Subway plans to hit its target of 125 stores across the Middle East by the end of 2011, and then to continue expansion at the rate of 25 stores per year thereafter.
The expansion is part of the group’s wider plans to grow globally after recently overtaking McDonald’s as the food chain with the most outlets worldwide. Subway now has more than 34,000 stores across 96 countries.
Development agent for Subway in the Middle East, Marwan Al Hamar, said that the chain plans to diversify its Middle Eastern locations, moving into areas such as Universities, gas stations and hospitals.
Although Al Hamar commented that the standalone locations are currently the most profitable, followed by the mall outlets and then the gas station outlets, he said that being “more diverse” was important in order to meet consumer demand:
“It’s not about having the biggest number of stores but finding concentrations of people and providing convenient locations for everyone to get the product,” said Al Hamar.
The chain’s plans have been modified in line with market conditions, commented Al Hamar.
“We had even more ambitious plans originally, but reduced our expectations. Dubai was supposed to have a population of five million people by 2015 but that is no longer predicted, so we have changed our plans accordingly.”
However, with Abu Dhabi and Dubai investing more in infrastructure than any other city globally, Al Hamar said that he predicts the UAE will be “booming” in the next three to five years.
“If the market is there we will grow with it. We predict that in the next three to five years the market should boom again as rent rates stay low and more people come to the city.”
Al Hamar added that the new stores would be able to take advantage of the lower rents for retail space, in contrast to some of the older stores, which are still suffering the high rental prices of contracts fixed before the economic downturn.
The varying rental prices for each outlet means that each franchise sets its own pricing structure, said Al Hamar.
“There are different prices in different stores. In some stores the rents are very low, but in others the rents are five to seven times more expensive. So it’s not fair to say that they all have to charge the same prices.”
Subway will increase the number of outlets at petrol stations by at least 10 per cent this year and aims to increase its non-mall outlets as a proportion of the total.
The chain already has outlets in a number of education establishments in the country and Al Hamar noted that he hopes to open an outlet at the American School of Dubai this year.