Try Subway! Fresh baked bread, fresh meats, fresh
veggies, and plenty of 6-inch subs with just 6 grams of fat or less. Subway, big on taste, not on fat. Subway is the biggest
fast-food chain on the planet. The chain knocked down McDonald’s and
KFC’s store count decades ago and has more than 44,000 stores in 110 countries. And it all started with a 17-year-old
from the Bronx who had never made a sub in his life until opening day. He struggled for years before finding
a way to make billions of dollars. And it’s all because of a
message scribbled in a notebook. In 1947, Fred DeLuca was
born to a factory worker and homemaker in Brooklyn, New York. When Fred turned five, the family moved
to a housing project in the Bronx. To them, it was a step up when compared
to their old basement apartment. A mere five years later, the DeLucas
had to pack their bags again. The company that Fred’s father worked
for relocated, so the family had to move to Schenectady, New York. There, life became more settled. The DeLucas became close friends with
a couple named Pete and Haydee Buck. They often brought their families
together for picnics and parties. But when Fred was finishing high
school, the two families lost touch. The DeLuca’s had to move out of
state to Bridgeport, Connecticut. A year later, the Bucks moved to Armonk,
New York, about 40 miles from Bridgeport. When they settled into their new
home, they invited the DeLucas over. By then, Fred had graduated from high
school and planned on becoming a doctor. He received an offer to attend
a pre-med program but questioned whether or not he should accept. “There wasn’t much hope that I
could get through college because my family simply didn’t have the money. I worked at a hardware store
as a store clerk earning $1.25. It was a good job for a kid,
but it wasn’t going to provide the money I need for college.” Fred felt hopeless until he visited
the Buck’s new home: a large white house with two garages. “Pete’s doing pretty good for
himself,” he thought to himself. “Maybe he’ll have some ideas on
how I can afford the tuition.” Secretly, Fred hoped that Pete
might even offer him a loan. Fred waited all afternoon to find an
opportunity to talk to Pete alone. Standing in the middle of Pete’s
lawn, he finally gathered the courage. “Pete, I want to go to college
but I don’t have the money. And I was wondering if you had any ideas
on how I could pay my way through school.” Pete answered immediately
without hesitation. “I think you should open a sub shop.” Fred was stunned. It was far from the
answer he had hoped for. He and his family couldn’t even
afford to send him to college. How could he start a business? Not to mention, he was only 17-years-old
and had never made a sub before. Still, Fred was curious and asked
him how the business worked. “All you have to do is rent a
small store, build a counter, buy some food, and open for business. Customers will come, put money on
the counter, and you’ll have all the money you need for college.” To Pete, it was that simple — even
though he worked as a nuclear physicist and had never owned a business before. He was so confident that his
idea would work that he offered to become Fred’s partner. Being a kid from a housing project
in the Bronx, Fred felt like it was a great opportunity and agreed. Afterwards, Pete walked into his
house, brought out a newspaper clipping, and started to read
an article about Mike’s Subs. The founder, Michael Davis, had
started his shop with almost nothing. He faced many struggles, but managed
to build a small empire in Upstate New York: 32 restaurants in 10 years. “If Michael can do this, why
can’t we?” Pete questioned. By the end of the night, Fred
and Pete came up with ideas for their menu, price, and even set a
goal: 32 restaurants in 10 years. Before Fred went home, Pete handed him
his first investment: a check for $1,000. Neither of them had any idea that it
would lead to a billion-dollar return. And that they would have to first survive
nearly a decade without making a profit. The next day, Fred found a small
store to rent in Bridgeport. The location was hard for
customers to find, but it was in decent shape and affordable. To Fred and Pete, it was good enough. Within five minutes, they shook
hands on a deal with the landlord. They didn’t even bother signing a lease
since they considered hiring a lawyer to draw up a contract too expensive. Afterwards, Fred and Pete went on a trip
to learn about the art of making subs. Their first stop: Portland, Maine. Pete was from Portland and grew
up eating subs from a local Italian deli called Amato’s. He was still a big fan of their
subs, so he suggested that they stop by, observe their operations,
and evaluate the pros and cons. Afterwards, they visited other
shops and did the same thing. When they compared notes,
they discovered that they both liked Mike’s and Amato’s best. Mike’s offered a greater variety of
subs and made them with foot-long rolls. And Amato’s used a blend of
olive and vegetable oils that made its subs more flavorful. Fred and Pete decided to combine the
pros from both shops and sell their subs for the same price as Mike’s. They knew nothing about pricing
but figured it was a safe bet, since Mike’s had 32 restaurants. Meanwhile, Amato’s only had two. “Intuitively, we realized that to
really understand our business, we would have to begin to work it. It didn’t matter if we chose Amato’s
pricing instead of Mike’s, and Mike’s taste profile instead of Amato’s. If we made mistakes, we could
correct them as we progressed.” While driving back home, Fred and Pete
made plans to open their shop that August and call it Pete’s Submarines. To promote their grand opening,
Fred made flyers and handed them to strangers as they stopped
their cars on a street corner. “I'm opening a sandwich shop on Saturday. Will you come?" Fred asked as he popped his
head into the passenger side. “Well, where is it?” they asked. Fred pointed to the back
of a shopping center. Every driver that he asked would
look over and give Fred their word. On August 28, 1965, Pete’s Submarines
officially opened for business. It ended up being the first day that
Fred had ever made a sub in his life. To make matters worse, he had
an English exam on opening day. So he had no choice but to ask his
friend Art Witkowski to take over. When Fred returned to
the shop, he was shocked. The parking lot was full. When he glanced over at the shop,
he couldn’t believe his eyes. There were customers crammed inside
and standing in a line outside. By 6 p.m., they sold over 300 subs and
had to close their doors for the day, since they ran out of ingredients. Fred and Pete were convinced that
their first customers would return and that sales would skyrocket. “Next time, they’ll bring
their friends,” Pete insisted. “We’re going to do great! We’re going to be millionaires.” Unfortunately, their first
customers never came back. And few new customers came in. Month after month, sales plummeted. Fred and Pete came up with ideas
on how sales could improve and even paid for an expensive radio ad. Every single one of them failed. Eventually, Fred and Pete couldn’t
afford to pay their rent or employees. “What do we do?” Fred asked. Pete pulled out a notebook and
jotted down a series of letters. “L T D A T A T K.” “What does that mean?” Fred asked. “Lock the door and throw away the key.” Those simple eight letters
sealed the fate of the business. And later, it redefined the
entire fast food industry. Closing the shop wasn’t what
Fred expected Pete to say. “It was only six months old and
it was too soon to give up on it. There had to be other options.” Pete quickly realized that Fred was right. They talked about different ideas on how
to save the business and settled on the most unusual one: opening a second shop. Their thinking was that a second shop
would allow them to experiment with different products and compare results,
and that having two shops would make people think their subs were in-demand. While it was a big risk, it
didn’t make sense to move the restaurant to a new location. They already paid for renovations
and would have to pay to re-install their equipment. A few months later, Pete’s
Submarines’ second shop opened in Fairfield, Connecticut. It was so successful that Fred and Pete
decided to open a third shop that year. Sales immediately went up
at all three locations. Fred and Pete boasted that it was surely
better to have more restaurants than one. But soon after, they discovered
they had spoken too soon. Sales plummeted as winter approached. And now they had not one but
three shops that were failing. Fred and Pete realized their
business was highly seasonal. Most people didn’t eat out
everyday and stayed home around the holidays to save money. Still, Fred and Pete refused to
give up and decided to wait it out. Fortunately, their patience paid off. Sales improved by spring. And overtime, business became more
stable as their reputation grew and customers’ eating patterns changed. By then, Fred had given up on
his dream of becoming a doctor. He realized that he didn’t enjoy
doing lab work and switched his major from pre-med to psychology,
since it was the only department that would accept his course credits. All he wanted to do was graduate and
figure out his career path later. Meanwhile, he remained committed to
reaching the goal that he and Pete set: 32 restaurants in 10 years. By the time Pete’s Submarines
reached its eighth year, Fred managed to open 16 restaurants. He knew he wouldn’t be able to go from
16 to 32 in two years, so he sought advice from a man who paved the way for
McDonald’s and KFC to succeed: William Rosenberg, the founder of Dunkin’ Donuts. Over a decade ago, William started to
franchise Dunkin’ Donuts and later founded the International Franchise Association. William encouraged Fred to open
shops in locations where people could park their cars and insisted
that he start franchising. Fred took his advice and
changed the business name to something more catchy: Subway. When Subway reached its 10th year,
they were several restaurants short of reaching their goal of 32. But they managed to open more than
5,000 restaurants over the next decade. From then on, Fred considered his role
at Subway as his career path, and the company’s success continued to skyrocket. In 2000, Subway made headlines when a
college student named Jared Fogle lost 245 pounds after eating its subs for a year. Soon after, Jared became
a Subway ambassador. His everyday-Joe quality appealed
to many Americans and convinced them that Subway was a healthy choice
— tripling the company’s sales overtime. Three years later, a Subway franchisee
named Stuart Frankel came up with an idea that made the company
even more money: $5 footlong subs. Five! Five Dollar! Five Dollar Footlong! After testing the promotion, Stuart’s
sales jumped from $14,000 to $23,000 per week, four times more than
what the average shop brought in. Corporate was skeptical that
the promotion would work on a national scale but later caved in. It ended up bringing billions of
dollars before becoming a staple. But since then, Subway faced
many crises involving its food, ambassador, and franchisees. And overtime, the company was forced
to close over 3,000 locations. Still, Subway remains the world’s
largest fast-food chain, surpassing McDonald’s and KFC, and has
restaurants in over 110 countries. In his book, Fred shares one
of the most important lessons he’s learned in business. “Most people don’t think that regular
folks with ordinary ideas and limited resources can make such happen. Boy, would they be surprised at the way
the real world works… More than the money, getting started is what it’s all about.” This is the story of how a 17-year-old
from the Bronx started a sub business and turned a single shop into a
billion-dollar multinational chain. For more inspiring stories and advice
from today’s most successful leaders, don’t forget to subscribe to our channel!
