How to invest in Subway Stock? Subway is one of the fastest-growing franchises with over 41,000 locations in more than 100 countries.
Subway has over 23,000 locations in the United States and is headquartered in Milford, Connecticut, the United States.
Subway is the largest single-brand restaurant chain and the largest restaurant operator in the world. Let’s look at whether investing in Subway Stock is a good option.
How was Subway started?
In 1965, 17-year old Fred DeLuca borrowed a thousand dollars from his friend Peter Bucks to start “Pete’s Super Submarines” in Connecticut.
They later formed Doctor’s Associates, Inc. to oversee operations of the restaurants as the franchise expanded.
Doctor’s Associates is not affiliated with any medical organization but was named so because Buck had a doctorate in physics and because DeLuca’s goal was to earn enough from the business to pay tuition for medical school. In 1968, they renamed their restaurant Subway.
Subway’s growth has been explosive because Subways were easy to open. The company opened 200 locations by 1981 and soon went international. The number of stores skyrocketed to 13,200 with gross sales of $2.1 billion by 1998.
By the end of 2010, Subway became the largest fast-food chain worldwide. Subway franchises are one of the cheapest chains to franchise, costing between $116,000 to $263,000, which is low compared to opening a McDonald’s, which is about $2.2 million. The look and feel of Subway franchises are the same, although they are owned independently.
Subway’s Marketing and USP
Subway pioneered the ability to customize your sandwich, and the exciting thing about it is its open-kitchen format.
It redefined fast food with fresh ingredients that customers could also see. Subway marketed itself as a healthy alternative to fast food.
Jared Fogle who claimed to have lost over 200 pounds eating Subway sandwiches became the face of the company. Subway made him a spokesperson for its advertising campaigns from 2000 to 2015, and he was closely associated with the brand. However, the company cut ties with him after his conviction in 2015.
How much does a Subway franchise make?
A subway franchise can generate over $400K in annual sales compared to over $2.5million in average revenue for McDonald’s restaurants.
Although Doctor’s Associates doesn’t own a single Subway location, it charges its franchisees a weekly fee of 12.5% of gross sales minus the sales tax. 8% towards franchise royalties and 4.5% towards advertising.
Virtually all Subway restaurants are franchised and are present everywhere, ranging from airports to convenience stores.
However, the company has seen cannibalization from the opening of too many Subway locations, sometimes close to each other. This creates issues for franchisees.
The Covid-19 pandemic has caused a decline in foot traffic in restaurants. As a result, several franchisees have closed.
Furthermore, competitors are copying Subway’s strategy and moving into healthier alternatives as consumers are focused on eating healthy.
Subway intends to revamp its stores and menu items, and it remains to be seen whether it can stop its stores from closing through its change in strategy.
How to invest in Subway stock?
You might have to wait until Subway issues an IPO to buy Subway Stock because Subway is still a privately owned company owned by Doctor’s Associates.
Private vs. Public Companies: People usually think if a company is private, the company would be small and unknown. However, big-name companies such as Subway and IKEA are privately held. Let’s look at what it means to be privately and publicly owned.
Privately held companies: When a company is privately held, it means that the company is owned by its founders, management, or a group of private investors. The main advantage of private companies is that the company management is not obligated to answer to shareholders and doesn’t have to disclose financial information to anyone. The main disadvantage of private companies is that private companies cannot rely on funding from the public capital markets and must rely on private financing. Privately held companies can borrow money from banks or venture capitalists or rely on profits to fund growth, but they cannot tap into the public capital markets.
Publicly held companies: On the other hand, a public company means that the company has sold all or a portion of itself to the public through an initial public offering (IPO), which means shareholders can have a part of its assets and profits. The main advantage public companies have is their ability to raise funding by selling stock (equity) or bonds (debt) for expansion or other projects.
Subway stock price
Since Subway is not a public company, it is not listed on the stock exchange, and it’s not possible to estimate Subway’s stock price.
Subway stock symbol
We don’t have a Subway stock ticker because Subway is a private company and is not listed on the stock exchange.
As you need to wait until Subway issues an IPO to invest in Subway stock, let’s look at alternatives to investing in Subway Stock.
Alternatives to investing in Subway stock
The top competitors for Subway include McDonald’s, Yum! Brands, Restaurant Brands International, Wendy’s, Starbucks, Domino’s Pizza, Dunkin Donuts, and Chipotle.
McDonald’s (NYSE: MCD), the king of fast food with its golden arches, is one of the most recognizable and loved brands. The fast-food chain has more than 39,000 restaurants in over 100 countries. 93% of the restaurants are franchised.
It has had universal appeal, although it has evolved over the years. It had a terrible menu and reputation in the ’90s, and it has reinvented itself and has run a successful business globally.
McDonald’s reported $19.2 billion in revenue for 2020 and employed roughly 200,000 people at the end of 2020. Revenue declined in 2020 partially because of the pandemic and the company’s refranchising effort.
The goal of the refranchising effort is to unload most of its company-owned stores. Due to its McDonald’s global presence, it competes against other national chains and regional and local restaurants.
We should see McDonald’s recover from its sales decline of nearly 8% in 2020 as the situation and restrictions caused due to the pandemic get rectified. In 2021, McDonald’s is expected to see normalized earnings.
2. Yum! Brands
Yum! Brands, Inc. (NYSE: YUM) is an American fast-food corporation that operates KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide. In China, these brands are operated by a separate company, Yum! China. YUM has over 50,000 restaurants in more than 150 countries, and independent franchisees operate 98% of their restaurants.
The company has relied on drive-thru service for its stores and has managed to weather the storms during the pandemic.
According to its 2020 annual report, the KFC franchise was the most significant contributor to sales with $26,289 million in 2020, followed by Pizza Hut with $11,955 million and Taco Bell with $11,745 million in annual sales. The Habit Burger Grill Division had annual sales of $370 million.
However, Pizza Hut is seeing significant declines in sales and stores, signaling that Yum! Brands is under pressure.
Looking at shareholder returns for the past five years, Yum Brands outperforms Restaurant Brands International but lags behind McDonald’s. Yum! Brands is a good company with a strong balance sheet. As the pandemic restrictions ease, we can expect sales to increase.
3. Restaurant Brands International
Restaurant Brands International (NYSE:QSR) is an attractive alternative to buying Subway stock. It is a holding company formed in 2014 by the merger between the American fast-food chain Burger King and the Canadian coffee shop and restaurant chain Tim Hortons.
In 2017, the purchase of American fast-food chain Popeyes Louisiana Kitchen made it the fifth-largest operator of fast-food restaurants in the world.
Restaurant Brands International is based in Toronto, Canada, and both Burger King and Popeyes are headquartered in Miami for tax purposes. These companies have stood the test of time and are hugely popular.
Burger King has just under 18,700 restaurants, while Tim Hortons has 4900 coffeehouses and 3400 chicken chains, and this brings Restaurant Brands International’s total to 27000 worldwide.
This has narrowed the lead between McDonald’s and Restaurant Brands International.
The United States is an important market for Burger King. The pandemic restrictions have severely hit the fast-food industry, and Burger King has lost some of its retail sales in the past year.
Additionally, Burger King has a poor value proposition when it comes to its restaurant and menus, which it is looking to address.
Plans to remodel restaurants and install digital outdoor menu boards at its drive-through locations are underway.
The decline in customer demand is also partly because of the poor value proposition of the company, which it is looking to turn around rapidly. As a global relaxation of restrictions on restaurants happens, the company will recoup its lost sales.
The challenges of Tim Horton are primarily because of the lockdowns in Canada, which accounts for nearly 80% of its restaurant footprint.
The coffee chain had faced some sluggishness in sales before the pandemic and had taken some initiatives to strengthen its business and modernize its restaurants.
However, the branded coffee industry underwent a 22% contraction during 2020, and Tim Hortons’ retail sales in Canada declined by 17.5%. As vaccinations increase, Tim Horton’s business will rebound.
Popeyes Louisiana Kitchen had a solid performance in FY2020. The shortfall in sales in the fourth quarter of 2020 was because of the brand’s substantial growth since the launch of its iconic chicken sandwich.
New store launches, menu innovation, delivery orders, and the loyalty program will contribute to the development of the business in the coming years.
Shareholder returns of Subway’s competitors
McDonald’s has the highest shareholder return at 53.78%. Yum! Brands has a shareholder return of 43.18%, and Restaurant Brands has a return of 31.83%.
Any of these competitor stocks of Subway stock will be a good investment, and you can buy these stocks online.
Investing in Subway’s competitor stocks
To make sure that you don’t lose money investing, you need to do your due diligence before you invest in Subway competitor stocks. Here are the steps to follow.
1. Understand how the stock market works
If you want to invest in Subway’s competitor stocks, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Subway’s competitor stocks
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using Subway’s competitor products and trust the brand, you can buy Subway’s competitor shares. Before you buy Subway’s competitor shares, you should take steps to research the stock and its fundamentals.
You should look at where the company gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in the company’s annual report in the annual letter to shareholders.
This letter will share the essential updates in the business. The company’s SEC filings, conference call transcripts, quarterly earnings updates, and recent news about the company are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Subway’s competitor stock.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Subway’s competitor stock. If it is a bull market, the price will go up, and it would make sense to buy the stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy at a lower price.
How to buy Subway’s competitor stock?
Buying shares online is a simple process, even for new investors. If you’re thinking of buying Subway’s competitor stocks, you must decide whether you want to buy the stocks for the short term or the long term. If you’re going to invest in the short term, you should perform a technical analysis of the stocks.
If you want to hold Subway’s competitor stock for the longer term, you should perform a fundamental analysis of the company. You should also keep yourself updated with news and with developments of Subway’s competitors. Here are the steps you need to follow.
1. Select a broker
To buy Subway’s competitor stocks online, you will need to use an online brokerage platform. Our broker reviews can help you select from the best brokers for trading Subway’s competitor stocks. In general, you should look at the following parameters before selecting a stockbroker.
Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade Subway’s competitor stock.
Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
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2. Open a brokerage account
This is the account in which your shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as PayPal.
4. Decide how many shares to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Subway’s competitor stock instead of the whole stock. If Subway’s competitor stocks are too pricey, you can opt to buy a fractional share in Subway’s competitors.
5. Choose your stock order type
All you have to do now is search for the Subway’s competitor stock’s ticker, specify the number of shares, choose your order type and click on buy. Once you place your order for Subway’s competitor shares, your broker will execute the order, and the Subway’s competitor shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order at the prevailing market price for Subway’s competitor. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a small price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours”, when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Subway’s competitor stock reaches a specific price point. It gives you control over the price at which your trade is executed.
For example, if the Subway’s competitor stock is trading at $200, but you value Subway’s competitor at $180, the limit order tells your broker to wait till the Subway’s competitor stock price reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position in Subway’s competitor stocks
Once you have purchased Subway’s competitor stock, you should monitor the Subway’s competitor stock periodically according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in Subway’s competitor.
Investing always comes with certain risks and Subway’s competitor stocks are no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker.
To recap, you can invest in Subway’s competitor stocks by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.