Battle for fast-food stomach as Subway plans more outlets

Subway Restaurant located along Kenyatta Avenue. [Felix Kavii, Standard]

American fast food chain Subway has given an indication that it intends to increase its foothold in Kenya as it seeks more locations to set up additional restaurants.

On Friday, the food chain, which runs 43,300 restaurants across 111 countries, announced it was looking for developers in Kenya who are willing to host its new outlets.

“Landlords wanted,” said the food chain in an advertisement published in the local dailies. This has obviously sent warning bells to other players in the market who have also been on an expansion drive.

“The world’s number one global franchise is seeking ...ground floor locations with excellent visibility for long-term leases in CBD, UpperHill, Lavington and Mombasa Road,” said the firm in an advert in local dailies.

With 12 outlets, Subway currently lies fourth in the pecking order of restaurant chains in the region. Nine of Subway branches are in Nairobi and are all franchise operated. It recently announced that it was considering shutting down about 500 branches in the US in order to embark on an international expansion drive.

This is as its American market continues coming under fire from McDonalds and Starbucks. Both Starbucks and Mc Donalds are yet to open restaurants in Kenya citing a weak supply chain.

“We want to be sure that we have the best locations,” Subway Chief Executive Officer Suzanne Greco, told International business media outlet, Bloomberg.

“We focused in the past on restaurant count. We’re focused now on strengthening market share. Store count isn’t everything, it is about growing the business,” she said.

Abraaj-owned Java House which last month announced a Sh1 billion expansion drive is the king of food chains with 64 branches followed by American fast food brand Kentucky Fried Chicken (KFC), which has 31 branches in the region, 17 of them in Kenya, nine in Uganda and five in Tanzania.

Java is known for coffee while KFC and Subway are known for chicken and sandwiches respectively. However, unlike KFC and Java, Subway has taken a conservative expansion approach in Kenya since opening the first restaurant in 2014. All of Subway’s outlets are located in Nairobi while Java has a footprint in all the big towns.

Disposable income

In recent years, KFC, Naked Pizza and Cold Stone Creamery have opened more outlets as Kenyans warm up to their services.

The trend shows that more Kenyans have more disposable income which has fueled the sprouting of eateries across major towns.

Owning a restaurant that is part of an American franchise is however not easy. Apart from the stringent requirements, starting a Subway, for example, could cost you a minimum of Sh10 million.

“With location flexibility and an easy-to-run operation built on simplicity and efficiency, our start-up costs are lower than most restaurants. The initial franchise fee ranges from $10,000 - $15,000,” says Subway on its website.

“Depending on your country and the total investment can be as low as $92,000. Individual costs vary,” it says.