Subway remains a popular place to get a sub sandwich for lunch and dinner.
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With several different subs from which to choose, and the ability to choose your own ingredients, it’s no wonder that the fast-food restaurant is a favorite.
However, you may find that building your sub has become expensive.
It may make you wonder why Subway has increased its prices despite being a fast-food restaurant geared toward cheap and affordable food.
Here are 10 reasons Subway is so expensive.
Why Is Subway So Expensive? (Top 10 Reasons)
1. Focus On Healthier Food
One of the reasons Subway is expensive is its focus on healthier food.
Fast food tends to have a reputation for not serving the healthiest of foods.
Whether it’s patties loaded with salt or shakes loaded with sugar, the food isn’t always the best for one’s body.
Sometimes, it isn’t fresh either.
The food may end up sitting in the freezer for as long as possible before it’s served.
Then there’s the question of the quality of the food.
After all, cheap food has to be cheap for a reason.
Subway’s business model is all about serving healthier food.
It’s fresh and it’s high-quality.
As people become more interested and invested in their health, they’re starting to choose to dine at fast-food restaurants that help them achieve those goals.
This makes Subway expensive for a few different reasons.
The first is that it generates higher demand for Subway’s dishes.
With higher demand comes higher prices since Subway’s supply of food has its limits.
It also means Subway has to take on a few extra costs to ensure they’re delivering the healthy food that the people want.
This also means that they invest in sanitary equipment and gear to ensure the restaurant also remains healthy.
These added operational costs have to be funded somehow.
Higher food prices are their means of keeping up with those operating costs.
There’s also the fact that healthier food is just more expensive.
Whether it’s because it’s higher quality or just because it’s advertised as healthy, it’s always more expensive than food that isn’t deemed as healthy.
All these factors contribute to making Subway more expensive.
2. Focus On Increased Wages
Another big factor that affects the price of Subway is the increase in labor costs.
In any business, the biggest expense that it contends with is labor costs.
It’s why many prefer to automate their businesses.
It saves on costs while it puts people out of work.
For the business, it’s a profitable move.
Subway hasn’t automated itself yet, so its biggest expense is its labor.
There’s been a massive wave among workers seeking better benefits and livable wages.
With rising living costs, it makes sense that those working in fast food would also like to be able to afford to live.
Some businesses have been faster about raising their wages than others.
For example, some don’t raise their minimum wage rate until they’re forced to by the government.
The government has slowly increased its federal minimum wage, expecting businesses to follow suit.
The problem is that some businesses choose to adopt their state’s minimum wage as the base of their pay instead.
State minimum wages are sometimes lower than the federal minimum wage.
Subway hasn’t increased its employee’s wages to a livable standard yet, but they have increased them.
Most Subway restaurant workers earn around $10 an hour with managers earning around $15 an hour.
Any time a business raises wages, the cost of its products also increases.
That’s usually because the business doesn’t want to see its profits decrease.
Businesses don’t always need to raise prices just to pay their employees better, but Subway has taken that route.
Many similar businesses do.
That said, Subway is expensive because it’s increasing the pay of its workers.
3. Subway Franchise Owners Need A Profit
Subway franchise owners do not make that much money.
The average amount of money that a franchise owner makes each year is $30,000.
That’s not much higher than what their employees make.
If a Subway franchise owner wants to earn more, then they need to open up more stores.
They don’t make as much money as they should because of the fees they need to pay to the Subway Corporation.
The Subway Corporation doesn’t own the Subway stores in the sense that most people think it does.
Rather, it’s a franchise that helps independent owners get stores started and allows them to use its logo and menu to make money.
Then the franchise owner pays the corporation weekly, monthly, and annual fees for using its logo, menu, and other Subway-affiliated things.
Although Subway helps franchise owners get started, the owners often have to use their own money to get the store started.
This usually means they take out a business loan.
With having to pay fees to the Subway company while paying off their loans, it’s obvious that franchise owners aren’t bringing home a lot of money from one store.
That’s why some Subway locations may have slightly higher prices than others.
While they’re obligated to keep some subs at the same price no matter what, they may charge more for custom-made subs.
The Subway Corporation itself might decide to raise prices to better support its franchise owners.
With higher prices, there’s a chance that the owners might be able to make more money to keep the store open and in operation.
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After all, the Subway Corporation wants every store to succeed.
Otherwise, it won’t be getting another money source.
Subway is expensive because its franchise owners need to earn money.
4. Focus On High-Quality Ingredients
There was a time when people didn’t much care what was in their food at fast-food restaurants.
The food was cheap and edible, and that was all that mattered.
However, as the middle-class gained some more buying power, as did their preference for better-quality food.
This sparked a change within the fast-food industry.
It wasn’t enough for restaurants to just sell cheap food anymore.
They needed to sell affordable food that was still restaurant-quality.
Subway was one of the fast-food restaurants to change its ingredients.
It went from serving low-quality meals to high-quality meals.
While its quality still isn’t on par with what you’d receive at most sit-down restaurants, it has gotten better.
However, the focus on high-quality ingredients also means that Subway has had to increase its prices.
Higher-quality ingredients cost more because they cost more to make.
Manufacturers and farmers have to spend more money to ensure their crops and products come out perfectly.
That might mean better pesticides to keep the food safe.
It might mean enriching the soil with special fertilizer to make the food grow large and juicy.
For animals, it means giving them better diets that make the meat healthier and better for consumption.
All these changes come at higher costs.
As such, the farmers and manufacturers sell at higher costs.
Subway buys them at a higher price and then needs to charge higher prices to make up for their increased costs.
There’s also the fact that high-quality ingredients also have a higher demand for them.
High demand and limited supply also increase the prices.
Subway is expensive because it focuses on providing high-quality ingredients for its customers.
5. Costs To Keep Ingredients Fresh
One of the things that Subway has a reputation for is its fresh food.
It frequently advertises that its ingredients are fresh.
According to a worker at Subway who recorded how the fast-food restaurant gets its ingredients, the store regularly receives fresh produce every day or almost every day.
The produce sits in the refrigerator until workers need to prep it to fill the bins at the front of the store.
When it comes to prepping, the workers wash the vegetables in the back and then chop everything.
They then fill the bins and bring them to the front of the store where they can use them to create their customers’ subs.
Clearly, Subway does what it can to provide fresh ingredients for its customers.
However, that doesn’t come without costs.
One of the costs that Subway has to contend with is refrigeration.
Since they’re storing boxes full of produce, they need a pretty decently-sized refrigerator.
The cost to keep that size of a refrigerator cold can’t be small.
There’s also the cost of keeping fresh produce coming their way each day or every other day.
While produce is relatively cheap, buying it in bulk is still an expense.
Then there’s the time and effort that goes into prepping the food and providing it for their customers.
Since it takes time to prepare everything, instead of having it pre-prepared like many other fast-food restaurants, that means that Subway stores are missing out on profit.
The team is prepping the store rather than serving customers.
That’s a block of time in which the store isn’t generating a profit.
All these factors make running a Subway more expensive.
To keep up with the costs of providing fresh food, Subway has to have higher prices.
6. Generous Portion Sizes
When you buy a sandwich at Subway, you can usually expect a pretty generous sub.
Not every sub restaurant provides generous toppings.
They cut costs by giving their customers the bare minimum.
That isn’t the case at Subway.
The workers are encouraged to give pretty generous portions like Five Guys.
Although Five Guys tends to go overboard, Subway hedges it.
They give you more than you might expect from a fast-food restaurant without running up their costs too much.
That said, it’s their portion sizes that make their subs a bit more expensive.
Whether you’re getting a veggie sub or one packed with meat, you can expect a pretty sizable sandwich.
The size of the bread itself is also quite large.
They also put plenty of condiments on their sandwiches, too.
Instead of a few squirts, the workers lay out thick lines of mayonnaise, ketchup, or whatever condiment you want on your sub.
Large portions don’t come without a cost, however.
The reason they make Subway expensive is that it makes Subway need to buy more ingredients to keep feeding its customers.
Since the subs are more expensive to make per how much goes on a sub, you’re charged accordingly.
That’s why loaded subs cost more than subs that only have a few ingredients.
Since it costs the store more to make the subs, it costs the customers more to buy their subs.
Subway is expensive because it gives pretty generous portions of food.
7. Prep Time
The amount of prep time that it takes to make a sub is another reason Subway is expensive.
Subs take some time to make.
While Subway has a few subs that you can order right off the menu, many people like to make their own.
This requires the worker to follow their instructions until the sub is exactly how they want it.
That takes time.
It also means Subway has less time to serve other customers.
If someone is taking a long time to make their sub, for example, then they might leave and eat somewhere else.
That’s a loss of profit for the store.
To make up for any lost profit, the store charges a slightly higher price for its food.
Even menu items take time to prepare.
The worker has to make the sub exactly how the menu describes it.
If they run out of ingredients, then they have to go to the back to prepare more.
Since the workers prepare all their food fresh, this can take some time, too.
Some customers might leave.
Even if some stay, Subway isn’t able to serve as many customers in a day as they’d like simply because it takes time to make each sub.
The very nature of the store makes it lose money.
To avoid that, Subway charges higher prices for the customers that they do serve to cover the loss.
Prep time is one of the main reasons that Subway is expensive.
8. Coupons
Since Subway franchise owners don’t make a lot of money to begin with, coupons are often a burden on them.
Unfortunately, the Subway Corporation forces them to promote coupons because it makes customers happy.
Whenever Subway is running a 2-for-1 sale, the store is ultimately losing money.
It’s a great way to make customers loyal to the chain, but it can also put a store out of business if they run too many coupon campaigns.
To counteract coupons, many franchise owners have to increase their prices.
This ensures that they’re able to make a living and pay the fees to the corporation.
It also ensures that they’re able to pay their employees.
While coupons may help customers save money, it ultimately leads to higher prices since franchise owners have to make up for the loss of profits.
Coupons are one of the reasons that Subway is expensive.
9. Agricultural Problems
When people buy a Subway sandwich, they don’t always think about all the steps it took to bring that sandwich to them.
There are several steps involved before those ingredients even reach a Subway store.
One of the reasons that Subway is expensive has to do with the problems that the agricultural industry is facing.
COVID-19 is one of the biggest reasons that farmers are having problems.
It created a labor shortage that made it difficult for farmers to work their farms.
With less produce and meat coming out of the farms, there’s more demand and competition for those ingredients.
That instantly raises the prices on them, which means higher operating costs for Subway.
Another problem that farmers are facing is severe droughts.
With some parts of the country experiencing a severe lack of rain, farmers are unable to water their crops.
This means that they have a smaller yield to sell.
With a very limited supply on their hands but with demand only ever-increasing, it makes the price of their food skyrocket.
That adds substantial cost to Subway’s operations.
Until the drought passes, farmers will continue to experience problems supporting fast-food restaurants, restaurants, and individuals.
Subway is expensive because of the problems in the agricultural community.
10. Transportation Expenses
A final reason Subway is expensive is because of the costs associated with the transportation industry.
There is a lack of CDL drivers which is causing serious problems with logistics.
Without enough truck drivers, those who are driving are in high demand.
As a result, it costs more to hire a truck to deliver produce and other products to Subway stores.
Since it costs more to transport the things they need, Subway’s operational costs also increase.
It’s not just a single transport either.
Any time there’s something that needs transporting, the price of the product increases.
Unfortunately for Subway, there’s a lot of transporting before they finally receive their ingredients.
Truck drivers first have to take produce and meat from the farmers to the manufacturing plants.
The plants then produce the goods and another truck then hauls them to Subway.
There may be several transfer points between those two destinations where other trucks and drivers take the load.
With normal costs associated with driving on the rise, like gas prices, the cost of transporting is extremely high.
Subway ends up being the one that pays for the increased prices since it’s the endpoint of the transport line.
To make up for those costs, they then have to charge their customers.
Subway is expensive because of the truck labor shortage and high gas prices.
Conclusion
Subway is a high-quality sub sandwich fast-food restaurant that offers generous portions to its customers.
However, due to several things like agricultural problems and a focus on fresh food, Subway tends to be expensive.
Since franchise owners make very little money from their stores, they have to do what they can to keep the store profitable and still earn a living wage themselves.
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Category: WHY
