Greg Madigan, head of Subway UK & Ireland, talks expansion, healthy options, store evolution and hospitals with Mark Wingett.

If customisation is the key trend for the current generation of consumers then Subway sits right in that sweet spot, but can you have too much choice? For Fred DeLuca, who founded the sandwich chain 50 years ago in the US, believes that 17-20 subs is the range size that the brand should be comfortable with.

Greg Madigan, the current UK brand head for England and Ireland, takes this a stage further: “A university looked into how many variants you can do with a Subway menu and there are currently 62 million different combinations. Conversely, I took my nan to Subway for the first time two years ago, I thought this will be a disaster and she would hold up the queue, but she just came in and said ‘I want that one’. Those two extremes show how flexible our offer is in terms of use by consumers.”

Madigan talks from experience on the strengths of Subway, having been with the brand for more than 10 years. “I worked with one of the Subway development agencies in Sydney for nine years and then went to the national office in Australia. I was then asked to take up the role in the UK, as head of the brand.

“Before Subway I was 14 years in full service restaurants for a chain in Sydney, where I was operations director. Moving from full-service restaurant chain where I was in control to a full franchise operation, where you were dealing with a different dynamic. It was about managing differently.”

Madigan admits that the group’s structure is quite unique. It has a corporate entity and then development agents, of which there are 20 in the UK & Ireland, who look after a geographical patch and look after the operations, inspections, leasing and construction in that region. Each of those own stores themselves. From that network of stores the brand is able to develop and trial new lines and formats.

There is no limit on how many stores a single franchisee can operate, as long as they are “a good partner”. Madigan says: “In the US there are franchise partners with 200 to 300 sites. In the UK, 12% are non-traditional stores and a lot of that comes from corporate businesses rather than entrepreneurs, the largest of which is forecourt operator Eurogarages. There is no set target on what that mix should eventually be, our focus is to maintain our traditional high-street presence, that’s the dominant part of our business.

“What non-traditional stores have allowed us to do is put sites where we couldn’t support a traditional store. We have taken what we have learned from these sites back into the main estate. We trialled a more formal café offer in Birmingham a few years ago and it has been put in a few more sites but we general go for a smaller footprint. We have very deliberately adopted the model of a greater number of smaller footprint sites rather than fewer larger stores. It’s all about giving the consumers choice, so really they will decide how many stores we will have.”

The company believes it has the capacity to reach 3,000 UK stores by 2020 by focusing on non-traditional locations and could eventually double its current UK estate of 2,000. The brand will open c250 sites in total in the UK & Ireland this year. Madigan said non-traditional locations are the biggest growth area with 440 stores currently situated in universities, military bases and forecourts. It will add a further 20 roadside sites through its link up with Welcome Break this year.

He says: “We have our own method of deciding where we should open, who is next to us or around us doesn’t come into play in that respect. We are talking to train station operators. There is a big opportunity there. We have a couple at present and something we need to chip away at. Airports are another opportunity and focus for us. Forecourts and service station areas are really driving forward for us.

“We have four drive-thrus at present. We have another to come online, so we will increase our numbers of drive-thrus by 100% this year! Our big focus for 2015 is hospitals which have previously been off limits but with healthy focus and a low-fat menu we have some really exciting prospects opening up. We have got a couple of sites located in hospitals with three or four more coming on line this year.”

For Madigan, everybody who sells food is a competitor, but the “Prets and the Greggs would be ones we keep an eye on”. He says: “That was one of the things that struck me coming to the UK. In Australia there is not a competitor for Subway as such in the sandwich market. However, the sandwich market here is so huge. You can buy ready made sandwiches anywhere, so for me that required a change in mindset. Because it is such a wide open market we have to concentrate on what we do and our points of difference. That is obviously the customisation and giving the customers exactly what they want, making it in front of them and our health platforms.”

The group is signed up to eight of the responsibility pledges, which is more than any of its competitors. “We have grabbed this and run,” says Madigan, rightly proud of the group’s efforts in this field. “We are doing some great work with Heart Research UK. It is working for us.

“Anecdotal feedback from consumers is that they love what we are doing in terms of our health credentials. The support for the brand across the UK is huge. It is not just choosing the lowest fat subs. By choosing a salad item it is already one of your five a day. We have nine subs with under three grams of fat per 100 grams. Forty per cent of our customers buy from that part of the menu.”

Consumer interaction is another key touch point for Madigan and franchisees. “For two and half minutes from order to leave they are 100% engaged with the customer. The four or five minutes they may have been waiting in the queue disappears once that engagement starts. That comes from training on what we call the ‘through put’ and staff are not just engaging with one person, but a number and within that several different personalities.”

That engagement is about to be stretched further as the company looks to ramp up the number of 24-hour stores it operates. Madigan says: “They are becoming more popular in the larger cities. Where there’s a market for 24 hours we are pushing franchisees to consider it, but it is their decision at the end of the day.

“The majority of stores open 7am to 9.30-10pm. Day parts are something we are exploring. We have our snacking day-part menu where we are trying to get the inbetween lunch and dinner trade. We had a large launch with breakfast in the last year, with the £2 breakfast range. Dinner will be a focus next year. Our kids packs are gaining traction, especially through our link up with Disney. Eighty per cent of our trade is lunch but we want to explore other day parts.

“We don’t have a branded coffee offering, but it is something that is growing and we are looking at solutions for some of the lower volume stores. It is one of those outside lunch points we are looking at.”