Submarina CEO talks turnaround, growth

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What has been the result?

If you were to look at first six months of 2011 versus the same time the prior year, we as a franchisor had an eleven-fold improvement in operating results.

I attribute that improvement to the change in management, streamlining operations, to going from franchisees that were ready to mount an insurrection to franchisees that have bought additional units and that are expanding.

Today I have happy franchisees — for the most part — and we’ve got new stores opening; some stores that have done very well, and some that closed under management that had issues where a new party or proven party has taken over the space and transformed some of those locations.

What differentiates Submarina in the competitive sandwich segment?

It comes from the top down. We believe in serving and offering our customers an absolute best-in-class premium product. And we also believe the critical element to our entire business model is serving and offering top-quality food.

One big differentiator between us and our competitors is that we don’t hose our franchisees with incredible markups in everything they buy. We go to suppliers and negotiate the best prices we can get, mindful of looking for top quality, and the price we negotiate is the price franchisees pay. We don’t have a situation where we go to suppliers and stick in a 10- or 20- or 30-percent markup. Once you start doing that, it then becomes obviously harder to offer quality product. What we earn from other parties is fractions.

Our attitude is that there are customers whose sole objective isn’t gut fill. Those are not our customers. We offer a distinctly superior product. I don’t intend to compete with Subway on price, and they can’t compete with me on quality.

So Submarina doesn’t offer a $5 sub?

Occasionally we might do a promotion item, but that’s not our focus or mission. That’s not our customer. We would only do it to get their customer to try our product, but we don’t intend to keep that customer based on price. We intend to keep them based on our quality.