for sustainability issues and this concerns customers, then the company may be compelled to act. At this point, however, this is little evidence to suggest that the social environment with respect to sustainability is such that the profitability of Subway restaurants would be impacted either positively or negatively by its social responsibility reputation.

The technological environment is important to sustainability because most sustainability initiatives are fueled by technological innovation. In addition, as technology that contributes to issues such as waste management, energy and water use reduction and other such issues becomes more affordable, it is expected that more companies will adopt such measures.

The legal environment is important for Subway with respect to sustainability. The company must obey the laws in each jurisdiction with respect in particular to its outputs such as waste, water and energy. Subway leaves most of this compliance to its suppliers and to its franchisees, however, although certainly Subway has a high degree of bargaining power over both of these groups. The laws to which Subway restaurants are subject are generally a patchwork of regulations and this can at times provide unique challenges to the company and its partners. In general, legislation that impacts on sustainability initiatives is increasing around the world, forcing companies to make frequent adjustments to the tactics they employ to deal with these issues. Most laws are built around the premise that reducing the usage of inputs is desirable, so even when there are variations with respect to the specific laws, Subway can build its strategy in a proactive manner around this general trend.

The ecological environment is central to the idea of sustainability. Subway must understand the prevailing issues in the environment and the different means of measuring its impact with respect to these issues. At present, climate change, energy usages, water usage and waste management are probably the four biggest issues with respect to ecology and the restaurant industry. The degree to which each is important will vary from region to region. In the U.S., waste management is probably the biggest issue. In Europe, climate change is important. In the Middle East, water usage is more important.

There are several key drivers that can shape Subway's sustainability policies. The first is the company's leadership. All organizational change initiatives, including those based on sustainability principles, must be driven from the top down, or at least supported by the organization's leadership. Thus, if the will of the company's leaders is to improve sustainability, then the company will do this.

The second key driver is the public, or the social environment. As noted, it is money that is the most important policy driver. Subway can be expected to perform a cost-benefit analysis with respect to any strategic initiative, including those relating to sustainability. The public can essentially vote with its dollars with respect to Subway's social responsibility initiatives. If the public does not care, then Subway probably will not either; if the public does care, this will provide direct financial motivation for Subway to care.

The third key driver of Subway's sustainability initiatives is the legal environment. Even if the company chooses not to engage in any proactive initiatives, it must react to changes in the legal environment. Subway may be compelled to perform certain activities by law, and this can guide the firm's policy. In addition, if Subway is subject to civil legal action, then the company may choose to alter its policies in light of such lawsuits.

The fourth key driver of Subway's sustainability is from the franchisees. The franchisees are at the front line of the business and are the group that has the most direct communication with the customers. Subway's owners therefore have some bargaining power over head office. If they would like to see the company engage in more sustainability measures or improve its sustainability image, then the franchisees have the power to shape corporate policy on this matter.

With these different internal and external drivers, Subway must read the external environment and set its policies accordingly. There are some issues that the company is in a good position… READ MORE

How to Reference "Subway Sustainability Analysis" Essay in a Bibliography

Related Essays:

Globalization Trends Research Paper

Globalization Trends

Globalization means a manner in which there is a connection and spread of products, technologies and communication to all parts of the world. Sometimes, economically it may refer… read more

Research Paper 10 pages (3218 words) Sources: 10 Topic: Economics / Finance / Banking

---

Bombardier Transportation Switzerland Essay

Bombardier Transportation Switzerland

History of Bombardier Inc.

According to its website, Bombardier, Inc. is a Canadian-based global transportation company, mainly focused on airplanes and rail transportation. Bombardier, in contrast to… read more

Essay 4 pages (1169 words) Sources: 4 Topic: Transportation / Mass Transit

---

Analyzing Supply Chain Management Research Paper

In close collaboration with the franchise's product development and marketing departments, IPC supports new demand. For instance, Subway's foot-long five-dollar promotion increased sales by 20-percent. This increased bread usage by… read more

Research Paper 5 pages (1619 words) Sources: 5 Topic: Transportation / Mass Transit

---

Weight Loss Restaurant Term Paper

Weight Loss Restaurant

Burton, Scot, and Elizabeth H. Creyer. "What Consumers Don't Know Can Hurt Them: Consumer Evaluations and Disease Risk Perceptions of Restaurant Menu Items." Journal of Consumer Affairs… read more

Term Paper 6 pages (2285 words) Sources: 17 Topic: Nutrition / Diet / Eating

---

Emotional Drivers of Consumer Toward Swarovskis Brand Literature Review

Emotional Drivers Towards Swarovski's Brand

Emotional Drivers of Consumer toward Swarovski's Brand

Emotional Drivers of Consumer toward Swarovski's Brand

Emotional Drivers of Consumer toward Swarovski's Brand

The standard of living… read more

Literature Review 38 pages (12508 words) Sources: 45 Style: Harvard Topic: Advertising / Marketing / Sales

---

View 100+ more related papers  >>