Open up SUBWAY® franchise at Kuching

1.0  Introduction

1.1 Name & Address of Business

The company name is TANG DYNASTY SDN BHD and it is a private enterprise consisting of less than 20 shareholders. The meaning behind this company name is due to the existing major shareholders are all with Tang as family surname. The company is planning on doing a SUBWAY® franchise business which is a restaurant that serves variety of sandwiches. The address for the SUBWAY® franchise that this company is going to open is at G46, Ground Floor, Plaza Merdeka, 88 Pearl Street Kuching which is inside a shopping mall located at the heart of Kuching City.

1.2 Franchise Missions & Visions

The franchise vision is to make the restaurants and operations as environmentally and socially responsible as possible. Every day striving to conduct business in a way that has a positive impact on the environment while improving the lives of the customers, franchisees, employees, vendors and communities worldwide. The company believes that using good, environmentally sound business practices help increase the franchisees' profitability, improve customers dining experience as well as help protect the planet.

As for the mission, there are 5 commitments that this franchise has dedicated to. First is to continue to evolve our menu of great tasting, healthier options as well as provide access to nutrition and healthier lifestyle information. Secondly, it is to ensure our food meets the highest quality and safety standards. Third is to find sustainable and cost effective solutions that serve the business needs of our franchisees. Fourth is to focus our sustainability initiatives on energy efficiency, water & resource conservation, waste reduction, sustainable sourcing and supply chain management. Finally, we are committed to encourage our franchisees' to contribute to their communities, promote diversity and choose “environmentally friendly” options and business practices such as building Eco-Restaurants.

1.3 Business Objectives

There are 3 objectives to be achieved within a year’s period of time that the company has decided on as a start for this new business. First of all, what the company looks forward on achieving is to create a clean and fresh environment of the franchise for the customers to dine in. Second objective is the company aims to provide wide choice of selection on sandwiches to meet the demands of different needs of customers. Finally, the company has set an objective on providing quality services of a hotel to customers for maximum satisfaction.

2.0 Insights on Business Objectives

2.1 Environmental Leadership

As a fast food restaurant, having everything from the mat outside the door to the nooks of the kitchen floor has to be in a clean and tip top condition. Thus the first objective is creating a clean and fresh restaurant environment for the customers. For this objective to be realized, several methods have been generated by the management team. Starting from the employees’ wellbeing, employees will have their regular medical check-up to prevent any casualties. Furthermore, during recruitment, applicants will need to pass their health exams before being recruited. After that, the newly recruited employees will go through a training session where they will be taught to be discipline in cleanliness and in dress code while using the correct and safe materials for washing and cleaning the kitchen, cooking equipment, floor etc.

Next, the restaurant has a health code that will help prevent any food-borne illness or other unwanted problems. An inspection on the entire restaurant conditions will be practice on a regular basis. This practice will also definitely help get through the health inspector that will come by anytime. The lists of things to be inspected are the ingredients, refrigeration and storage, cold storage, temperature monitoring, storage methods, labelling, thawing methods, produce prep, cleaning, kitchen cloths, handling prepared food, cooking and heating, staff, kitchen equipment and outside the kitchen.

Further ways to improve cleanliness of the restaurant is to first of all, stop the dirt at the door as much as possible. 80% of dirt in a restaurant comes from outside, thus having a suitable mat program at the entrance that traps dirt and water will efficiently prevent too much dirt coming in. Besides that, frequently deep clean the surface of the floor and seal the lines will prevent soil build-ups making the floor easier to clean.  Next, maintaining the sanitation of the restaurant toilets is also important. The hygiene of the toilet reflects the hygiene of the kitchen as well. Also, the dining area should always be spot clean including the table top, the menu, salt and pepper shakers, and ketchup should all be wiped clean.

2.2 Nutritional Leadership

Besides having a clean environment, fast food restaurant should also serve varieties of delightful meals. The next objective that has been targeted by the company is to provide a variety of sandwich that suits the taste of everyone. Basically, SUBWAY® style of serving is that customers will choose all the ingredients that they prefer on their sandwich. Starting from the type of bread that customers prefer whether it is hearty Italian, rosemary & sea salt or parmesan oregano. Followed by what flavours the customers want which are the different types of meat that SUBWAY® serves. Next comes the topping which includes natural Swiss, feta cheese, mozzarella and other extras such as bacon strip or spicy pepperoni to choose from. After that, customers will choose what vegetables that they want to go with their sandwich such as green bell pepper, olives, cucumber etc. and as a final touch, the delicious tastes from different kinds of sauces for the sandwich such as honey mustard, sweet onion, chipotle southwest and etc. that brings out the wonderful flavours of SUBWAY®’s trademark sandwiches.

Nevertheless, having only the regular SUBWAY® sandwich variety is not enough. The company has decided to add on more and improve the categories of ingredients for the different range of customers’ needs. The first types of customers that the company considers are vegetarian customers. Vegetarians are more than just non-meat product eating people. There are several types of vegetarians that exist in the society. The most common term used for them are vegan and vegetarian. The difference with these two is that vegans do not eat any sort of meat or fish and they also don’t consume products derived from animals such as dairy products, eggs and other products such as honey because it comes from bees. On the other hand, there are variations of vegetarians. Some vegetarians consume fish, which are typical, some that consume dairy products are called lactovegetarian and those that consume eggs are called ovovegetarian. Ovolactovegetarians consume both dairy products and eggs but no fish and meat.

The company wishes to bring out more varieties for the vegetarians especially the vegans since they have stricter diet. For the normal vegetarians, ovolactovegetarians, ovovegetarians and lactovegetarians, they have more choices of selection such as fish meat or eggs or dairy products like cheese and cream. They can still choose ingredients from the original menu of SUBWAY® along with the salad. What the company has in mind is to add more choices for the vegans and vegetarians. First and foremost, the problem of being a vegan is the lack of protein from meat so the company has decided to add in all sorts of nuts and seeds for protein. Seeds such as sunflower seeds, hemp seeds, pumpkin seeds and nuts such as cashew nuts, almond nuts, pecans nuts and others will be included. Second to be added into the lists are dark vegetables like kale, red cabbage, collards, turnip greens and etc. Seaweeds are also included as it is believed to provide great source of calcium which is beneficial to ovovegetarians that doesn’t consume dairy products. And lastly, the franchise will also serve Ezekiel bread for providing essential amino acids that vegans lack from incomplete proteins. With all of these ingredients in sight, vegans are not going to have a hard time getting all the essential ingredients they need for daily nutrition.

Second type of customers the company is taking into consideration is the health and fitness conscious people that have little time for break during work hours. It is certain that the latest trends of lifestyle are all about fitness, going to the gym and eating dietary meals but these activities are hard to fit in to daily life schedule especially for working adults. Furthermore, not only are they busy with work and family, some also have to prepare separate meals for the family and their own strict diet meals. This takes out quite an amount of time in their life and can be quite stressful. With these conditions in mind, the company has decided to help ease these customers’ life at least in their daily meals. There will be a section of selections for clean diet customers. In the lists of selections includes white meat such as chicken breast part that are always a part of diet plan. The meat can be prepared either steamed or stir fry in extra virgin olive oil. No other artificial flavouring or additive added except for salt. Tuna will also be available for different preference. As for the vegetables, broccolis, carrots and such are included. Peanut butter as topping or spread will be in the option and breads to be used are whole meal breads. These ingredients are meant to help customers under professional trainers with strict everyday diets.

2.3 Our People, Our Communities

For the third objective, the company is aiming to provide quality overall services for the customers. Employees should be very efficient, serves in quality fashion, fast in services and are able to keep calm while being attentive and friendly towards customers whether it is the kitchen crew or the counter crew. Thus, trainings will be provided to all employees in order to achieve this objective. Starting from the kitchen crew, employees that are responsible for handling food products will be trained to monitor the cycle of all food products using proper first-in, first-out (FIFO) method. Also they will be taught on precision of labelling and date food products and making sure to never serve expired foods. Method of proper preparations will also be taught in ways to avoid spreading of dangerous bacteria or cross-contact with allergens. Basic principle of washing hands before and after handling food products will be rooted into the kitchen crew. The rest of the employees will be trained to serve customers efficiently.

In every business, the golden rule will always remain as the customer is always right. Employees should never say the customer is wrong even if they think so. By human nature, there will always be problems wherever customers go due to their different attitudes and demands. Whether the customer is wrong or right, the most important issue is to fix the problem so that customer satisfaction is guaranteed. Employees should always take the time and listen to the customers’ complains in an understanding and sympathetic manner. But in a case where the customer is disruptive or have attitude problems, employees are well trained on keeping the safety of customers and effectively deal with the particular problematic customer. If it is a customer with bad temper that easily reaches out, employees should immediately move nearby customers to a safer position and gently persuades the problematic customer into subduing his temper. If push comes to shove, there is always the emergency button below the counter that will dispatch the nearest officers.

Another training the company puts up for the employees are focus training. Simulations of a real restaurant busy hours will be played and employees each will have to familiarize with the placement of ingredients and time keeping so to be aware of the time limit of serving each customer. The traffic behind counter will also be organized to avoid any clash between moving colleagues. Train focusing on communications is also important for the employees to master. There should be no miscommunications occur even during busy hours in order to deliver efficient and fast services to customers. Another way to deliver better quality service to customers is that employees of different stations are conversant to other stations. Just in case the assigned employee on a station is unavailable, another free employee can cover for the busy employee so that the customers will not have to wait to be served.

3.0 Industry Analysis

3.1 P.E.S.T.

3.1.1 Political factor

Several factors under politic can affect the opportunity and threats of the business. Those factors include especially the halal certification, local licensing and the government service & tax charges. For the first factor opportunity, having the halal certificate when running a restaurant business in Malaysia will greatly help in gaining wider range of customers as there are a lot of Muslim in this country. By earning the certificate, the restaurant can rest the citizens assured of the food served. Next factor opportunity is local licensing. This is an opportunity for the business as it is easy to acquire such licensing that is needed to open up the restaurant. Not only is it easy to get, the government are lenient towards any restaurant that opens up for the Muslim customers. So this will also create good relationship with the government. The only factor that is a threat for the business in political factor is the government service & tax charges. The government of Malaysia is currently trying to implement the GST charges to every products and services in Malaysia and it has been known the tax rate is 6% which is quite an amount for Malaysian citizens as the majority of the citizens are the lower end customers that have lower incomes.

3.1.2 Economic factor

In economic, the factors that affect the opportunity and threats of the business are the living standard living of citizens, employment, and oil price. For the first factor which is the standard living of citizens, this factor is a threat for the business especially because the average income of more than half of the Malaysian citizens are only around RM1,000 to RM3,000. Given the average living standard of Malaysians, this might cause the customers of the lower end to try and save more money by buying groceries and cook food themselves at home without giving SUBWAY sandwiches a chance. Since majority of Malaysian’s living standards is average or at the lower end, this will bring negative effect on the business. Second factor is employment. Malaysia is obviously a developing country and in recent years, the GDP has been on the rise but slow. With the increase of GDP, unemployment should decrease and slowly increasing the power purchase of customers. But because the process is a bit slow, it takes time for the customers to be able to fully spend their money on outside food. Nevertheless, as employment increases, thus making the citizens more affordable to purchase outside food such as the SUBWAY sandwiches which is an opportunity for the business. The third factor is oil price. This factor is obviously a threat because with the increase of oil price, everything else increases along with it. This is because products and raw materials are all being supplied via some sort of transportation and transportation requires oil. When oil price increases the fees for the suppliers transportation increases. When the fees increase so does the product prices to recover the loss revenue. Thus this factor is a threat for future businesses.

3.1.3 Social and Cultural factor

Social and cultural factors are about the Malaysia’s demographic citizen’s social cultural brings opportunity and threats to the business. First social and cultural factor is the trending in Malaysia. Malaysia consists of a diversity of ethnic groups and races that have different cultures yet are able to truly embrace each other’s cultures. This makes the Malaysian citizen very open and easily to accept other trends and also keeping up to date with the new things in town. So taking that built-up characteristic and put it into trending, it works like magic. The citizens will spread the words of the opening of SUBWAY franchise and this will bring more customers to the business without having to spend huge money on advertisement and promotions thanks to the social media where everyone gets up to date with the trends. Furthermore, Malaysians are the type that always has to try anything new in the market. So for the early years of SUBWAY business, the company can predict that the customers will constantly return to SUBWAY for the sandwiches and soon the business will gain loyal customers. This brings opportunity to the business.

The next factor is culture of locals. This factor is a threat to the business because the cultures of Malaysian citizens are that their staple foods are mostly rice or noodles. Ever since they are small, the citizens has been exposed to eating rice or noodles as their full meal thus when they grow, the mouth craves for not sandwiches, but a full meal of their staple food that can easily be found everywhere in the city. The newer generations might be able to get attracted to SUBWAY restaurant but unless the parents bring them, they will not accustom themselves with having sandwich as a full meal. This is definitely a threat for the business in the long run. Nevertheless, Malaysians have grown to live a busy life style thus less time cooking healthy meals at home. So for consumers that are looking for fast food yet are healthy, SUBWAY subs can provide them with what they need. This will turn into a huge opportunity for this business as well, as the busy lifestyle will not wither out anytime soon.

3.1.4 Technological factor                  

Under technological factor, some technologies can become opportunity for the business to prosper. First factor that brings opportunity to the business is the advance of technology such as the iPad that is accessible by everyone. What the iPad brings to the business is the application that was created by a team of restaurateurs turned software makers which is called Breadcrumb, a New-York based app. This app delivers real-time views of tables, processes sales, catalogs the menu by a selection’s name or ingredients and sends orders to the kitchen. This app is all about being fast and efficient for production and other purposes. With such app, the business can truly come to its full potential by producing fast serving food and ingredient with little cost. Besides an application that helps the employees organize better, SUBWAY can also create an application for customers to pre-order their meals beforehand.  This app is for busy lifestyle customers and those that prefer not to wait in line to order. The other opportunity for the business from technological factor is the internet. The internet can spread news very quickly such as short advertisement before watching videos on YouTube and from social media such as Facebook and Instagram.

Finally the restaurant can make used of the LED alert system that is easily installed yet very much helpful especially in the kitchen. Malaysia is a multi-racial country with different languages. Furthermore, the kitchen will be hectic during busy hours. By having LED alert system in the kitchen, it is silent yet it communicates with workers in the kitchen with a total of 19 different messages. It illuminates the kitchen floor and attracts attention in a non-obtrusive way. Workers will be able to work in a more peaceful environment and the customers will not hear loud noise nor will they see the LED lights. There will be no more ringing or beeping that is usually used for alert.

3.2 Michael Porter’s Five Forces

3.2.1 Rivalry

The first competitive forces is rivalry. The rivalry intensity for this business’s industry is high as there are a lot of fast food restaurants that has made their grounds in Malaysia. Furthermore these restaurants have established loyal customers and this makes it a tough competition for the business. There is also the factor where there is a rivalry in strategic pricing of fast food to price sensitive customers. Due to the ingredients used in SUBWAY subs, the franchise could not afford to have the sandwiches to be lower than a certain price unlike other competitors which uses more common ingredients for their products. This situation causes higher intensity towards rivalry in the industry.  Examples of rivalry of SUBWAY® are McDonald’s and Burger King.

3.2.2 Bargaining Power of Suppliers

The second competitive forces is bargaining power of the suppliers. The bargaining power of the suppliers is quite high because the suppliers can find buyers easily as there are many restaurants in the city that are their customers. Furthermore, sole suppliers such as for the breads can have their way on the price of their supplies to the business since the franchise is also serving a unique type of bread that not all bakeries make. Besides that, suppliers can favour whoever they want to supply to so the best way for the business to deal with these problem is to create good relationships and trust with long-term suppliers as they know the patterns of the industry well and will help the business to prosper by getting discounts from these long-term suppliers.

3.2.3 Bargaining Power of Consumers

The third competitive forces is bargaining power of consumers. The bargaining power of the consumers is high. This is because the business cannot fulfil all the demands of consumers. Not only that but the business targets specific consumers that have specific needs such as a healthy lifestyle, busy working hours, dieting consumers and vegetarians. These consumers have high bargaining power on the products while rest of the consumers have even higher bargaining power because they do not require much of the products of the restaurant.

3.2.4 Threats of New Entrants

The fourth competitive forces is the threats of new entrants. The threat of new entrants is high as the industry is a profiting business. Everyone will need to eat and setting up restaurants that can attract and make customers become loyal is the same as having a gold mine all for the business. Not only that, this industry is easy to enter making it even more of a threat for the business. Business start-up capital also does not require too much cost making the industry more attractive to new comers. The new entrants might even improve and evolve the current food served in restaurants thus forcing the business to catch up and this might disturb the pace of the business.

3.2.5 Threats of Substitute of Products and Services

The last competitive forces is the threat of substitute products and services. The threat of substitute products and services is high as there are too many substitutes for the restaurant and the foods served. The consumers can change restaurants at any given moment without any cost. Also price sensitive consumers will try to look for less expensive yet delicious food or services and there are a lot of kopitiam or café and other places where the consumers can spend their money and get what they are looking for. Examples of substitutes for SUBWAY are places like bubble tea places such as Chatime, coffee shop such as Starbucks, convenient store such as 7-eleven and buffet restaurant such as Hartz Chicken.

3.3 SWOT Analysis

Strength -          Provide healthier meals -          The first to open in Kuching -          Serves custom sandwiches to meet different   preferences -          Low start-up cost -          Redesigned interior for better environment -          Halal certified	Weakness -          Kitchen equipment not latest -          Price a wee bit more expensive -          High employee turnover rate -          Franchisor overpowering franchisees
Opportunity -          Increase in demand for healthier meals -          Build drive-thru for SUBWAY -          Changes customer lifestyles and create new customer segments	Threats -          Local fast food restaurants -          Flooded fast food market in Kuching -          Competitor restaurants have developed loyal customers

Table 3.3 SWOT on SUBWAY

3.3.1 Strengths

The first strength is that SUBWAY subs provide healthier meals to the customers. The ingredients that are prepared are less salted and are fresh. The ingredients are also handled with care and with utmost hygienic method. Second strength is that this franchise is the first to open in Kuching. There has been McDonald’s, KFC, Pizza Hut, Marrybrown but there has not been any SUBWAY outlet in Kuching. The community is definitely going to welcome this outlet with big arms and will sell for a long time. Third strength is the serving of customized sandwiches to suit the different preferences of different customers. This will enable customers to feel full power over their meals and will be happier with their own choices. Fourth strength is the low start-up cost of the outlet. The start-up costs is only around RM400,000 to RM800,000 depending on the level of the outlet, compared to McDonald’s which is at least RM1,000,000 right out from the franchisees own capital before actually earning the franchising license. Furthermore, SUBWAY outlet has redesigned its interior design to make customers feel more at home while still keeping the clean image. It no longer has the cheap looking outlet as before. Customers can enjoy a comfortable sofa in front of an LED television or a modern wooden stool for short dine-in. Last but not least, SUBWAY restaurant is Halal certified thus giving assurance towards Muslim customers showing that the franchise is being responsible and at the same time widening the range of customers.

3.3.2 Weaknesses

The first weakness that SUBWAY is having is the equipment of the outlet available in Malaysia is limited. The western countries has innovated an LED alert system for the kitchen to run smoothly with minimum noise but Malaysia has yet to obtain this system. Second weakness of SUBWAY is that the price is a little bit pricier than the competitors who constantly come up with promotions. This is because the ingredients that are used by SUBWAY are all fresh and some ingredients are special. Third weakness is high employee turnover rate. The reason behind this is due to employees with low wages and jobs are low skilled resulting in low performance from the employees. Trainings are necessary but use a lot of capital for proper trainings of the employees. The last weakness of SUBWAY is that the franchisor is watching closely on the outlet. There shall be no changes made to the outlet unless approved by the franchisor. The franchisee cannot simply change the outlet due to the signed contract that favours the franchisor even if the change will attract more customers and improve the business. Furthermore, if the outlet struggles to keep the business open, the franchisor will seize the restaurant.

3.3.3 Opportunities

The opportunities that SUBWAY finds is that first of all, there is an increasing demand for healthier meals by the society that are growing more aware of their health consciousness. The earth is sometimes at some point unsafe for human health as there are global warming happening and the thinning of the ozone layer. With such phenomenon, humans are exposed to harmful Ultraviolet-ray that might bring various sicknesses. The society starts to adapt healthy living lifestyle in order to avoid sickness and live longer lives. SUBWAY finds its opportunity from this change. Second opportunity is the construction of drive-thru for SUBWAY. People have been going to McDonald’s drive-thru and have adapted themselves with the limited amount of time in a day. Constructing SUBWAY drive-thru will give the same customers more choices of healthier meals yet still saves time. Finally, SUBWAY has the opportunity to change the lifestyle of the customers by introducing fast yet healthy food for the customers’ sake and will also create an entire segment of customers that look for SUBWAY products.

3.3.4 Threats

The threats that SUBWAY has to take into account are first of all, the local fast food restaurants that are available in the market. Such local fast food restaurant available in Kuching is Sugarbun that has been gaining loyal customers. This restaurant has known the cultures and preferences of local people longer than any outsiders so this might pose a threat to SUBWAY. Besides local fast food restaurants, the market itself poses threats as it is too attractive for entrepreneurs that the lots of them have been entering the fast food market flooding it. Finally, this SUBWAY franchise is the first to open in Kuching, Sarawak so most probably some of the citizens are not familiar with the outlet and they are already of loyal customers towards the other competitors such as McDonald’s and KFC. This will make it tougher for SUBWAY franchise business.

4.0 Production Plan

No.	Actions	Person in Charge	Period
1.	Negotiate and purchase Starbucks lot of Merdeka Plaza ground floor	Chief Executive Officer	10 days
2.	Acquiring business license from Dewan Bandaraya Kuching Utara (DBKU)	General Manager	15 days
3.	Purchase franchising license from SUBWAY franchisor and approved	General Manager	20 days
4.	Obtaining Halal certification from registering online to approval process	Operations Manager	1 month
5.	Approval of the size of premise from local government	Operations Manager	1 week
6.	Hire contractor and interior designer and sign contracts	Human Resource Manager	2 weeks
7.	Start demolishing site	Operations Manager	1 week
8.	Start planning the floor plan of the franchise with the contractor and approve	General Manager	2 weeks
9.	Design interior design of the franchise with the designer and approve	General Manager	2 weeks
10.	Initiate the construction of franchise floor plan	Operations Manager	5 months
11.	Installing internal wiring of the whole franchise	Operations Manager	1 month
12.	Inspect the construction site to re-analyse designing of interior design	General Manager	1 month
13.	Start implementing the interior design of the franchise	Operations Manager	2 months
14.	Start interviewing and recruitment of employees	Human Resource Manager	1 month
15.	Purchase furniture with the designer and installing of fix furniture	Purchasing Officer	1 week
16.	Purchasing of electronic and kitchen equipment	Purchasing Officer	1 week
17.	Initiate installing of electronic and kitchen equipment	Operations Manager	2 weeks
18.	Hire an advertising agent	Human Resource Manager	5 days
19.	Collaborate with advertising agent	Human Resource Manager	1 month
20.	Purchase various types of advertisement lots and approved	Purchasing Officer	3 weeks
21.	Finishing up the interior design of the franchise	Operations Manager	1 week
22.	Purchase of decoration for the franchise	Purchasing Officer	5 days
23.	Final touch on the franchise with the decoration	Operations Manager	2 days
24.	Training employees and familiarize the employees with the franchise	Human Resource Manager	3 weeks
25.	Establish contract with suppliers	Human Resource Manager	2 weeks
26.	Obtain Fire Department Permit from the Fire Department	Operations Manager	10 days
27.	Register food premises with the Health Ministry online	Operations Manager	2 days
28.	Grand opening of the franchise	Chief Executive Officer	1 day

Table 4.0 Production Plan

5.0 Marketing Plan

5.1 Market Segmentation

Segments Characteristics	Kids	Youngsters	Adults	Older adults
Gender	- Male - Female	- Male - Female	- Male - Female	- Male - Female
Age range	8 – 12	13 – 21	22 – 40	40 and above
Income/Allowance	RM50 – RM150	RM150 – RM1,200	RM1,200 and above	RM3,000 or more
Lifestyle	- Energetic - Carefree - Unhealthy	- Loafing - Social - Active	- Healthy - Busy - Proactive	- Retired - Peaceful - Inactive
Power of Purchase	Moderate	High	High	High
Benefit sought	- Cheap - Fun - New things	- Social Place - Cheap - Speed	- Health - Convenience - Speed	- Health - Family
Usage rate	Medium	High	High	Low

Table 5.1 Market Segmentation of SUBWAY

5.2 Targeting

There are several segments that the company has investigated and only two segments have been chosen to be targeted by the franchise. The targets include youngsters and adults. The youngsters are aged between 13 to 21 years old and these youngsters have an allowance ranging from RM150 to RM1,200 for some that are already working. They have a lifestyle of loafing most of the time, and this is the age for them to socialize the most so they also have very social lifestyle along with an active lifestyle. This segment has a high power of purchase as well. They are seeking for social places to hang out with peers, cheap meals and fast food. The reason why the franchise has targeted the youngsters is because youngsters are the best target for the franchise. They are usually more adaptive with the changes in the society and with SUBWAY® being a sandwich selling fast food outlet instead of the usual burger or fried chicken, youngsters are the gate to having the society accepting this new trend. Furthermore, these youngsters like to try new things and finding new places to hang out especially youngsters in Kuching. They also have enough money to purchase SUBWAY® sandwiches which are cheap and tasty. And sometimes these youngsters are students of college or university with tight schedule so they might need to look for something quick which SUBWAY® can provide. So with these given conditions, this segment will have a high usage rate.

The next segment that the franchise is targeting is adults. The adults in this segment are aged between 22 to 40 years old. Since they are adults, majority of them are working adults with income. Their incomes are RM1,200 and above. These adults have sorts of lifestyles since they are of different background and environment. Nevertheless, majority of them have busy lifestyles because of work and family. They also either have a healthy lifestyle or are trying to pursue one. The adults also have a proactive lifestyle especially when their professions require them to be proactive and some may have a proactive hobby. They are mostly working adults, so they have a high purchasing power. Things that adults are seeking are health for them to live longer, convenience and speed to fit their busy schedule. The reason why the franchise has targeted adults is because adults these adults, they can afford to purchase SUBWAY® products anytime they want. Furthermore, these adults probably are practising healthy lifestyle but due to their work, they are too busy to cook healthy food at home and some working parents have to pick up their children from school which takes up more time of their lunch break. SUBWAY® provides them the best solution for their daily tight schedules. First of all, SUBWAY® serves healthy foods which have varieties of ingredients that the customers can choose. The adults that have strict diets due to their healthy lifestyle, they are able to pick out the ingredients that they need without preparing the food at home or spend more time and gas going back home. The thought of SUBWAY® sandwiches being the first choice for their health and busy schedule can be implant into their minds. Then it will soon become their custom to come to SUBWAY® for lunch. Secondly, for adults that are working parents, they are most probably at the age where they are looking out for their health as well but with children to add into their daily responsibilities besides their body, this adds up stress and takes more time in their busy life. SUBWAY® will be one of their top choices as SUBWAY® has the whole package. SUBWAY® is a fast food outlet so obviously they can serve in a fast pace and also the ingredients are healthy so even though they might not be decisive of what to order, they will not be too concern as all the ingredients are guaranteed to be healthy. This makes it far more convenient and faster than having to go to fast food outlets such as McDonald’s but have to reconsider before ordering which is inconvenient and takes up more time because fear of ordering a meal with high calories or is unhealthy. With these given conditions, this segment will most likely to have high usage rate.

5.3 Positioning

There are several factors that help SUBWAY® franchise to position itself in the market. The first special character of SUBWAY® is the food being served is all about freshness. The ingredients prepared by SUBWAY® are all fresh and clean giving the customers the fresh taste of every single ingredient in their submarine sandwiches. The sandwiches are also tasty and healthy, which a lot of other fast food restaurants have yet able to put together these two elements. Furthermore, SUBWAY® has created franchise that lets the customers to fully customize the ingredients that they prefer to have in their sandwiches. By giving customers this option, the franchise is able to satisfied wider range of preferences, wants and also the needs of most of the customers. Besides that, the sandwiches sold by SUBWAY® are cheap, making it affordable for a most of the social classes in the society. This puts the products under value for money which is being largely sought out by customers nowadays. Finally, the sandwiches sold in SUBWAY® are all halal. By being halal certified, the franchise is able to serve wider range of customers especially by being in Malaysia, with the majority of religion is Islam.

5.4 Marketing Mix Strategies

5.4.1 Products

Subway menu serves a variety of ingredients for customized meals such as salads, dinners, pasta, soups and desserts. The chains introduce the classic BMT which is SUBWAY®’s flagship sandwich, a set of menus called the 7 under 6 which features seven submarine sandwiches that contains 6 grams of fat or less, fresh veggies and more. The lists of sandwiches SUBWAY® offers are as shown in the table.

Classics	Favourites	Premium	Breakfast
-     Spicy Italian -     Steak & Cheese -     Chicken Teriyaki -     Meatball Marinara -     Seafood & Crab -     Veggie Delite™	-     Tuna -     Chicken Slice -     Roasted Chicken -     Roast Beef -     Turkey Breast -     Turkey Breast & Chicken Slice	-     SUBWAY Melt™ -     Italian B.M.T™ -     SUBWAY Club™	-     Cheese & Egg -     Chicken Slice & Egg -     Breakfast Strip & Egg -     Tuna & Egg

Table 5.4.1 Marketing Mix: Product

5.4.2 Price

SUBWAY® used differential strategy for pricing with value pricing. They have several set of value pricing with accordance to the types of submarine sandwich available in the sets. Several sets of prices ranges are shown in the table below.

Sets	Price range
Subway Everyday Value	RM6.90
Subway Triple Delight	RM9 to RM11
Subway Breakfast	RM6++

Table 5.4.2 Marketing Mix: Price

5.4.3 Place

The SUBWAY® franchise that this company is going to operate will be located at the ground floor of Merdeka Plaza taking over the place of the current Starbucks Coffee which is placed near the entrance of the mall. Merdeka Plaza is located near Kuching’s Golden Triangle which is at the heart of Kuching city. The place is always packed with high school students from nearby high schools such as St. Mary, St. Thomas, St. Joseph and more. Merdeka Plaza also attracts citizens from across the bridge over the Rejang River which is separating the centre of the city and the kampong area. The size of the shop lot is 481 sq ft and has indoor and outdoor areas.

5.4.4 Promotion

The company has decided to use three methods for promoting which are through public relations, advertising and sales promotions. Since the franchise is targeting customers from age 13 to 40 years old, it needs a wide range of reach. First method is advertising. So the franchise has decided to promote the opening of SUBWAY® restaurant via television with advertisements showing during prime time and sports. The franchise will also advertise via local radio and also in-store using point-of-purchase materials such as posters, menu etc. The franchise will also promote via public relations which is during the grand opening of SUBWAY® restaurant, several nearby schools will be provided free catering of SUBWAY®’s submarine sandwiches to promote not only the restaurant’s opening, but also working together with the schools to promote health awareness to the students in their early ages. The third method of promoting is sales promotions. This promotion will be repeated bi-monthly.  The customers can have an extra whole submarine sandwich of their choice with purchases of over RM40. The customers can also have a collection card where they can get one free submarine sandwich once the card is filled with stamps received according to the number of submarine sandwich purchased and can be collected at any time.

6.0 Organizational Plan

Chart 6.0 TANG DYNASTY’s Organizational Chart

6.1 Chief Executive Officer

The Chief Executive Officer (CEO) has the highest position in the hierarchy of an organization. The responsibilities of a CEO is almost entirely every management including operations, financing, marketing, human resources, creation of company culture, hiring, firing, sales and everything else that is under it. The CEO is responsible for the success or failure of a company. Also when there are works that cannot be delegated, it is up to the CEO to get the job done such as creating culture, financing road shows, building senior management team and surely delegating tasks. Every department should report to the CEO.

6.2 General Manager

The General Manager is the second highest in the hierarchy. This is because General Manager, as the title suggested, is involved with general issues which mean the General Manager has to monitor all departments. The jobs of a General Manager are administrative services, operations, human resources, policies and procedures which the General Manager is either directly or indirectly involved. The General Manager is also responsible for recruiting, selecting candidates, and training while ensuring a certain level of quality of the organizational training with the help of the human resource department. Also the General Manager plays an important role of becoming the communication link between top management and the employees. The General Manager is to review and monitor the performances of the employees and help direct them. The General Manager will report back to the Chief Executive Officer.

6.3 Human Resource Manager

The Human Resource Manager is responsible for recruitment of staff, working practices, negotiates with external work-related agencies, prepares the conditions of employment, preparing staff handbooks, analysing types of training needed for the employees and administer payroll. Human Resource Manager will report back to the General Manager.

6.4 Finance Manager

The finance manager is the person who is in charge of providing and interpreting financial information to the company. Finance manager is also responsible for monitoring cash flows and forecast the future trends. Managing the company’s budget, financial accounting, monitoring and reporting systems and produce accurate financial reports to the company is also an obligation. Besides that, supervising staff under this department is also the manager’s job to develop financial management method that minimise any financial risk. Finance Manager will report back to the General Manager and Operations Manager.

6.4.1 Purchasing Officer

Purchasing Officer has the responsibility of purchasing products and making sure the product is of high quality for a lesser cost before approving of any purchases. Also, handling data is another part of a Purchasing Officer’s job which is to record any purchases made or pricing accurately while managing the inventories of the organization. The Purchasing Officer should have all the relevant information of the organization’s suppliers. Such details are the suppliers’ qualifications, delivery times, potential development and products. Also, it is the Purchasing Officer’s duty to communicate with the supplier to create stronger bonds between the suppliers and the company to procure better quality product for the best price. For this, the Purchasing Officer should have great amount of negotiation skills to seek the best deals. Purchasing Officer will report back to the Finance Manager and also the General Manager.

6.5 Operations Manager

An Operations Manager job is on managing the efficiency of strategies for profit and financial growth of the company. The Operations Manager is responsible for increasing the efficiency of products and services. The Operations Manager is to motivate employees to increase output at the same time disciplining them. Operations Manager also makes the financial decision of purchasing items such as for this franchise, the Operations Manager is to give final approval of the restocking of supplies and other equipment. The Operations Manager will report back to the General Manager.

6.5.1 Assistant Manager

The job of the Assistant Manager is to monitor the workflow of the restaurant. The responsibilities include order in stocks, improve performances of the employees, maintaining smooth workflow, attend to customers complains and making sure only minimum casualties or none at all happen. The Assistant Manager will report back to Operations Manager and General Manager.

6.5.2 Supervisor

The supervisor is the person who supervises the actions of the employees in the restaurant. The responsibilities of a supervisor is to check stocks, monitor kitchen staff, counter staff and general workers, delegating task and filling in empty posts and also communicate with employees grievances while find solutions to problems. The supervisor should also be able to manage time and work multiple projects and have good written and verbal communication skills. The supervisor will report back to the Assistant Manager.

6.5.2.1 Kitchen Supervisor & Kitchen Staff

The work of a kitchen supervisor is to supervise the activities in the kitchen. Such activities are the labelling of stock, monitor each station, making sure cleanliness of kitchen, checking the workflow in the kitchen, managing time of serving food and taking out trash in a timely manner. The kitchen supervisor and staff will report to the supervisor.

6.5.2.2 General Staff

The jobs of the general staff are to maintain the cleanliness and tidiness of the franchise dining area, cleaning the toilet refilling empty toilet rolls, attend to customers’ needs, opening the door for customers, and making sure the utilities are always available such as ketchup or chilli sauce. The general staff will report back to the supervisor.

6.5.2.3 Counter Staff

The counter staff are responsible for attending to customers when they are ordering, listening to customers’ complains, operating the cash register, taking takeout orders,  communicate with the kitchen staff for ingredients refills, reporting to supervisor of any problem and should be able to converse well with customers in multiple languages. The counter staff will report to the supervisor.

6.6 SUBWAY® Franchise Crew Recruitment

Position	Job Requirement
Assistant Manager	- The applicant have to have at least 3 years job experience as an      assistant manager of a restaurant - Applicant must be of college graduate or preferably higher education - Applicant age in range of 25 to 40 years old - Applicant need to have good leadership and able to delegate task    efficiently
Supervisor	- Applicant must have at least 2 years of job experience as a supervisor - Applicant must be of college graduate or preferably of higher education - Applicant age in the range of 20 to 35 years old
Kitchen Supervisor	- Applicant should have at least 2 years of experience in the kitchen - Applicant must be at least a high school graduate - Applicant age in range of 22 to 40 years old
Kitchen Crew	- Applicant must be age 18 and above - Applicant is of at least high school graduate - Preferably hardworking and adaptable characteristics
General Crew	- Applicant must be age 18 and above - Applicant should be of high school graduate - Preferably diligent characteristics and able to communicate well
Counter Crew/ Cashiers	- Applicant must be age 20 to 40 years old - Applicant must be a high school graduate or higher - Applicant must be skilled in calculation and able to speak in several    different languages

Table 6.6 Crew Recruitment

7.0 SUBWAY® Financial Plan

One-Time Payment
Details	Expenses (RM)
Purchase of shop lot in Plaza Merdeka	770,000
Construction of SUBWAY restaurant	500,000
Hiring of contractor and designer	300,000
Hiring advertisement agency	200,000
Kitchen equipment	100,000
Furniture and apparatuses	50,000
Electronics and Appliances	40,000
Training Fees	22,500
Miscellaneous	21,000
Decorations	20,000
Grand Opening Advertising	7,500
Total	2,031,000
On-going Payment
Details	Expenses (RM)
Royalty fee	8% of total gross sales
Promotion fee	4.5% of total gross sales
Advertising lots	150,000
Franchising license	45,000
Supplies	20,000
All employees’ wages	14,600
Halal Certificate	200
Total	229,800+

Table 7.0 Financial Plan

8.0 Legal Plan

8.1 Business License

There are several legal permissions, certifications and licenses that are required before opening SUBWAY® franchise. The first license that the company should acquire is the business license which is to register the company name and also to permit the company in doing business locally. The SUBWAY® franchise is planned to be opened in Kuching, Sarawak thus the company need to get the license for doing business from Dewan Bandaraya Kuching Utara (DBKU). The process will take up around less than 20 days to be approved and an amount of fee has to be paid for obtaining the license. 

8.2 Franchising License

The second most important license to procure is the franchising license of SUBWAY®. The licensing can be obtained through completing an online application for SUBWAY® franchising or request a hardcopy of the application from the development office. The company will need to pay an initial amount of RM45,000 for the franchising license. The license gives the company the privilege of SUBWAY® for 20 years and the license is renewable for the same price.

8.3 Halal Certification

The third legal document that is needed is the halal certificate. Halal certification can be obtained online and will require certain documents about the company to be eligible for the halal certification. After sending the relevant documents, it will take around 5 days for a receipt of service to be charged and the company will need to pay within 14 days. After making the payment, the process will be done within 30 days. When approved of the halal certificate, the company will need to pay RM200 per kitchen, lasting for 2 years. This certificate is authorized by the Department of Islamic Development Malaysia (JAKIM).

8.4 Local Permit

The fourth legal permission is from the local government on the size of the premise which in this case is for SUBWAY® restaurant. The government will need to inspect the size of the franchise, is it appropriate for the cause and if the condition of the place is good. This service is done by the local government.

8.5 Fire Department Permit

The fifth legal permission is given by the local Fire Department. They are to inspect the kitchen and anywhere else that handles fire. They also inspect the safety measurements of the franchise and may come for inspection periodically to ensure that the franchise meet the fire safety regulations.

8.6 Hazard Analysis and Critical Control Point Certificate

Last but not least, the company have to obtain HACCP certification by filling in application form. This form will have to include information of the company along with the payment. After being approved, there is the registration of the food premise of the restaurant. This is to register the list of food or ingredients being served in the restaurant. This can be done online through FoSIM Domestic (Food Safety Information System of Malaysia). Both of these processes are authorized by the Ministry of Health Malaysia (KKM).

9.0 Conclusion

In conclusion, the SUBWAY® franchise will be the first to open up in Kuching and will be opening few more outlets in a couple of years. The franchise management has come up with strategies to keep the franchise opening for years to come such as exploring the external opportunities of SUBWAY® and also improving the internal strengths. In the near future, the company will revise the market segmentation in order to widen the targets while making further improvements on fulfilling customers’ different preferences with the selections of ingredients. The company is seeing the franchise to be the platform for promoting health awareness to the society in Kuching for the sake of the people as well as the children and at the same time will be a successful business for the company.