Analysing Profitability of Opening a Subway Sandwiches Franchise in Stockbridge.

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                Fraser Anderson

                Business Studies Coursework

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2878 Business Studies Coursework

Analysing Profitability of Opening a Subway Sandwiches Franchise in Stockbridge

Fraser Anderson

Contents:

1.1 Introduction

Where is a suitable restaurant that serves fast food and has healthy options in Stockbridge? Currently, there is none of this kind of dining experience. Due to the increase in percentage of people nationwide that are trying to eat a healthier diet and run healthier lifestyle, it seems as though there is a slight niche in the market here.

When this niche is contemplated, one restaurant brand immediately springs to mind that would probably best satisfy customers in the area whilst retaining a fair sum of profit is the brand named Subway’s Sandwiches. They offer made to order healthy sandwiches with fast service and high quality. This brand is very well known in the United States and is becoming increasingly popular in the United Kingdom.

There are many fatty fast food restaurants in the area, such as Franco’s and Pizza Hut but no healthy food can be bought in these two places. Subway is a sandwich making restaurant which the sandwiches are highly customizable so is made exactly to the customer’s desires.

After some browsing the Subway website, I found that it was a franchise which has many advantages and some disadvantages as well which will be looked at throughout this feasibility study.

Stockbridge is a small area with one main street which mainly consists of tertiary sector small retail stores and many housing area around this central street. The retail stores bring consumers into the area with cash to buy goods with and some of this money will be spent on meals while the consumer is out of their home.

The surrounding area is largely residential so those residents may become regular customers and visit often due to the ease of getting to the restaurant from their homes.

The age distribution is looked at in the graph shown in the Appendix of age of people in Edinburgh against the percentage of population. The graph is unimodal and shows that the greatest population lies between the 25 to 34 year old category. This graph is analysed more when looking at the consumers.

The success of the project can be measured by profitability of the branch in the first year of the opening. This time scale is adequate because it will allow for time for customers to become regulars and for the brand awareness to spread. A whole year is needed to measure the success of the store because as the seasons chance, so do people’s habits so there will be fluctuations in consumer spending patterns, for example right before Christmas when lots of people will go out to buy presents they may also buy a sandwich while they are in the area so sales may increase.

1.2 Objectives:

Without objectives any firm will fail. Objectives are usually the firm’s targets but they are written out in such a way so that they are SMART (specific, measurable, agreed, realistic, time measured). The main objective is to create a feasibility study into the profitability of setting up a branch of the Subway franchise in Stockbridge.

My secondary objectives contain the following parameters:

  • Competitors                

Competitors must be considered when creating a feasibility study. They must be analysed to see if they will be a threat to the firm or if they will provide slight competition. Competition can also be good for a firm as it helps the firm become more productive and efficient as each business wants to do better than the others so works harder at doing so.

  • Suppliers

                Where will a business get its stock from? Will the food still be fresh after a long journey from the suppliers? The location of suppliers is just as important to the cost of stock, especially in the food business where freshness is the key to quality and quality is the main way the business uses to attract customers.

  • Customers

        Customers form the basis of any business. Without them, the business would not be able to create any revenue and would therefore fail.

  • Brand Image

The brand image is how customers will distinguish your product from the others in the same market. If customers think higher of one product over another then they are far more likely to buy the product which they prefer unless the value they place on it is less than the price. Having a large brand image will help get customers to be loyal to a business or product and not go to competition instead.

  • Finances

                Cash is the gears behind a business that make it work. The cash is used in every transaction a firm does with anyone else and is used by businesses to help in growth. Money is needed to start and maintain a business so is fairly important and should be considered in much detail.

These secondary objectives will then help me in making my conclusions which support my primary objective which was to analyse the profitability of opening s Subway Sandwiches restaurant in Stockbridge.

1.3 Research:

Research is the method used to collect information that can later on be used to create plans for the future, for example for creating objectives, aims or targets. This information is data collected directly from the source as raw data. This data must then be sorted and reorganised until it can become useful. Secondary information is data that has already been collected and sorted and can usually be found on hard-copy or by asking experts in the field that is being researched.

This study will mainly consist of secondary research for finding facts and figures about the area of Stockbridge such as the number of residents in the area itself. I will then know my potential market.  This information is better than primary information because it is usually done on a very large scale to get the most accurate results possible for the people who use it whereas the results may be very wrong in a small survey done over 15 people. If there are a decent number of residents in the area then I can assume that a fair amount of those people will at some stage visit the subway branch and may become regular customers due to the ease of getting from their homes to the store. Repeat customers have been known to make up the vast majority of the customer base as opposed to one time only customers for most businesses in the restaurant market. Repeat customers are also a good sign of customer satisfaction because if a customer was not satisfied with the service on offer then they would not have come back for a second or more time.

My primary research will be a questionnaire done on the main street in Stockbridge and I will make some notes on dining habits in Stockbridge, such as where I see most people going to eat at the lunch hour of the day. This will give a larger insight into the way consumers think and their behaviours. This questionnaire would be conducted at the middle of the main street on the pavement. This questionnaire will be essential into giving me an insight to how customers think and how they view the franchise I am investigating and it will give me a good viewpoint into the percentage of people who would become customers at the store.

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I will use systematic sampling to randomly choose the people that will be surveyed in my questionnaire. This will mean I will have to ask every 10th person who walks by during the time specified if they would be interested in participating in a survey about opening a Subway branch of the restaurant on that street, This should give a fairly random sample of people asked as it is out of my control who the 10th person to walk past will be. This should give me a large amount of results as a copious amount of people walk past the area ...

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