The Subway restaurant chain is celebrating its 35th anniversary in Puerto Rico, where it has 180 stores that have transformed over the years to satisfy local consumer tastes.
In an interview with this media outlet, José Vázquez, vice president of Subway in Puerto Rico and who co-founded the chain in 1995 with business partner Lyle Swanson, said the trick to longevity has been to “implement innovative and practical ideas.”
Among these innovations was incorporating toasted bread, drive-through windows, wraps, pizzas.
“The key to our success has been that we have adjusted to the needs of the Puerto Rican consumer. It is they who have motivated us to have the variety of foods we have on the menu,” said Vázquez.
When Swanson arrived at the island in 1995, the Subway chain had been in the market for 10 years, experiencing inconsistent growth, Vázquez said. The chain had three different developers, who implemented too many changes that prevented Subway from taking off.
“When my business partner arrived here, there were only five stores left. All of the growth Subway has had since then had to do with adjusting,” said Vázquez, who joined Subway upon being approached by Swanson and his team, who were scouting a location at the university where Vázquez was vice president of finance.
At present, Subway generates about $95 million in gross annual sales on the island. All of the Subway shops are run as franchises, with three franchisees owning the bulk of the stores: Swanson who has 34, Vázquez who owns 20 stores, and a third executive who owns 20 stores in the western region.
“We had a little more than 200 stores open before Hurricane María hit but had about 20 that didn’t reopen after the storm,” Vázquez said, adding that the chain is not measuring its immediate future in terms of how many stores it has or how many new units will be developed, because the market is “practically at capacity.”
Over the next three years, Subway Puerto Rico will continue remodeling its existing stores and adding new menu options, which call for an investment of some $25 million, he said. Of that, he said about 60% will be procured from local contractors.
“We began introducing the new design that we call ‘Fresh Forward’ about a year-and-a-half ago.’ That requires an extensive remodeling that includes new equipment and a new look,” he said, adding each restaurant generates between 10-12 jobs.
“We’re also introducing new dishes, including our pastas, which are being developed in Puerto Rico,” he said, adding some 70 Subway restaurants have already included them in their menus. “We’re the only market in the world selling pasta and we hope it continues to spread outside Puerto Rico.”
Vázquez, who is the president-elect of the Puerto Rico Restaurants Association (ASORE, in Spanish) also said that in general, the island’s restaurant industry has seen a “moderate improvement” in sales as a result of the reduction of the sales and use tax to 7% on prepared foods.
“It has been generally positive. For the government it was balanced because all of the effort that the Treasury Department conducted to require restaurants to register and become current in their sales tax remittances to be able to participate in the reduced tax rate resulted in more revenue for the agency,” said Vázquez.