Subway is the biggest fast food chain on the planet. The chain knocked down mcdonald’s and kfc store count decades ago and has more than 44 000 stores in 110 countries, and it all started with a 17 year old from the bronx who had never made a sub in his life until opening day. He struggled for years before finding a way to make billions of dollars and it’s all because of a message. Scribbled in a notebook in 1947, fred deluca was born to a factory worker and homemaker in brooklyn new york, when fred turned five, the family moved to a housing project in the bronx to them. It was a step up when compared to their old basement apartment. A mere five years later, the delucas had to pack their bags again. The company that fred’s father worked for relocated, so the family had to move to schenectady new york. There life became more settled. The delucas became close friends with a couple named pete and ide buck. They often brought their families together for picnics and parties, but when fred was finishing high school, the two families lost touch the delucas had to move out of state to bridgeport. Connecticut, a year later, the bucks moved to armonk new york about 40 miles from bridgeport when they settled into their new home. They invited the delucas over by then fred had graduated from high school and planned on becoming a doctor. He received an offer to attend a pre med program but questioned whether or not he should accept there.
Wasn’T much hope that i could get through college, because my family simply didn’t have the money. I worked at a hardware store as a store clerk earning 1.25. It was a good job for a kid, but it wasn’t going to provide the money. I need for college fred felt hopeless until he visited the buck’s new home, a large white house with two garages pete’s doing pretty good for himself. He thought to himself: maybe he’ll have some ideas on how i can afford the tuition secretly. Fred hoped that pete might even offer him a loan fred waited all afternoon to find an opportunity to talk to pete alone, standing in the middle of pete’s lawn. He finally gathered the courage pete. I want to go to college, but i don’t have the money and i was wondering if you had any ideas on how i could pay my way through school pete answered immediately without hesitation. I think you should open a sub shop. Fred was stunned, it was far from the answer he had hoped for. He and his family couldn’t even afford to send him to college. How could he start a business not to mention he was only 17 years old and had never made a sub before still fred was curious and asked him how the business worked. All you have to do is rent a small store, build a counter, buy some food and open for business. Customers will come put money on the counter and you’ll have all the money you need for college to pete.
It was that simple, even though he worked as a nuclear physicist and had never owned a business before he was so confident that his idea would work that he offered to become fred’s partner. Being a kid from a housing project in the bronx fred felt like it was a great opportunity and agreed afterwards. Pete walked into his house, brought out a newspaper clipping and started to read an article about mike’s subs. The founder, michael davis had started his shop with almost nothing. He faced many struggles but managed to build a small empire in upstate new york 32 restaurants in 10 years. If michael can do this, why can’t we pete questioned by the end of the night, fred and pete, came up with ideas for their menu price and even set a goal? 32 restaurants. In 10 years before fred went home, pete handed him his first investment a check for one thousand dollars. Neither of them had any idea that it would lead to a billion dollar return and that they would have to first survive nearly a decade without making a profit. The next day, fred found a small store to rent and bridgeport. The location was hard for customers to find, but it was in decent shape and affordable to fred and pete. It was good enough within five minutes. They shook hands on a deal with the landlord. They didn’t even bother signing a lease, since they considered hiring a lawyer to drop a contract too expensive.
Afterwards, fred and pete went on a trip to learn about the art of making subs their first stop. Portland maine pete was from portland and grew up. Eating subs from a local italian deli called a meadows. He was still a big fan of their subs, so he suggested that they stop by observe their operations and evaluate the pros and cons afterwards. They visited other shops and did the same thing when they compared notes. They discovered that they, both like mics and amato’s best mics, offered a greater variety of subs and made them with foot long rolls, and the matters used a blend of olive and vegetable oils that made its subs more flavorful, fred and pete decided to combine the pros From both shops and sell their subs for the same price as mike’s, they knew nothing about pricing, but figured it was a safe bet, since mike’s had 32 restaurants. Meanwhile, amato’s only had two intuitively. We realized that to really understand our business, we would have to begin to work it it didn’t matter if we chose amato’s pricing instead of mike’s and mike’s taste profile instead of a meadows. If we made mistakes, we could correct them as we progressed, while driving back home, fred and pete made plans to open their shop that august and call it pete’s submarines to promote their grand opening fred made flyers and handed them to strangers as they stopped their cars. On a street corner i’m opening a sandwich shop on saturday will you come fred asked as he popped his head into the passenger side? Well, where is it? They asked fred pointed to the back of a shopping center.
Every driver that he asked would look over and give fred their word on august 28, 1965 pete’s submarines officially opened for business. It ended up being the first day that fred had ever made a sub in his life. To make matters worse, he had an english exam on opening day, so he had no choice but to ask his friend art witkowski, to take over when fred returned to the shop. He was shocked. The parking lot was full when he glanced over at the shop. He couldn’t believe his eyes. There were customers crammed inside and standing in a line outside by 6 pm. They sold over 300 subs and had to close their doors for the day since they ran out of ingredients. Fred and pete were convinced that their first customers would return in that sales with skyrocket next time, they’ll bring their friends. Pete insisted we’re, going to do great we’re going to be millionaires. Unfortunately, their first customers never came back and few new customers came in month after month, sales plummeted, fred and pete came up with ideas on how sales could improve and even paid for an expensive radio ad. Every single one of them failed eventually, fred and pete couldn’t afford to pay their rent or employees. What do we do? Fred asked pete pulled out a notebook and jotted down a series of letters, l t d, a t, a t k. What does that mean? Fred asked lock the door and throw away the key those simple, eight letters sealed the fate of the business and later it redefined the entire fast food industry, closing the shop wasn’t.
What fred expected pete to say? It was only six months old and it was too soon to give up on it. There had to be other options. Pete quickly realized that fred was right. They talked about different ideas on how to save the business and settled on the most unusual one opening a second shop. Their thinking was that a second shop would allow them to experiment with different products and compare results and that having two shops would make. People think that their subs were in demand. While it was a big risk, it didn’t make sense to move the restaurant to a new location they already paid for renovations and would have to pay to reinstall their equipment. A few months later, pete’s submarine’s second shop opened in fairfield connecticut. It was so successful that fred and pete decided to open a third shop that year, sales immediately went up at all three locations. Fred and pete boasted that it was surely better to have more restaurants than one, but soon after they discovered they had spoken too soon. Sales plummeted as winter approached, and now they had not one but three shops that were failing, fred and pete realized. Their business was highly seasonal. Most people didn’t eat out every day and stayed home around the holidays. To save money still fred and pete refused to give up and decided to wait it out. Fortunately, their patience paid off sales improved by spring and over time, business became more stable as their reputation grew and customers eating patterns changed by then fred had given up on his dream of becoming a doctor.
He realized that he didn’t enjoy doing lab work and switched his major from pre med to psychology, since it was the only department that would accept his course credits. All he wanted to do was graduate and figure out his career path later. Meanwhile, he remained committed to reaching the goal that he and pete set 32 restaurants. In 10 years by the time pete’s submarines reached its eighth year, fred managed to open 16 restaurants. He knew he wouldn’t be able to go from 16 to 32 in two years, so he sought advice from a man who paved the way for mcdonald’s and kfc to succeed. William rosenberg, the founder of dunkin donuts over a decade ago, william started to franchise, dunkin donuts and later founded the international franchise association, william encouraged fred to open shops in locations where people could park their cars and insisted that he start franchising. Fred took his advice and changed the business name to something more catchy subway. When subway reached its 10th year, there were several restaurants short of reaching their goal of 32, but they managed to open more than 5 000 restaurants over the next decade. From then on, fred considered his role at subway as his career path and the company’s success continued to skyrocket in 2000 subway made headlines when a college student named jared fogle lost 245 pounds after eating its subs for a year soon after jared became a subway ambassador. His everyday joe quality appealed to many americans and convinced them that subway was a healthy choice, tripling the company’s sales over time.
Three years later, a subway franchisee named stuart frankel came up with an idea that made the company even more money. Five dollar foot long subs after testing the promotion, steward’s sales jumped from 14 000 to 23 000 per week four times more than what the average shop brought in corporate was skeptical, that the promotion would work on a national scale, but later caved in. It ended up. Bringing billions of dollars before becoming a staple, but since then subway faced many crises involving its food, ambassador and franchisees, and over time the company was forced to close over 3 000 locations. Still subway remains the world’s largest fast food chain, surpassing mcdonald’s and kfc, and has restaurants in over 110 countries in his book fred shares one of the most important lessons he’s learned in business. Most people don’t think that regular folks, with ordinary ideas and limited resources can make such happen boy.