What Is the Average Income of a Subway Restaurant Franchise Owner?

Lengthy earlier than Subway was bought by the acquisitive personal fairness agency Roark Capital—a deal that closed in Spring 2024 with a price ticket of $9.6 billion—an entrepreneurial member of the StartupNation neighborhood posed a query in regards to the big sandwich chain.

It was July 2006. The query to the StartupNation neighborhood discussion board was earnest and particular:

“I’m curious to know what’s the common revenue a Subway restaurant proprietor would make month-to-month? Or if you realize anybody who owns a Subway, how a lot do they make month-to-month? Or if you realize anybody who owns just a few Subway areas, how a lot do they make month-to-month?”

Inside days, members of the StartupNation neighborhood started responding to the Subway questioner and discussing the price of a Subway franchise and whether or not proudly owning one was a superb funding. Then, over the following 15+ years, they continued responding, layering questions on prime of feedback on prime of compliments like, effectively, like an enormous Subway sandwich:

They mentioned and debated all the pieces from Subway franchise value to Subway franchise profitability to Subway guidelines, rules and non-traditional areas.

‘The Subway Put up’

The Subway Put up,” because it got here to be recognized at StartupNation, grew into a number of pages over time as scores of neighborhood members—Subway franchise homeowners, Subway managers, Subway lovers, Subway haters, you title it—weighed in on the financials of proudly owning an outlet of the well-known restaurant chain.

Now, with Subway within the arms of Roark Capital after a Federal Commerce Fee evaluate, StartupNation determined to revisit “The Subway Put up” and replace any info we may. We additionally needed to put Subway store possession within the context of franchising general.

However, first, what about that unique query? How a lot are you able to make from proudly owning a Subway franchise?

Subway Franchise Profitability

Nicely, formally, Subway Eating places, the franchise enterprise operated by Physician’s Associates, Inc., is cautious to not predict what any single Subway location may earn in gross sales or clear in income. In case you’re trying to purchase an current Subway franchise, it’s possible you’ll be offered the precise data of revenue and loss for that particular retailer.

However a brand new location? Future revenue projections? You’ll should do your personal analysis.

In actual fact, sprinkled all through the paperwork {that a} purchaser should full when securing a franchise are phrases underlining that neither Subway nor its representatives can or ought to make any predictions or ensures about profitability.

Right here is a type of disclaimers, for instance:

“We don’t make any representations a couple of franchisee’s future monetary efficiency or the previous monetary efficiency of company-owned or franchised shops. We additionally don’t authorize our staff or representatives to make any such representations both orally or in writing. Nevertheless, in case you are buying an current outlet, we could give you the precise data of that outlet. In case you obtain some other monetary efficiency info or projections of your future revenue, it’s best to report it to the franchisor’s administration. …”

Profitability Estimates from Posters

In responses to the unique submit in 2006, folks figuring out themselves as Subway franchisees or Subway staff conversant in franchise operations offered numerous revenue estimates.

Some mentioned franchisees ought to count on to see 20% revenue margins. Tightly managed retailers can push 25% money movement, and ones with weaker operations may clear solely 15% a yr.

Meaning a location on the excessive finish of the gross sales chart may throw off $150,000 a yr or extra. A struggling Subway in a low gross sales location may clear as little as $40,000.

One poster provided this recommendation:

The final rule of thumb is that in the event you actually push it (work within the retailer your self, maintain meals and labor prices as little as potential, and keep on prime of loss prevention) you’ll be able to attain a revenue margin of about 25%.  So, when you’ve got a retailer averaging $10,000 every week in gross sales, you`ll make about $10,000 a month revenue.  Be mindful, this isn’t straightforward and most Subway homeowners don`t do that effectively.

A poster who recognized himself as “Subway Proprietor” was extra bullish on the chance:

I personal three Subway eating places.  I don`t need to make anybody mad, however some issues posted listed below are both unsuitable or deceptive.  First off, I’ve been concerned with Subway for 17 years, since 1989, and it’s a good firm.The common retailer within the US does somewhat shy of $8,000/week.  So for simple spherical numbers let’s say the common retailer does $400k/yr.  It’s comparatively straightforward to drag 20% revenue in the event you control the enterprise.  I averaged 22.63% for the primary quarter this yr and I used to be in my shops a median of 10 hours or much less per week, so 20% will not be that arduous.  However for the next estimate, let’s use 20% common revenue.You probably have a retailer that’s merely common it’s best to revenue within the ballpark of $80k/yr.Now let’s say you had been fortunate sufficient to get a fantastic location and also you retailer does $15k/week (the realm I’m in has a number of shops that do that and way more in gross sales so it is extremely potential), effectively, you have to be making in extra of $150k per yr.Now, one or two shops usually are not going to make you a multi-millionaire, however you can also make a snug residing with out a lot of a time funding.

Different posters pushed again, suggesting that income down within the $25,000-$30,000 vary had been frequent and that to make a residing off Subway franchising one needed to personal a number of areas. They warned that except you would construct up your personal enterprise of Subway franchises, you may simply be shopping for a job, and in some instances shopping for a low-paying job.

Changing these 2006 {dollars} to 2024 buying energy is fraught given the latest excessive inflation and the specificities of meals prices and the restaurant enterprise. However a straight conversion based mostly on basic inflation would put that vary of earnings at $46,000-$125,000 in at this time’s {dollars}.

So, How A lot Do Subway Franchise House owners Make?

So, how may we estimate at this time’s Subway franchise financials via analysis of accessible documentation? Nicely, let’s begin with discovering what we will about product sales figures:

Whereas Starbucks and McDonald’s battle for the title for the world’s largest restaurant chain based mostly on whole gross sales, Subway is correct there battling for the highest spot by variety of shops (virtually 37,000 shops worldwide in 100 nations, with about half of these in the US).

On common, a typical Subway retailer will gross about $420,000 a yr, based mostly on Subway’s personal figures and business estimates. Whereas that will sound like some huge cash, $420,000 is a small per unit income in contrast with different restaurant franchise alternatives. And Subway’s common income per retailer really decreased for a lot of the 2010s, till a turnaround in 2021-22.

So, if our working quantity is $420,000 a yr in product sales, the place does that cash go?

(Subway does boast among the many lowest begin up prices for franchised shops. However we’ll take a look at the preliminary funding, such because the franchise payment, later.)

Subway Franchise Value: Royalty Charges

Begin with the Subway franchise royalties. The royalty payment is 8% of product sales, whereas the promoting payment is 4.5% of product sales, in line with Subway’s Franchise Disclosure Doc.

Like different franchise agreements, Subway’s consists of different small, recurring charges as effectively, and so they’re listed in that disclosure doc. However the huge charges are these two that add as much as 12.5% of product sales, and Subway is obvious in its documentation about amassing these:

“Product sales” consists of all gross sales of each form constructed from your restaurant. … The royalty is payable to us and is nonrefundable. … The royalty is payable weekly and is due on or earlier than the Friday following the shut of the enterprise week which is often Tuesday. You should submit signed types to permit us to deposit drafts in opposition to your checking account for the total quantity of the weekly accruals of royalties, promoting charges, and different quantities you’ll owe us.

Labor, Meals and Different Prices

Past these royalty charges lurk the opposite, typical prices of working a meals franchise. You’ll have hire and utilities, after all, or different bills reminiscent of property taxes and constructing upkeep in the event you’re fortunate sufficient to personal the property. In case your Subway goal retailer is in a non-traditional location, you may need a concession payment as effectively.

Labor prices will rely on prevailing wages in your neighborhood, together with any state or native minimal wage, in addition to how aggressive the labor market is the place you arrange.

You’ll have to account for what number of hours you because the franchise proprietor can put in, however don’t depend in your sandwich abilities to be the distinction maker. If monetary success requires you to take too many shifts behind the counter, you may need to rethink the plan.

Meals prices are more likely to account for the most important chew of your bills. Within the Subway franchise system, homeowners should purchase from Subway-approved suppliers.

Subway cites high quality management and buying energy because the positives of this association, and a few homeowners of Subway franchises contributing to “The Subway Put up” praised the system for serving to them with account well being monitoring and stock monitoring. Others, nevertheless, pleaded for extra flexibility, questioning Subway’s “eat contemporary” slogan and saying they may supply higher elements at a fairer value than these mandated by Subway company.

Put all these prices collectively, together with another miscellaneous bills, and you’ve got a stable image of what would come out of that common gross sales take of $420,000.

Your prices, once more, would rely largely in your location and your administration of the place. Your gross sales may even rely on location and the quantity of competitors, together with from extra areas within the Subway household.

Franchisees have complained when Subway grows its retailer depend and recommend that Subway generally pushes for systemwide income development over the account well being of particular person franchises. As an alternative of contemplating their present Subway franchises, they push new shops even when an area space is oversaturated.

Some Subway franchisees complain about different company dictates as effectively. The newest is the demand by Subway that every one franchises honor digital coupons within the app, one thing that about 10% of franchises had been declining to do on a constant foundation.

Anticipate Extra Friction and Increased Prices If Franchise Labor Change Goes By

One Franchisee’s Numbers

A discussion board contributor who mentioned he owned three Subway franchises broke his P&L financials down this manner:

Meals: 33% (lowest retailer 30% and highest retailer 33%)
Labor: 22% (lowest retailer 19% and highest retailer 22%)
Hire: 9% (lowest retailer 3% and highest retailer 9%)
Subway charges: 12.5%
Utilities/Misc: 8.5%
Revenue: 15% (lowest retailer 15% and highest retailer 22%)

He additionally gave an insider tip about company-owned tools: “I’d additionally recommend financing your tools as a substitute of leasing. The common Subway lease comes out to +20% curiosity the place as a conventional mortgage can be within the 5-8% vary. Hope this helps!”

Guidelines for Subway Franchisee

So far as working the enterprise, understand that as a franchisee your freedom to function is constrained by the phrases of the settlement with the mum or dad firm.

Apart from mandating meals purchases and charging weekly royalty charges, Subway operates like most any restaurant chain with a franchise mannequin. Subway has groups that assist franchises get arrange (a web site choice staff, for instance) and groups that monitor franchise efficiency.

Subway employs what they name a Improvement Agent. A Improvement Agent, in Subway’s description, is “an area, on-site consultant of the Subway idea” who will “present native assist not solely all through the applying course of however continued assist as you use your restaurant.”

Our StartupNation neighborhood posters had combined views on these Subway DAs, as they known as them. One poster gave this recommendation concerning DAs: “In case you are contemplating Subway, discuss to current franchisees within the space and ask about their satisfaction with the DA of that space. Improvement Brokers are additionally anticipated to make sure franchisees are working inside firm pointers by having discipline reps that examine shops month-to-month. They do way more than simply open shops.”

Whereas one other poster put it extra succinctly: “There may be large variation amongst areas, with some native improvement brokers being useful, and a few are downright horrible.”

Shopping for A Subway Franchise: Preliminary Franchise Payment

So, earlier than you even get to the stage of making a living from a Subway, you must make in preliminary funding within the firm. Happily, in the event you’re decided to pursue a Subway franchise, the corporate operates on a comparatively low funding enterprise mannequin, and new or current franchises are sometimes out there.

Subway units desk stakes at a web price of $150,000 and liquid property, or money available, of $100,000 per location. That’s what’s wanted simply to be thought of for a Subway franchise position.

Subway Franchise Complete Funding

Then, your preliminary funding begins with the preliminary franchise payment of $15,000. On prime of that, you’ll need an estimated $207,000 to $477,000 to put money into your retailer, in line with Subway’s personal estimates. Your determine will rely on such elements as constructing measurement, configuration and placement.

Understand that any transforming or renovation you do to your area should conform with Subway franchise pointers. Some franchise homeowners have ready their area forward of time solely to search out out that Subway’s retailer design staff didn’t contemplate them configured correctly for franchised shops.

So, with all that as fundamental background on the Subway franchise value and on what Subway franchise homeowners may make, what’s subsequent?

First, allow us to share just a few ideas from contributors to “The Subway Put up.”

It’s one factor to think about proudly owning your personal enterprise, however when you’ve got by no means accomplished it, it’s best to suppose arduous about all of the obligations you’re taking over.
Working a meals franchise is a grind. And though Subway gives coaching courses and assist with issues like stock administration duties, the challenges of labor shortages and competitors are actual.
The good thing about Subway will not be in proudly owning a Subway franchise a lot as proudly owning a number of Subway franchises. Posters say that multi unit homeowners get essentially the most out of the expertise.

On prime of that, it’s best to look arduous at the way forward for Subway Eating places itself.

Based in Bridgeport, Connecticut, in 1965 by Fred DeLuca and Peter Buck (each now deceased), Subway went via a tricky decade within the 2010s earlier than turning issues round.

In April 2024, Subway accomplished the sale of itself to Roark Capital, a personal fairness agency that owns a bunch of different restaurant operators and franchises (together with Subway rival Jimmy John’s.) Roark reportedly paid greater than $9.55 billion for the sandwich chain. Then in early 2025, Roark Capital moved so as to add to its restaurant steady by signing a deal to accumulate Dave’s Scorching Rooster for roughly $1 billion, sources conversant in the matter informed Reuters.

In saying its plans to promote itself earlier in 2023, Subway emphasised that, coming off a powerful 2022 that noticed its same-store gross sales climb 9.2%, its technique was paying off.

“The administration staff stays dedicated to the long run and can proceed to execute in opposition to its multi-year transformation journey, which features a deal with menu innovation, modernization of eating places and enhancements to its general visitor expertise,” the corporate mentioned.

The mixture of fewer shops and better gross sales per retailer stands as a degree in favor of turning into a Subway franchisee.

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Listed here are another professionals, adopted by some cons:

Professionals of proudly owning a Subway franchise:

Subway is a longtime model with a big buyer base, excessive loyalty amongst a few of these prospects and powerful model recognition.
Subway gives franchisees with coaching, ongoing assist, and entry to sources reminiscent of advertising supplies and operational manuals.
Subway begins you off with comparatively low franchise charges, so the Subway franchise value is affordable compared with different franchise alternatives.
Subway permits some flexibility in creating menus to cater to native tastes.
Subway has sturdy relationships with its distributors, which some franchisees tout as useful in shopping for high quality items for cheap costs.

Cons of proudly owning a Subway franchise:

As our discussion board contributors talked about steadily, the Subway franchise royalty payment cuts into the revenue margin.
Subway franchisees say menu flexibility doesn’t go far sufficient and that the requirements imposed restrict their capacity to create distinctive menu choices.
Competitors from different quick meals shops is intense, and even when Subway is not the biggest restaurant chain on this planet by variety of shops, some franchisees say there are nonetheless too many new franchises popping up.
The quick meals business general has excessive worker turnover, and Subway is not any exception.
The framework and guidelines that apply to Subway franchise homeowners may be limiting.

Ideas of Beginning a Franchise

Clearly, whether or not to pursue a Subway franchise is an advanced query stuffed with the standard uncertainties that encompass any enterprise enterprise.

The identical may be mentioned, after all, for franchising usually.

With that in thoughts, we wish to depart you with one other listing that may assist anybody contemplating a Subway franchise or some other franchise.

Franchising is usually a nice alternative. But it surely needs to be best for you.

Listed here are 9 issues to find out about franchising. We based mostly this listing on this text about beginning a franchise and this text about how franchising might help management your dangers.

Analysis the franchisor: Earlier than investing in a franchise, analysis the franchisor’s historical past, financials, and repute. Search for purple flags reminiscent of lawsuits, chapter, or unfavourable critiques.
Perceive the franchise settlement: The franchise settlement is a authorized contract that outlines the rights and obligations of the franchisor and franchisee. Perceive all phrases and circumstances.
Consider the franchisor’s assist: A very good franchisor ought to present assist in areas reminiscent of coaching, advertising, and operations.
Take into account the franchise’s profitability: Take a look at the franchise’s financials, together with the preliminary funding, ongoing charges, and potential income. Be conservative when making projections.
Know the franchise’s goal market: Ensure the franchise’s goal market aligns with your personal pursuits and strengths.
Analysis the competitors: Take a look at the competitors within the franchise’s market and consider how the franchise differentiates itself.
Perceive the dangers concerned: Like every enterprise enterprise, there are dangers concerned in beginning a franchise. Be sure you and have a plan to mitigate the dangers.
Speak to different franchisees: Get an thought of the experiences and challenges confronted by different franchisees within the system.
Get skilled recommendation: Take into account consulting with a lawyer, accountant, or franchise advisor. They’ll present invaluable insights and allow you to make an knowledgeable resolution.

Conclusion

Since touchdown the StartupNation neighborhood discussion board in 2006, “The Subway Put up” has not solely remained related, nevertheless it has engaged entrepreneurs and the business-minded repeatedly. 1000’s of Subway franchises have opened, closed or modified arms in that point, and Subway Eating places has gone via its personal twists and turns.

The unique poster’s query—”What’s the common revenue of a Subway restaurant proprietor?”—was by no means answered right down to the greenback. However the posters received shut, and we hope this text has accomplished the identical for a 2024 reader.

We additionally hope now we have offered a transparent mind-set about Subway franchise possession and a few helpful recommendations on franchising usually.

This text was up to date in March 2025.