How a Disruptive Business Reinvented the Sandwich

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From Kris Sayce in St Kilda:

A Disruptive Sandwich…

Whenever I’m out and about I’m always looking for examples of creative destruction or disruptive business.

But sometimes it hits me when I’m not even thinking about it…

On Wednesday morning we left the Sir Stamford Hotel in Sydney to head out to the airport. By the time we’d checked our luggage and gone through the security screening it was just about lunchtime.

So, like many (we’ll admit to not being very contrarian when it comes to food!) we headed over to the Subway counter for a sandwich. Before we had time to stop and think, it started…

“Which bread would you like sir?”

“Um, the Italian herb please.”

“Foot long?”

“No, six inch please.”

“What would you like on it?”

“Seafood please.”

“Any cheese? Swiss or cheddar?”

“Swiss please.”

“Any salads?”

“Yes, just lettuce thanks.”

“Any sauces?”

“No thanks.”

“Salt and pepper?”

“Yes please.”

And that was it. But what do you notice about the conversation? If you haven’t worked it out, it’s the key to what has made Subway the world’s biggest restaurant chain… and its owners multi-billionaires.

I’ll explain all in a moment.

But it’s important to note the entire ordering, sandwich assembly and payment lasted no more than a couple of minutes.

Subway makes sandwiches. But why do so many people choose to buy a sandwich from Subway? It’s not as though they sell the best sandwiches in the world (although they aren’t the worst either).

Well, there are a couple of reasons. One is the global familiarity.

The same way that a Big Mac in Sydney is the same as a Big Mac in Melbourne… or a Big Mac in New York is the same as a Big Mac in Dallas. The same goes for a Subway sandwich. When you go into McDonald’s or Subway you know what to expect.

But there’s more to it than that. Subway has “disrupted” the sandwich-making industry. The people behind the Subway business did two things no-one previously thought of…

First, they deconstructed and rebuilt the sandwich ordering and making process.

Second, they brought the efficiency of the production line and division of labour to sandwich making.

Think how you normally order a sandwich at a deli…

You tell the person everything you want to go on the sandwich (after you’ve stood there staring for five minutes at the 50 possible ingredients). Then, after you’ve told them what you want, they ask which bread you’d like… or maybe you’d prefer a roll… or a Panini… or Turkish bread…

More indecision follows.

Meanwhile, a queue builds behind you.

Once you decide which bread you want you have to repeat the ingredients again. If you’re lucky, you’ll get your sandwich 10 minutes after you first walked into the shop.

Now think back to the ordering process at Subway. It’s logical. It starts where you’d expect it to start… with the bread. Then the main ingredient (seafood, meat, chicken, ham, etc.). Again it’s logical.

Next is the salad… then the sauce and finally the salt and pepper.

Everything is presented to you in the right order.

But that’s only part of it. Subway is an efficient sandwich-making production line. You deal with two, three or even four people during the process. There’s no time to umm and ahh. “Any salads?” they ask as they grab a handful of lettuce expecting you to say, “lettuce please.”

And why not, everyone has lettuce in a sandwich!

Subway is a prime example of a disruptive business.

It has taken an industry that hadn’t changed for years and created a new business and process that has seen it overtake McDonald’s to become the world’s biggest restaurant chain.

You see, disruption doesn’t have to involve technology.

And it doesn’t have to be something that changes the world.

A disruptive business is just a business that changes an old way of doing things and replaces it with something new. In this case it’s a process that allows you to get a tasty sandwich in a quicker and more efficient fashion.

Cheers.
Kris Sayce.
for The Daily Reckoning Australia

Editors note: Kris tells me: “Find a creative destroyer and you’ve found someone who understands the difference between true entrepreneurial spirit… and just a basic knack for business. It’s a vital skill – especially if you want to make serious money from investing.”

To find out where Kris thinks you can make “serious money” from creative destruction in 2012 – click HERE

Kris Sayce
Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms. A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. He is currently the Publisher, Investment Director and Editor in Chief of Australia's most outspoken financial news service — Money Morning.
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2 Comments on "How a Disruptive Business Reinvented the Sandwich"

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Technofreak
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Whaa??
I think it sucks balls! I don’t go to subway for the reasons you have described. I don’t want to explain everything I want on a tuna roll, I want the one on the menu and get the hell outa there.

icecream weather
Guest

technofreak, somehow i don’t think subway was specifically catering to you. It’s the *other* 47 million people that they are targeting. Plus, there aren’t that many places that DO sandwiches off the menu, and neither of them are likely to make it in to forbes 500 any time soon. I also don’t think the point of the article was to sell you on eating subs for your remaining years, given that this is a financial/stocks feed. Never bring a sandwich to a sub fight.

wpDiscuz
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