For some 55 years, Subway had one, well publicized, and often stormy, go-to-market strategy—Business Development Agents. It was a hyper-growth engine as BDAs were given a territory, 20-year contracts, and tasked with recruiting stores that, at times, ended up flooding markets with little space between units. BDAs received up to a third of royalties paid by franchisees from that territory.

There’s much to be said about how this evolved and where it wobbled over the years. The boss could also become the competitor, and friction tended to follow.

But the key now, starting in 2020, is Subway adjusted to one of two routes to market. The first is what it calls “Subway Market Operations,” or SMO, where corporate manages franchisees directly. Subway deploys that approach in areas where it’s more penetrated, like the U.S. or Australia. It’s also started to embrace the master franchise model, which has housed some significant movement of late.

MORE: Take a deeper look at Subway’s transformation

Tracing the change, in August 2023, Subway made a few leadership transitions. President of North America, Trevor Haynes, announced he was stepping down at the end of the calendar after 18 years with the company, starting in 2005 as Territory Manager in Australia. Douglas Fry, director of Subway Canada, ascended into the role. Global chief marketing officer Carrie Walsh was named president of EMEA. Cristina Wells got promoted to SVP of U.S. marketing.

And, lastly, the former EMEA president, Mike Kehoe, who once served as president of international for Focus Brands (now GoTo Foods), became global chief development officer.

That was a new position at Subway, which was sold to Roark Capital in April for a reported price of $9.6 billion, and reflective of the redirect.

Speaking at this year’s QSR Evolution Conference in Atlanta, Kehoe shared how sizable of a change this evolution truly was for Subway. From a numbers perspective, Subway finished 2023 with 20,133 U.S. stores after retracting by 443 locations.

Mike Kehoe joined Subway in 2020.

Since the start of 2016, Subway has trimmed some 7,000 U.S. shops, which on its own would be the fifth-largest quick-service brand in the country.

This past year did, however, mark a slowdown—Subway shuttered a net of 1,043 shops in 2021, 571 in 2022, and, as noted, 443 in 2023.

The company counts about 37,000 restaurants globally. So roughly 17,000 are outside the U.S.

Getting back to the makeup itself, Subway once touted more than 100 BDA territories in the U.S. alone. Kehoe said you can count the present figure on one set of hands.

In 2024, he added, Subway expects to build double the number of restaurants it did in 2019 pre-COVID. “And I think one of the big enablers is moving to those different routes to market,” Kehoe said.

Subway earlier in October announced it reached north of 10,000 international restaurant commitments in a three-year window. The stores are the result of more than 20 master franchise agreements—commitments that cover more than 40 percent of the new openings slated for 2024.

Seven were inked this year, including entry into Paraguay and Mongolia, and further expansion in Europe, South America, and Central America.

And this comes after a 2023 where Subway experienced positive global net growth for the first time since 2016 (mostly thanks to international).

Remodeled Subway restaurant.
Subway’s Fresh Forward design has another evolution in store.

There are several undercurrents. The menu was a massive, multi-year push that brought set builds to stores in July 2022 with the Subway Series category of chef-curated sandwiches that could be ordered by name or number. A year later, Subway introduced a Deli Hero change of freshly sliced meat. Subway invested $100 million to provide meat slicers to all locations. Stretching deeper in the timeline, Subway in July 2021 unveiled its most significant menu launch in brand history with over 20 updates, including 11 new and enhanced ingredients.

Kehoe said Subway isn’t moving away from the traditional, build-your-own sandwich model it built the brand on; it’s simply not going to be the default approach.

He admitted Subway was also a laggard on the digital side. This year it’s launched a new app and loyalty program and is rolling self-order kiosks across Europe. Subway is relaunching its CRM program in tandem with FranConnect and developing and testing a 2.0 design of the “Fresh Forward” remodel program that “blew the doors of it in terms of consumer feedback,” Kehoe hinted.

And this all factors into development prospects for Subway, which today is in more than 100 markets globally. Kehoe believes the lion’s share of whitespace exists internationally.

To get a sense of Subway’s overseas picture, the EMEA region counts 50 markets. “Just geographically, now I get to work on how do we bring multi-unit owners into the system here in the U.S.?” Kehoe said. “I get to work on master franchise deals across Asia and Latin America. But I also get to go into more depth [where Subway already has a lot of locations].”

If you view Subway’s international-domestic split, among those brands you’d label truly global (KFC, Starbucks, McDonald’s, Burger King, Domino’s), it’s the only one of the pack whose international count isn’t larger than its U.S. footprint.

“So if you look at that relationship and just if we were to get to the average of that group,” Kehoe said, “we would double our restaurant count internationally.”

That’s going to begin in core markets—China, where Subway recently signed a development deal for more than 4,000 restaurant commitments that would expand its base by a factor of seven; India, which has a pipeline over 2,000. There are 700-plus Subways in Germany and more than 800 in Mexico. “Those markets should more than double,” Kehoe said.

This isn’t to say Kehoe is writing off the U.S. While he admitted some might bet against this given recent trends, Kehoe said the brand’s internal data shows it has “huge traditional opportunities, probably a couple of thousand of restaurants we can build.” And also, there’s untapped runway with non-trad outlets, like airports, hospitals, universities, and so on.

“Those fit us great,” Kehoe said. “Because one, the type of food we serve, the price points, our footprint. And the reality is that none of those channels, we’re under 10 percent in all of them, in terms of penetration.”

Sandwich with Honey Oat Bread.
Subway has kept its foot on the lever with innovation.

One of founder Fred DeLuca’s philosophies for Subway was, in terms of operators, the brand would be the only concept within their portfolio. It wasn’t just about owning another sandwich concept, but the entire scope of quick service. He also sought smaller restaurateurs.

Subway moved away from this under CEO John Chidsey, who was hired in November 2019, and started to invite multi-brand franchisees to grow and also acquire units from other franchisees and build out viable trade areas.  

“We look at that, why would we not want that?” Kehoe said. “If we can generate better returns on their investment. We know they can operate well. We know they have access to capital.”

Broadly, Kehoe said, these two go-to-market models are rather different. With master franchisees, he said, Subway has found partners with roots in other large systems, like Yum! Brands or Restaurant Brands International.

The way Subway works with these sophisticated companies differs from how it engages with the general franchisee in its SMO approach.

When Kehoe started, Subway had essentially two master franchisees on paper. As shared earlier, seven were signed internationally just in 2024.

One of the frameworks Subway set up, though, was to ensure it wouldn’t get between master franchisees and guests, nor their sub franchisees, or the franchisees that were there. So that meant giving them a good deal of autonomy, from marketing to menu to supply chain and compliance—things in its SMO model the company won’t do. There, Subway has coaches on the ground helping franchisees.

The brand today, Kehoe adds, has ample data pouring in since its point of sale is in so many markets (definitely the SMO ones). And it has a feature called the “BAT Tool,” (business analytics tool) where flags are identified. The more that pop up, the lower comp sales go. Subway corporate can see issues and pinpoint. It chases metrics like hours and delivery penetration.

Overall, the development models are a bit of art and science, Kehoe said. With science, take Germany for example. It’s a large market with solid penetration (700-plus units). But this year, Subway expects to build 40 or 50 net restaurants. “When you’re able to build like that, you ask yourself, maybe a master franchisee could build a little bit faster. But do I want to share the revenue with them? That’s the science of it,” Kehoe said. “And then the art is, what do we think of the candidate we might have? How complex is that market?”

In other terms, would a master franchisee be a better fit for a market where Subway doesn’t already have latent scale and awareness? And that’s the act being balanced.

The latest deal will add 4,000 units across multiple international regions.
International remains the biggest area of whitespace for Subway.

Also, Kehoe said, you need to consider Subway hasn’t entered that many new markets because it’s already in 100-plus. Frankly, most of the tail of DMAs it isn’t in are just not huge opportunities for the brand.

But it did recently enter Indonesia and, as previously shared, get into Mongolia. It’s opening across the latter with its set-build Series menu and a “pay-first” model that’s been looked at and piloted a bit in the U.S. If a guest’s default is to select a sandwich and maybe make a little edit, there’s no reason they can’t pay first, Kehoe said.

That’s an example of Subway getting to reinvent itself from the outset as it grows. Naturally, the menus adjust around the world as well, with premium lobster subs in Korea as LTOs in one example and a melt platform that helped Subway crack late-night in the EMEA as another.

Kehoe said Subway is circling roughly 15 markets for development. Japan, Spain, Central America, the Caribbean, and others among them.

Something Kehoe always mentions when talking about Subway to prospective candidates, he added, is it’s competing in a mammoth category (sandwiches). That’s no great secret. But unlike other quick-service staples, like burger and chicken, there’s no defined global competitor. So, at least for now, Subway is a category of one on that wavelength.

Firehouse Subs kicked off its international expansion in June 2023 with its first restaurant in Switzerland. Mexico was up next. Jersey Mike’s struck a 300-store deal with Burger King and Taco Bell franchise operator Redberry Restaurants in January to bring the brand to Canada. That signaled the first major international expansion plan for Jersey Mike’s since its founding in 1956. The debut Redberry store opened in August. Inspire Brands announced in January it would take Jimmy John’s global (Canada and Latin America to begin) for the first time through a partnership with Foodtastic, a franchisor that oversees north of 1,100 locations through a collection of brands, including Pita Pit and Freshii, and $1.1 billion in sales

Kehoe’s point is a clear one. He said Subway’s biggest sandwich competitor overseas, typically, is drug store and supermarkets and other prepared vendors.

And while, as those deals show, Kehoe expects the international arena to heat up, Subway has a chance to dig its international roots deeper with these new go-to-market models and momentum. Without much debate, it has a head start.

The Deli Hero meat slicer.
The Deli Hero meat slicer.

Part of this returns to a tease Kehoe dropped earlier. Subway’s Fresh Forward design included changes to nearly all of the guest-facing areas of the dining space and service sections, including new flooring, furniture, wall coverings, counter equipment, and ceiling and lighting elements. The update was unveiled in summer 2017. Subway said previously the switch brings a 20–25 percent sales lift if it also involves a franchisee relocating their restaurant to a better trade area. If not, the increase is about 10-11 percent. Roughly half the U.S. system was upgraded at the start of the year.

There’s an evolution—2.0—in the works Subway has quietly tested in multiple markets. It should amp up later this year and into next. Details aren’t forthcoming just yet, but the idea is it’s a warmer, more inviting version deliberate in its approach to dine-in and off-premises occasions. There will be more brand personality on display and a rethought layout that answers a growing call for convenience.

“What we heard in the research is this a restaurant I would like to order from, but also eat in,” Kehoe said.

There are some tech pilots in the work as well. Things like having kiosks in front of the sandwich line where the last position is if you want to pay in cash. It’s about flow and how tech could enable it, Kehoe said. Also, ensuring Subway’s pickup area is fully integrated into the design so it fits naturally.

Speaking of off-premises possibilities, Kehoe sees a “hidden gem” in how Subway could position itself going forward. The company is testing and incubating an attended and unattended version of grab-and-go. Picture a larger partner, such as a national travel center like Pilot, which has Subway restaurants already in locations. But given they’re open all night, Subway opens and closes on a schedule like any restaurant would. However, an extension could open where Subway reaches a major audience those venues already speak to—the target group of people filling up and getting out, no matter what time of night or morning it is. Subway has coolers. Other times, it’s using the center’s. Either way, the opportunity to offer Subway sandwiches packed up and ready to go is a big opportunity, Kehoe said.

The unattended version is something the brand has spoken about before—vending machines with a one-day shelf life. These, Kehoe said, can go into hospitals or airports. Consider a large airport. Subway wouldn’t try to put a restaurant in every gate. But it could put a machine in each one. That idea should open up the brand to partners and bids as it works to scale in non-trad venues.

Stepping back, these innovations and evolutions are something Kehoe hopes transforms Subway into becoming a world-class franchisor focused on multi-unit ownership.

“We’re the largest sandwich player outside the U.S. But we have so much space in front of us,” he said. “… I’d love to just look back and say wow, we actually did double our international footprint.”

Fast Food, Sandwiches, Story, Subway