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Subway bets on Korean market

February 27, 2014

Plans to offer bulgogi sandwich in Korea this fall

Subway is aiming to expand its market presence in Korea by diversifying its menu lineup to compete with McDonald’s and Lotteria.

Subway Korea CEO Colin Clark.

“We will open up to 300 stores throughout the country within the next three years,” its CEO Colin Clark said in a recent interview with The Korea Times. Currently, the local franchise of the American fast food restaurant runs 78 outlets in Korea, with another scheduled to be opened soon.

Subway outlets all over the world are 100 percent franchise restaurants, which means no store is directly run by the company, an official at Subway Korea said.

Since its entry into Korea in 2007, the firm has continued on a growth trend. It posted 20 billion won ($18.7 million) in sales, up 30 percent from a year earlier.

Korea has the seventh-highest number of Subway stores in Asia, behind Japan with 462; China with 440; India with 417; Malaysia with 156; Taiwan with 134; and Singapore with 113.

While expanding its presence here, Clark said that Subway will try to stick to the firm’s three core values that set it apart from its competitors in order to attract more Korean customers. “Unlike other franchise stores in Korea, we are strict in adhering to the three virtues of food all at the same time ― freshness, taste and reasonable price,” said Clark. “Other fast food restaurants such as Lotteria, McDonald’s, KFC and Burger King release new menu items too often, which can waste energy that should be poured into capturing customers’ real preferences. We know customers will eventually eat the food they truly want, not just something new.”

Clark emphasized that allowing customers to customize their meals could be another reason they keep coming back to Subway Korea. “When people order at a hamburger franchise restaurant, you don’t see them customizing their food, even if they can. However, we consider customers’ choices as very important. That is the value we would like to provide our customers.”

Clark meets with franchise owners from time to time to listen to their concerns. “We only receive a royalty of 8 percent of sales from each store, and the franchise owners give us their opinions for the marketing. We disclose information including details about management to them, so it’s a win-win for all.”

Subway CEO and founder Fred DeLuca visited Korea in February 2011 before the Korean branch started its rapid growth. DeLuca knew Korea has potential to expand. Korea is one of 10 countries that have a dedicated personnel training center.

He added that he is confident about the firm’s expansion because Korean customers are very health-conscious.

The firm plans to offer the Bulgogi Sandwich for a limited time in the upcoming fall after significant research and development.