The dark side of your $5 Footlong: Business owners say it could bankrupt them
Keith Miller
A Subway sandwich is far more than the sum of its fillings   franchisee Keith Miller  says.
Those ingredients cost roughly $2. Then  he  pays labor. Electricity. Gas. Royalties. Credit card transaction fees. Rent.
All told   Miller   who owns three Subway franchises in northern California  says it costs  him  well over $4 to produce one of Subway's foot-long subs. And that is why  when the chain announced plans to drop the price of the sandwich to $4.99 starting in January  he and hundreds of Subway's other 10 000 U.S. franchisees sent a strongly worded letter warning that the promotion could force some stores to close.
"The numbers don't work for us " said  Miller   who also chairs an industry group  the Coalition of Franchisee Associations. "Ten years ago  they might have worked. But now they don't  in my opinion."
 Miller  said that when  he  bought  his  first Subway 28 years ago   his  margins could swell as high as 18 percent. But since then   he  said  competition has grown far more fierce and costs have risen dramatically for labor  utilities and rent.
In California  where the minimum wage will be $11 per hour starting Jan. 1   Miller 's labor costs are up 50 percent from 10 years ago   he  said. The cost of a full-price sub has risen only 20 percent.
"It's a hard cost per sandwich  " Miller  said. "People can only make so many sandwiches per hour. We find it's about seven."
A Subway sandwich is far more than the sum of its fillings   franchisee  [TGT]   says.
Those ingredients cost roughly $2. Then  he  pays labor. Electricity. Gas. Royalties. Credit card transaction fees. Rent.
All told   Miller   who owns three Subway franchises in northern California  says it costs  him  well over $4 to produce one of Subway's foot-long subs. And that is why  when the chain announced plans to drop the price of the sandwich to $4.99 starting in January  he and hundreds of Subway's other 10 000 U.S. franchisees sent a strongly worded letter warning that the promotion could force some stores to close.
"The numbers don't work for us " said  Miller   who also chairs an industry group  the Coalition of Franchisee Associations. "Ten years ago  they might have worked. But now they don't  in my opinion."
 Miller  said that when  he  bought  his  first Subway 28 years ago   his  margins could swell as high as 18 percent. But since then   he  said  competition has grown far more fierce and costs have risen dramatically for labor  utilities and rent.
In California  where the minimum wage will be $11 per hour starting Jan. 1   Miller 's labor costs are up 50 percent from 10 years ago   he  said. The cost of a full-price sub has risen only 20 percent.
"It's a hard cost per sandwich  " Miller  said. "People can only make so many sandwiches per hour. We find it's about seven."