In 2017 there were more than 44,000 Subway franchises throughout the world. This makes Subway the most popular franchise in the world. If you are looking to open your first Subway store or your 10th store, you will probably need to secure some financing from a bank or an investor.
In order to secure a business loan for a startup you will likely be asked to provide a set of financial projections. So we have developed a financial projection template specifically for a new Subway franchise within the ProjectionHub web application.
Our goal with this blog post is to walk you through the Subway financial projection template that we have created, so this will effectively serve as your User Guide to the Subway Franchise financial model.
- Feel free to learn more about ProjectionHub in general before signing up.
- You can sign up for a free trial by selecting the “Subway” template here once you sign up.
- If you have any questions about the model as you go, please email email@example.com
General Business Info
Once you sign up and confirm your account you will be asked to complete some general business info as seen below:
Adding the Subway Business Model
Once you save the general business info, you will be able to add a business model. If you don’t already see a Subway Business Model added on this page, you can click the add Business Model button as seen below to add your first Subway unit.
Next you can click the orange button to Add Revenue to get started with your sales projections.
You will now have 2 options as you see in the image below:
- You can click “Add Revenue” which will give you the ability to add projected revenue numbers for each month for your store.
- Or you can click “Add Google Sheet Revenue”. We have created a special Google Spreadsheet template specifically for Subway franchises that will give you more control in terms of adding assumptions for your average ticket price and number of customer orders each month.
- If you decide to utilize our Google Sheet template please see this guide on how to enable the Google Sheet Integration. You can see a screenshot of the Google Sheet below:
As you work on your revenue projections, it may be helpful to know that, according to Business Insider, the average Subway franchise has annual sales of $490,000. But this will vary greatly based on your location, so you may need to make some adjustments. In this section you can assume an average order amount and a growth rate of that average order amount. Then you can assume the # of monthly orders and a growth rate for that as well.
Once you complete your revenue projections you can move on to your expenses. There are 2 primary types of expenses:
- Startup Expenses
- Ongoing Operating Expenses
Subway Startup Costs
This list of startup expenses and ranges comes from FranchiseDirect.
As you know more about your specific costs you can update these numbers. Some of the items listed as startup expenses should be entered as expenses on month 1 and some are actually cash spent on assets like:
- Leasehold improvements
If you have any of these types of expenses you will want to add them later as an “Asset” instead of an “Expense” on this page.
Subway Operating Expenses
On the Expenses page in ProjectionHub you will be able to add/update your operating expenses. You will notice that the Expense page will come with a number of standard expense line items along with a default monthly expense for most of the line items. Obviously you can change any of these default expenses to reflect your specific situation.
Some expenses will be a % of your total sales, instead of a fixed monthly amount.
So as you see in the image above you can click the check boxes next to those expense categories and then in the drop down box you can select “Apply Industry Ratios” and then click “Apply”.
ProjectionHub is assuming the following % ratios for the following expenses:
- Advertising – 4.5%
- Royalties – 8%
- Food Costs – 30%
- Labor Costs – 25%
So when you click “Apply Industry Ratios” the system will take your projected sales and multiply by 8% to come up with your royalty expense for example.
Next you can move on to the assets section. You will notice that the Assets page comes pre-loaded with the default assets that you might have as a Subway franchise owner.
To add an asset, hover over the row, see the 3 dots on the left of the asset name, hover over, and click edit.
Next you will be able to add your Kitchen Equipment as an example. You can enter in the details of your assets as seen below:
Next you can move to the Liabilities page and add a loan. If you are going to borrow to help fund your startup costs, you can “Add a Liability” as seen below:
CIT Direct Capital is one lender that specifically provides financing to Subway franchises.
Next you can add any personal investment you will be making as well as investment from outside investors. One common situation may be that you pay the $15,000 franchise fee with your personal investment. In the example below we assume that you paid the $15,000 franchise fee as a personal investment, and we selected that the investment was pre-existing which means that the projections will assume that you already paid the $15k prior to the projections starting, so this will show up on your opening balance sheet as equity.
Once you enter in all of your assumptions you will be able to review a number of reports. Here is a sampling of some of the reports, tables below:
On the Dashboard page you will be able to download your projection Income Statement, Balance Sheet and Cash Flow projections to share with your lender or investor.
Adding Multiple Subway Units
Finally, let’s assume you want to add another Subway store in the future. All you need to do is go back to the “Business Model” page and add another “Subway” business model. You can then label it Subway Unit 2 and you can repeat the process. You can add as many units as you would like over time.
Again, you can get started by creating a ProjectionHub free trial account today.
As you complete your projections please don’t hesitate to reach out to us with questions at firstname.lastname@example.org