Subway Could Save £10.8 Billion Annually With Automation
So How Did I Get To £ 10.8 Billion ?
We get to this conservative figure of £ 10.8 billion by considering the following assumption:
- Subway is the biggest franchise in the world with 41,600 stores worldwide.
- The average subway has 6 employees working at every working hour, with 3 Sandwich Artist, 1 Assistant Manager, 1 Manager & 1 Multi-Unit Manager.
- The average subway opens from 0700 to 2200, which translates to 15 hours daily.
- The calculation assumes all 6 workers are paid the average wage offered to Sandwich Artist by Subway, which is £7.92.
**However, this is obviously a low estimate as managerial position are paid at a much higher rate.**
When we put the numbers together, 41600 (stores) * 6 (employees) * 15 (hours) * 7.92 (GBP) = £ 29.6 million per day.
Which is equivalent to £ 10.8 billion per year.
How To Save £ 29.6 Million Every Day
This would mean we have to create an employee-less subway and implement it to the 41,600 branches worldwide. How can we do that ? We start by looking at each position’s job description.
Sandwich Artists
They are responsible for customer service and making the sandwich based on your requests. But have you noticed that the procedure is very repetitive and monotonous ? Because it is just a series of binary questions. Do you want cheese ? Do you want it toasted ? Lettuce ? Onions ? … This means that they are easily replaced by machines. I have created a simplified work flowchart for their task, as shown below:
The flowchart can be expanded with more information into the types of bread, meat, sides, and drinks, but essentially it forms the fundamental of the machine logic behind the ordering process. When we have the customer order, we can translate the information into the actual sandwich-making process. To keep the tradition of customers being able to see their subs being made, we can have a transparent glass showing the whole machine process. The sandwich can be placed on a platform, moved along a conveyor belt and stopped at each station to add the ingredients, the ingredients can be placed by using valves like water dispenser, but instead of dispensing water, it dispenses sliced ingredients. After all the requested ingredients have been placed, the sandwich will be wrapped up and be ready for collection by the customer. Payments are also handled by the machines. New selections in the menu or new ingredients can be easily added by modifying the configuration of the machine settings.
The only job left would be the cleaning of the subway store.
Assistant Managers & Managers
One of the managers’ job is to supervise sandwich artists and provide training for new sandwich artists, so in the above situation, this requirement would become redundant. Apart from that, they also handle purchasing and inventory management. This can be replaced by inventory management software; The inventory data can be machine-learned to determine purchase trigger points and understand the demand to optimize stock level and keep food wastage to a minimum, hence reducing loss.
Multi-Unit Managers
The multi-unit managers are responsible for regional financial performance, optimizing profitability by driving sales and handles communication with store managers and ingredient suppliers.
Bringing forward the concept of machine-powered stock control, we can scale this concept to a region-wide level. The combined database across all the subway joints in the region would be complementary to the wastage reduction as the unexpected peaks and trough in inventory demand can be smoothed by assisting neighboring joints. (Note that this may be an issue to the accounting side of each business as assets are shared)
However, when the operation of each store is simplified by utilizing machines, there is no need to treat each branch as separate entities, but all stores can be unified as one in the respective region. This will reduce the workload and administration work faced by both store managers and multi-unit managers.
Proposed Business Operation Model
My proposed business model for Subway is to replace all sandwich artists with automation, remove assistant managers but retain experienced store managers and provide training for operating the new machines, he/she will also be responsible for the cleaning services, therefore cutting down the number of employees in each store from 5 to just 1.
Multi-unit managers will remain but with a reduced job scope, they can focus on the sales and marketing side of the business, as well as the financial performance of each managing store. Additionally, with the stock purchase automated, the whole operation is streamlined.
Scaling To Other F&B Franchises
This concept can also be scaled to other F&B franchises, especially those with a standardized menu, like McDonald’s. However, this concept will mainly benefit a large-scale franchise as it involves an expensive initial investment into the R&D and implementation of the new technology. However, when done on a large scale, the overall costs that come with the machines will be increasingly lower than the combined salaries paid over time.
**A detailed cost analysis needs to conducted to determine the break-even point where a business would benefit from such technology.**
Why Is This Not Feasible ?
The concept is not feasible because for a big franchise like Subway with 41,600 stores worldwide, cutting 4 jobs each store translates to a reduction of 166,400 jobs in total, that would be a huge socioeconomic factor to consider.
What Can Be Done Instead ?
Assuming the technology is developed, what is the realistic plan-of-action for implementation ? A few possible ideas come to mind:
- Phase Implementation
A prototype store can be used as a trial to ensure the viability of the new operation model, and begin phase implementation to different regions or only to the franchisees willing to participate in the change, this gradual implementation will reduce the employment impact mentioned above. Furthermore, it will require significant time for world-wide implementation as existing stores are already installed with the current model.
2. Licensing
There are 2 ways to profit from licensing, as described below:
i) Licensing the technology to other F&B businesses for the use of the machine and maintenance at a premium.
ii) Provide a new advanced franchising license that includes the addition of the new technology for new franchisees at a higher fee. Currently, the franchise fee for Subway is only £ 8,500 for 20 years, with a total average setup cost of £ 150,000 (Ranges from £ 85,570 to £ 221,240 depending on location). Subway could potentially increase the franchise fee and training fee, which would be an appealing offer for franchisees as they can operate the business with less effort and reduced labor costs.
3. Value Proposition for Consumers
Depending on the savings by the technology, the price of the products offered to consumers can be reduced, which will likely improve sales volume and have an edge over industry competitors.