Subway Expects to Add 8,000 More U.S. Locations

Photographer: Andrey Rudakov/Bloomberg

Subway’s expansion and tests are taking place at a time of growing competition among fast-food chains that has hampered their ability to boost U.S. revenue. Close

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Photographer: Andrey Rudakov/Bloomberg

Subway’s expansion and tests are taking place at a time of growing competition among fast-food chains that has hampered their ability to boost U.S. revenue.

Subway is expanding -- both its menu and its stores.

The closely held sandwich chain, which has more than 26,600 U.S. locations, has room to add 7,000 to 8,000 more domestic eateries, co-founder and Chief Executive Officer Fred DeLuca said today.

“Maybe it will take 10 years or so,” he said in a telephone interview. “If we do a good job building consumer demand, that number might change and be higher.”

DeLuca also disclosed that Subway has started testing hummus as a sandwich topping as it seeks to maintain its appeal among health-conscious consumers.

Subway’s expansion and tests are taking place at a time of growing competition among fast-food chains that has hampered their ability to boost U.S. revenue. McDonald’s Corp. (MCD) said two weeks ago that sales at its established U.S. locations fell for the fifth straight month in March as “challenging industry dynamics” slowed customer traffic.

DeLuca, 66, opened the first Subway sandwich store in 1965 in Bridgeport, Connecticut. Since then, the company has expanded through franchising, attracting customers with lower-calorie and reduced-sodium submarine sandwiches. It also has accelerated growth abroad and now has more than 41,700 stores worldwide, making it larger than McDonald’s in terms of locations.

Mashed Chickpeas

Hummus, a spread made of mashed chickpeas, is being tested as a topping for an additional charge, similar to avocados, Chief Marketing Officer Tony Pace said in a separate interview. The trial is being conducted at about 1,000 stores, he said.

“We have to see how consumers respond to it,” said Pace, adding that hummus is a nice complement to veggie and chicken sandwiches. “It may warrant additional testing or expanded testing, and then we’ll see how it goes from there.”

DeLuca, who worked in a reduced capacity while he was treated for leukemia last year, said he is back in the office every day. There are no plans to sell the Milford, Connecticut-based company, which is owned by Doctor’s Associates Inc., or to take it public, he said.

While it would be good to turn over the CEO job to someone else eventually, that’s not coming any time soon, DeLuca said.

“I’m not interested in retiring and playing golf,” he said.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, James Callan

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