EDITOR’S NOTE: Nation’s Restaurant News reporter Bret Thorn is traveling this week in India on a trip organized by the U.S. Commercial Service for American franchisors, including restaurant chains, that are seeking franchisees in the country. Follow Thorn’s reports and observations on NRN.com, as well as on his blog, Food Writer’s Diary, and Twitter (hashtag #nrninIndia).
A coupon for a free sandwich introduced Sandeep Shah to the Subway chain in 1991, when he was a graduate student in Dayton, Ohio.
Twenty years later, he is Subway’s area developer for Hyderabad, a fast-growing city in southern India of more than 9 million people, according to the latest census figures. There he owns three Subway units of his own and has developed another 25 locations in the area, most of which are run by single-unit operators.
Subway, which has more than 34,000 units worldwide, debuted its first restaurant in India 10 years ago and hit the 200-unit mark in the country last month.
Shah shared his experience of opening a Western-style quick-service chain Wednesday with American restaurant operators, who were visiting Hyderabad as part of a trade mission organized by the U.S. Commercial Service to help companies find franchisees.
EARLIER:
American chains travel to India to recruit franchisees
McDonald’s: Lessons learned from India
Dispatch from India: A taste of McD, CPK
“In Dayton, I saw the ‘Subway’ sign for two years without knowing what they were selling,” he said.
Then in 1991 he received a coupon for a free six-inch sub. “That’s how my Subway story began,” he said.
He returned home to Hyderabad and forgot about Subway, until he saw one during a trip to Dubai.
“I thought, ‘if Dubai can have a Subway, why not India?’” he said.
So Shah contacted Subway and opened his first store in 2003. The response was huge, which presented some logistical challenges, he said.
“On the second day, I ran out of bread. Then on the third day we had bread, but not lettuce, which had to come from nearly 1,000 kilometers away,” Shah said.
“It was a logistical nightmare,” he said. “Customers were standing at my door, and my franchisor told me to go outside and courteously tell them what was going on.”
A week later, his freezer died. “I had to shift all of my cold food to another facility,” he said.
“A few months later, we settled down and the store was doing well, customers were getting much better food, much better service and a much better environment,” he said.
Shah became the area developer a year later.
“The market is huge, and the numbers are very promising,” he said, but he told delegates of the U.S. trade mission to India that establishing the right supply chain was crucial, as was training of staff.
Shah said his restaurants are 500 to 700 square feet in size and serve around 12,000 customers per month at an average ticket of 150 rupees, or around $3. Food costs run around 40 percent, while labor costs are 9 percent.
Like other American restaurant brands, Subway has had to adjust its menu to appeal to local tastes in India. Shah estimated that between 40 percent and 45 percent of his customers are vegetarian, and with non-vegetarian Hindus shunning beef, and Muslims not eating pork, he kept those two proteins off the menu entirely and instead uses chicken, lamb, turkey and tuna.
Subway developed several sandwiches specifically for the Indian marketing, including chicken tikka, chicken seekh, potato patties, paneer tikka, a “veggie supreme patty” made of a mixture of different vegetables, and a mixture of corn, peas and mayonnaise similar to a salade Russe.
Roasted chicken is the most popular sandwich on the menu, he said.
Contact Bret Thorn at [email protected].
