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Franchise Sub Shop

Strategy and Implementation Summary

Our #1 strategy is to focus on our customer experience. Our success hinges on whether customers receive what we promise them, and are pleased enough to come back for more. Our KISS (Keep it Simple Stupid) approach will be successful only if we don’t distract ourselves from the core business of making good sandwiches fast, and of treating the customers as if they are special. 

As with any business model in the new millennium, we must adapt our strategy to the customer and market trends, while maintaining consistency of brand and message. This is a challenge for any business in any industry because the nature of business will always, and has always determined that the best strategy with the most resources behind it will survive. This millennium has proved to be very successful in growing this market, and of supporting it’s franchises.

5.1 Strategy Pyramid

Build Customer Loyalty and Word-of-Mouth (WOM) Buzz

Punch Card System

Community Event Sponsorship

Store Ambiance

10 Sandwiches, 11th Free

10K Jackson County Run

Toys for Tots

European Prints, Furniture

5.2 Value Proposition

Our value proposition is that we offer high-quality, healthy fast food at a reasonable price. Our facilities are clean and our food is tastier than that of our competitors. The ambiance of our facilities contribute to customers’ desire to eat their meals in a comfortable, healthy environment.

5.3 Competitive Edge

We have a competitive edge in regards to the overall quality and differentiation of our products, and in the cleanliness and ambiance of our seating area. Our sandwiches, soups, etc. are all of the finest quality, and have been refined through taste-tests sponsored by The Sub Shop Corporate. Our seating area will be clean, the murals and prints on the wall will feature airy Italian landscape and European lifestyle motifs. The walls will be painted a rich yellow color, the tables and chairs are a rich walnut color, and the floor will consist of high-quality tile. 

We will differentiate our food from SubSub’s in regards to taste, quality of bread and contents, attentiveness to customers, and overall experience. We will build off of SubSub’s national marketing strategy so that we gain from their conversion of burger eaters to sandwich eaters, but alternately prove that we are more responsive to customers and offer better fare than SubSub franchises.

5.4 Marketing Strategy

Our Marketing Strategy is to reach the largest amount of tourists, residents, and students for the least amount of money.  

Our strategy will focus on three solid points:

  1. Building customer loyalty.
  2. Extending the franchise brand locally.
  3. Develop local word-of-mouth advertising (buzz).

5.4.1 Positioning Statement

For people looking for a fast, friendly, and tasty lunch, we produce a quick meal.  Our seating area will be clean and the overall ambiance of the place will be pleasing to the senses.  The food will be good and the service, friendly and fast.

5.4.2 Pricing Strategy

Our pricing strategy is different for different customers. Prices to retail customers will be fixed by the chairs, and based on a relative cost of living indicator. Retail prices will be competitive at about $6 for the average meal. This is about 30% above McDonald’s and Burger King prices, but only about 15% above the average price of a SubSub sandwich. Customers are simply willing to pay more for healthy, flavorful food served in a clean, comfortable environment.

Our highest margins will come from our catering services and large sub products. We will focus on expanding this segment of the market as soon and as aggressively as possible.

5.4.3 Promotion Strategy

The chairs will promote our products on the national level. In order to reach our local customers, and build loyalty, we will offer special mid-day promotions, sponsor local community events, advertise in the local classified paper, and our President will become a leading figure and spokesman in the community.

Our strategy is to focus on promoting the business through local PR efforts, rather than paid advertising.

5.4.4 Distribution Strategy

We plan to distribute our products direct to customers, without the use of a separate channel of distributors.

5.4.5 Marketing Programs

Our marketing programs will include customer-centric appeals to switch from the competition, build loyalty, provide cost value to the customers, and build word of mouth marketing.

Here’s a list of the sales and marketing programs we intend to implement within the next 15 months:

  • Five daily in-store regular specials, at least 15% off one particular sandwich item.
  • A direct mail coupon offering 50% off your first sandwich when you bring in a stamped SubSub card and sign up for our coupon mailing list.
  • High profile sponsorship of two local sporting or charity events.
  • 20% off a menu item when you bring in your Oregon Shakespeare festival ticket stub.
  • Free delivery to any of the local hotels (market only through hotels), and offer to pay hotels a slotting fee.

We may institute more programs as we see fit. This list of programs is aggressive when compared to the local marketing done by our competitors, so this should give us an early advantage as long as we can keep cash balance and sales numbers up.

5.5 Milestones

The following table shows important milestones for the franchise Sub Shop.

Milestones
Milestone Start Date End Date Budget Manager Department
Shakespeare Festival Ticket Stub Promotion 6/1/2001 10/31/2001 $700 Luke Department
50% off Coupon – Preparation and Distribution 6/1/2001 7/25/2001 $400 Jack Department
Sponsorship of “Pear Blossom Run” 2/1/2002 2/5/2002 $600 Jack Department
Establish Menus in Hotels – Slotting 5/1/2001 7/1/2001 $2,000 Lisa Department
Devise Specials Schedule and Logistics 7/1/2001 7/31/2001 $100 Luke Department
Wrap-up Menu, Special Offers 7/1/2001 7/25/2001 $0 Luke Department
Complete Interior Decor 7/1/2001 7/15/2001 $0 Jack Department
Hire and Train Employees 7/1/2001 7/31/2001 $1,200 Lisa Department
Other 1/1/2001 1/1/2001 $0 Manager Department
Totals $5,000

5.6 Sales Strategy

Our sales strategy will be to reach the largest amount of Jackson county residents and tourists with consistent value-added incentives to purchase our products and visit our restaurant. In this industry, and especially as a franchise, our marketing programs are almost indistinguishable from our sales programs. The indistinguishable handles a lot of the national and regional marketing, and we just pay our fee to have it done. Our flexibility will lie in our ability to push the boundaries of freedom the indistinguishable has given us, and to take advantage of opportunities to differentiate ourselves on sales by sale level.

5.6.1 Sales Programs

Here’s a list of the sales and marketing programs we intend to implement within the next 15 months:

  • Five daily in-store regular specials, at least 15% off one particular sandwich item.
  • A direct mail coupon offering 50% off your first sandwich when you bring in a stamped SubSub card and sign up for our coupon mailing list.
  • High profile sponsorship of two local sporting or charity events.
  • 20% off a menu item when you bring in your Oregon Shakespeare festival ticket stub.
  • Free delivery to any of the local hotels (market only through hotels), and offer to pay hotels a slotting fee.

We may institute more programs as we see fit. This list of programs is aggressive when compared to the local marketing done by our competitors, so this should give us an early advantage as long as we can keep cash balance and sales numbers up.

5.6.2 Sales Forecast

The majority of our revenue will be generated through medium subs and cookies/desserts. The breakdown by product is below.

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales
Large Subs 19,024 20,926 23,019 25,321 27,853
Medium Subs 139,508 153,458 168,804 185,685 204,253
Small Subs 50,730 55,803 61,383 67,522 74,274
Entree Salads 19,024 20,926 23,019 25,321 27,853
Side Salads 15,219 16,741 18,415 20,256 22,282
Chips 38,048 41,852 46,037 50,641 55,705
Party Subs and/or Trays 254 279 307 338 371
Desserts 16,487 18,136 19,950 21,945 24,139
Cookies and Desserts 63,413 69,754 76,729 84,402 92,842
Soups and Chili 17,756 19,531 21,484 23,633 25,996
Drinks 50,729 55,803 61,383 67,522 74,274
Total Unit Sales 430,189 473,210 520,530 572,584 629,842
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5
Large Subs $7.10 $7.10 $7.10 $7.10 $7.10
Medium Subs $5.10 $5.10 $5.10 $5.10 $5.10
Small Subs $3.89 $3.89 $3.89 $3.89 $3.89
Entree Salads $5.10 $5.10 $5.10 $5.10 $5.10
Side Salads $1.59 $1.59 $1.59 $1.59 $1.59
Chips $0.89 $0.89 $0.89 $0.89 $0.89
Party Subs and/or Trays $22.00 $22.00 $22.00 $22.00 $22.00
Desserts $1.49 $1.49 $1.49 $1.49 $1.49
Cookies and Desserts $1.39 $1.39 $1.39 $1.39 $1.39
Soups and Chili $1.89 $1.89 $1.89 $1.89 $1.89
Drinks $0.99 $0.99 $0.99 $0.99 $0.99
Sales
Large Subs $135,069 $148,576 $163,433 $179,776 $197,754
Medium Subs $711,488 $782,637 $860,901 $946,991 $1,041,690
Small Subs $197,340 $217,074 $238,781 $262,659 $288,925
Entree Salads $97,021 $106,723 $117,396 $129,135 $142,049
Side Salads $24,198 $26,618 $29,280 $32,208 $35,429
Chips $33,862 $37,249 $40,973 $45,071 $49,578
Party Subs and/or Trays $5,580 $6,138 $6,752 $7,427 $8,170
Desserts $24,566 $27,023 $29,725 $32,697 $35,967
Cookies and Desserts $88,143 $96,958 $106,654 $117,319 $129,051
Soups and Chili $33,558 $36,914 $40,605 $44,666 $49,132
Drinks $50,222 $55,245 $60,769 $66,847 $73,531
Total Sales $1,401,048 $1,541,154 $1,695,269 $1,864,796 $2,051,276
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5
Large Subs $2.49 $2.49 $2.49 $2.49 $2.49
Medium Subs $1.79 $1.79 $1.79 $1.79 $1.79
Small Subs $1.36 $1.36 $1.36 $1.36 $1.36
Entree Salads $1.79 $1.79 $1.79 $1.79 $1.79
Side Salads $0.56 $0.56 $0.56 $0.56 $0.56
Chips $0.31 $0.31 $0.31 $0.31 $0.31
Party Subs and/or Trays $7.70 $7.70 $7.70 $7.70 $7.70
Desserts $0.52 $0.52 $0.52 $0.52 $0.52
Cookies and Desserts $0.49 $0.49 $0.49 $0.49 $0.49
Soups and Chili $0.66 $0.66 $0.66 $0.66 $0.66
Drinks $0.35 $0.35 $0.35 $0.35 $0.35
Direct Cost of Sales
Large Subs $47,274 $52,001 $57,202 $62,922 $69,214
Medium Subs $249,021 $273,923 $301,315 $331,447 $364,592
Small Subs $69,069 $75,976 $83,573 $91,931 $101,124
Entree Salads $33,957 $37,353 $41,088 $45,197 $49,717
Side Salads $8,469 $9,316 $10,248 $11,273 $12,400
Chips $11,852 $13,037 $14,341 $15,775 $17,352
Party Subs and/or Trays $1,953 $2,148 $2,363 $2,600 $2,860
Desserts $8,598 $9,458 $10,404 $11,444 $12,588
Cookies and Desserts $30,850 $33,935 $37,329 $41,062 $45,168
Soups and Chili $11,745 $12,920 $14,212 $15,633 $17,196
Drinks $17,755 $19,531 $21,484 $23,633 $25,996
Subtotal Direct Cost of Sales $490,544 $539,599 $593,559 $652,915 $718,206

5.7 Strategic Alliances

The fast-food business is based largely on the impulsive choice of consumers. Many people buy their business lunch, lunch, or family dinners at a fast food restaurant, and those fast food restaurants offer not necessarily the best selection, but the most reliable menu and the fastest order completion time. Customers will try other fast food restaurants, and shop around, but the majority of their fast food purchases are made through one retailer. Our goal is to capture those customers, and to build loyalty to the product through purchase punch cards, consistent daily specials, and a direct mail list.