Subway: Last Week Tonight with John Oliver (HBO)

[Music] our main story tonight concerns sandwiches specifically subway sandwiches dad's attempt at dinner now it can seem like subways in the news pretty often and it is rarely for anything good fast food chain subway being sued for fraud accused of selling tuna that isn't actually tuna ireland's supreme court says subway's bread can't legally be called bread because it contains too much sugar subway customers are filing lawsuits against the global sandwich chain saying its foot long sandwiches aren't really a foot long these are the shocking pictures that started everything they were posted on a social media site and one shows a man putting his genitals on what appears to be subway bread dough with the caption i will be your sandwich artist today look blood or not that penis isn't even the most defensive part of that photo look at the bread it looks like a child's drawing of ed sheeran and the sad thing is you know just by touching the bread with that penis the penis is ruined forever he's got no choice but to just throw it in the trash but of course when you hear pr nightmare for subway your head immediately goes to this man jared he was the face of subway for 15 years after claiming that he lost 200 pounds thanks in part to eating subway every day he even featured in used puff pieces like this one to play a lot differently in hindsight jarrod takes his pants on the road 200 days a year speaking to kids about nutrition everybody needs to make sure they make really really good healthy decisions every day so they never ever put themselves in a position to have to wear jared's old pair of pants yeah you heard him kids stay out of jared's pants nothing good happens in there subway has clearly been on the receiving end of a lot of terrible stories and to deal with each one just quickly jared is a monster and subway should have always been suspicious of a man willing to eat their terrible product every day not quite a foot long that is a lawsuit it didn't go anywhere dodong that did happen and it's objectively funny ireland's court ruling that subway spread can't be called bread the company insists subway's bread is of course bread and if you are curious about the tuna you can just visit subway tunafacts.com a real website the company felt it had to launch to debunk tuna myths although the moment that you've done that it does feel like you're already losing the argument but even putting all of those stories aside subway is still worth talking about tonight for a number of reasons starting with the fact it's a lot bigger than you might think subway is actually the biggest restaurant chain in the us by number of locations and for a while they had the most locations of any restaurant worldwide beating both starbucks and mcdonald's but in recent years things have taken a turn thousands of its restaurants have closed and some franchisees that's the people who own and operate their restaurants are getting restless here in the us a hundred of them got together and wrote an open letter last year stating that for many of us this dream has turned into a nightmare and overseas franchisees have given interviews like this our franchisees frightened people terrified i feel threatened because i'm scared if they target us franchisees claim many want to get out but say they can't because head office won't approve it unless expensive refurbishments are done we want to escape but they make it impossible for us to sell holy you know it's serious when they use a voice modulator that can only be described as auto-tuned andre the giant and remember this is about a restaurant that sells ham sandwiches what's the worst subway could do to that man make him eat one and if your franchisees are giving interviews like they're in witness protection and the public is constantly debating if your bread is bred your tuna is tuna and whether or not your sandwiches are filled with dicks something has clearly gone very wrong so tonight let's talk about subway where it came from what its business model is and why there are so many of them and let's start with a little history subway was founded as a single sub shop called pete's super submarines back in 1965 by fred deluca who ran the company until his death in 2015. and to give you just a sense of what kind of manager he was the company once distributed a literally not safe full work calendar to its employees featuring photos of shirtless subway executives including fred as mr january and i have a lot to say about this the least important of which is why is this guy in a bathroom the theme is clearly business but make it nipples not polaroids of uncle dale before a scrub down anyway from the very beginning deluca was absolutely obsessed with expansion even though the business didn't make a profit for 15 years he kept opening subways anyway in order to as he later said create the image of success so it really seems that subway's business strategy was basically fake it till you make it which apparently our lawyers say i cannot suggest also applies to their tuner so i won't i will not suggest that the point is deluca had an insatiable desire for growth which may be why in the mid 70s subway moved to the franchise model the benefit for the company being that they could have more locations that way and the benefit from franchisees theoretically being that they could sell an established product with brand recognition with the promise of being their own boss and there's actually one other key draw about subway specifically and that is just how simple it is to open one subway's extreme ubiquity all comes down to their streamlined setup no deep fryers no gas grills so they can build pretty much anywhere got a plug that's practically all it takes to open a subway it's true you really don't need that much to open a subway although i'm not sure quite how reassuring it is that all you need is a plug after all it is a restaurant serving human food not an air mattress but subway startup costs have indeed been significantly lower than many of its competitors it usually costs between around 200 and 500 000 to open a subway compared with the mcdonald's which can cost between 1.3 and nearly 2 and a half million and that might help explain why subway owners tend to be individuals and families many of them immigrants unlike chains such as mcdonald's where many restaurants are operated by investment firms but that low entry fee comes with some significant catches first subways bring in a lot less money than other chains an average one generates around four hundred thousand dollars a year compared to the average jimmy john's which brings in more than double that or an average mcdonald's which generates over three million but on top of that subway franchisees also have to pay a lot more of what they make back to their company because while mcdonald's asked its restaurants to pay them eight percent of gross sales subway demands twelve and a half percent specifically an eight percent royalty fee and another four and a half percent that goes toward advertising those are some of the highest fees of any chain although i will say subway puts those ad fees to heavy use because they are the reason that you can't turn on your tv without being bombarded by commercials featuring steph curry tom brady and megan rapino pretending they're all standing in the same place and willing to put sloppy bread cannons into their godbods and it's not just ads subway has done a significant amount of product placement in shows and movies like the biggest loser to all the boys i've loved before and chuck i was even part of one of them years ago in an episode of community which i have zero memory of filming but unlike my forgettable days as a corporate sandwich vessel some of that placement is pretty hard to miss like in this incredible scene from hawaii 5.0 this subway sandwich so oma okay so you're eating these to lose weight is that is that right it worked for jared and that boy was large but the best thing about it they make it any way you want it check this one sweet onion chicken teriyaki with jalapenos with banana peppers now you put that with this turkey blt bam there's some serious culinary fusion you know that scene reminds me of an old hollywood saying every ad exec wants to be a television writer and every television writer is dead in sight but incredibly even that is subtle next to the product placement the subway engages in overseas particularly in korean dramas where every plot point seems to occur at a subway here is two characters having a meeting at one here is a group of men celebrating the fact real plot point by the way their friends just woke up from a coma then there is this scene which is i swear i'm not making this up about a ghost magically eating a subway sandwich subway even released its own mini drama on youtube called sunway and i'm going to show you a scene from it now and i warn you it is breathtaking oh [Music] it's good i mean it's really good and not that you need it but here is some context that character was dating this guy who works at subway and every day she ordered the plant-based sandwich because he recommended it to her until one day this guy who wait for it also works at subway recommended the steak and cheese sandwich for her to mix it up the sandwiches were a metaphor you see now she had a decision to make stay with her usual or go with a new flavor which will she choose plant or steak tried and true or new and exciting obviously she chose the steak which is why we got that kiss in front of a subway franchise its art and its cinema and its sandwiches the point is subway advertises a ridiculous amount and its franchisees benefits from that brand building but in return subway expects them to work very hard something made painfully clear in this video created by a regional office which takes a bit of a turn halfway through when you buy a franchise you enter into a family the subway family we must own what is ours to own we must lead what is ours to lead whether you sell sandwiches develop stores or evaluate operations we must do our part to the best of our ability why because in this family people matter so we don't let people down by being lazy we don't complain about each other's work we don't feel sorry for ourselves and we certainly don't give up oh my god it's a sandwich cult and it's one that should probably think twice about threatening their so-called family members for being lazy when they couldn't even put in the effort to proofread their own copy because this is not how you spell buy as in to buy a franchise and they've left out the word two in this sentence but whoever made that video don't worry after all it's only two little mistakes there's no need to fell sorry for yourself and the thing is there is only so much a franchise owner can do to increase their earnings as they are largely at the mercy of decisions their parent company makes so if subway decides to change the menu or redesign the stores franchisees may be on the hook for those costs also if the company announces a promotion or a discount stores may have to go along with it even if it is a money loser for them and it gets even worse because those already ridiculously tight margins have been exacerbated by subway's long-time obsession with expansion for decades franchisees have complained about subway allowing locations to open near each other and cannibalizing their business in fact here is the head of a franchisee association discussing the problem back in the nineties what they tell you when you buy that franchise is don't worry we wouldn't put another franchise too close to you why would we do that why would we want to hurt you like that you're one of our partners reality is they're going to do whatever they can do that's not written in black and white and they do it okay first that is some very dramatic camera work but also power bangs is completely right there in fact to this day subway franchisees are told that you will not receive an exclusive territory and their contract states we and our affiliates have unlimited rights to compete with you meaning a subway could open right next to yours and cut your sales in half and none of this really affects subway corporate they still get their royalty fees on any sale plus a fifteen thousand dollar franchise fee for every new store that's opened that is why these stores are everywhere there are literally ten subways in a one mile radius of where i am sitting right now you could go to all 10 stores order a foot longer each and be back here in less than an hour and the reason i know that is i did that and frankly i'm instantly regretting my decision because now this entire studio is about to smell like a subway which as we all know is the exact smell of what if bread could fart and all of this all of this was by design fred deluca even once attempted to convince a journalist that more subway locations raises everyone's revenues by referencing a graph his 24 year old son made which an economist later reviewed saying in my view this tells us absolutely nothing if this is true then why not have 15 subways on the same block wouldn't they all be doing splendidly the answer is obviously not and that is a lot of sass coming from an economist the answer is obviously not it's much like subway's spicy italian sub not actually spicy in the least but given the sauce about as spicy as you're gonna get and encroaching on their own territory isn't the only way subway has angered franchisees because their corporate structure has long involved something called business development agents these are individuals often franchise owners themselves who control a certain area and are tasked with finding and approving new people to open stores getting a cut of royalties for doing that they're also in charge of overseeing inspections of stores in their area and for many years franchisees have complained about development agents being exceptionally harsh with those inspections with one saying he was once marked up for slicing his vegetables in a choppy manner which seems pretty petty how else would you do it and there is an incentive for development agents to be overly harsh because if a store gets multiple violations that franchisees agreement can be terminated and the store can be resold sometimes to the business development agent themselves at a discounted price one former inspector even described a development agent telling her the exact store owners that he wanted to fail adding i was kind of his hitman you know normal sandwich stuff now i have to tell you subway insist is transitioning away from using development agents in the us and from having them be the ones overseeing inspections but even so you might well be wondering given everything you've seen so far why on earth would anyone want to open a subway when it has some of the highest royalties some of the lowest sales and a new store could conceivably open right next door to you well crucially potential owners often don't fully know what they're signing up for here is one subway franchisee inadvertently making this point i bought my original store from a guy who was involved with subway had been involved for about five years before me and that store little did i know was the lowest volume store in the market when i went to my first owner's meeting him and his buddy said hey lollipop and i said why are they calling me lollipop and they said well we needed a sucker to buy columbus which was the subway right out of 91 stores in the market it was 91st yeah that's not great is it ideally you would have that kind of information before you invested it's hard to tell how successful a subway is just from looking at it especially because from the outside they all look like the worst one currently there is no easy way to find out what you might earn before you open a new subway for two reasons first the company won't tell you generally when it comes to franchises the ftc requires that you are provided with what's called a franchise disclosure document giving you important information before you invest but it doesn't require companies to include any details about how stores do financially now some companies do provide this but it's voluntary firehouse subs for instance has 17 pages dedicated to financial performance burger kings includes 11 pages but subway has just two paragraphs in which they say we do not make any representations about a franchisee's future financial performance or the the past financial performance of franchised outlets instead fred deluca encouraged potential owners to simply do this you know what we really want people to do is go find out from other franchisees rather than relying on what we might tell you it's much better experience to talk to 10 20 franchisees some will be doing very well some won't do very well and you can then size up the business yeah or you could just tell them instead of making them go to 20 different subway stores i guess luckily for them you can find 20 of them on any one block in america but it's really the principle of the matter here but getting accurate info can be very hard to do for starters some franchisees may be reluctant to speak because a few years ago subway added an aggressive non-disparagement clause in their contracts and while it's true that there is now a carve out saying you're not prohibited from sharing information in good faith with any prospective franchisees as one of them told congress a few years ago many are reluctant to trust someone calling and asking questions and for obvious reasons so people always talk about doing due diligence in the industry before they buy a franchise well one of those parts of the due diligence is calling existing owners most franchise agreements have that non-disparagement clause in it i can tell you if i'm in one of my stores and somebody calls me and starts asking questions and let's say i have a negative experience am i going to really say so i don't know who's on the other end of the line exactly you have no idea who might be calling it's frankly all the more reason why you should just never answer your phone calling people is for divorcees and serial killers i haven't answered my phone in 10 years now either text me or forget me and look lots of the problems you've seen tonight exist in some form with almost all franchises but subway in particular seems like the absolute worst and for years their store owners have begged them to be less restrictive with some even releasing that open letter last year complaining about many of the things that we've mentioned tonight and alleging whenever they've spoken out about any of these issues to the media they've been silenced by cease and desist letters biased arbitrations and forced non-disclosure agreements but rather than listening to that subways made things even worse for them they recently updated their contract for new and renewing franchisees which among other things expands the non-disparagement clause to include subjecting the subway brand to ridicule which come on subway you are the one who made your new logo to arrow 69 in each other the call is coming from inside the house here it is frankly no wonder one restaurant industry expert said no one in their right mind would sign the new agreement so what can we do here well i know that your instinct might be to now never go to your local subway it may have been your instinct before this segment began and honestly it remains a good one but it's worth remembering some have spent their life savings on these stores believing the promise they could be their own boss and are now stuck in a business model that was stacked against them from the start and to prevent that happening to anyone else there are things that we absolutely should be doing to better regulate all franchises the ftc should tighten up their rules on them and make disclosing financial performance mandatory that would force companies to give a much fuller picture to any potential investors of what they are getting into but until that happens or subway specifically decides to present a more accurate picture of how they operate maybe we can tell their story for them through their favorite medium i'm talking of course about korean sandwich dramas please take a look [Music] [Music] foreign [Music] foreign [Music] foreign [Music] [Music] is [Applause] [Music] foreign [Music] so [Music] foreign [Music] [Music] me [Music] [Music] huh [Music] foreign come on [Music] [Music] [Music] come on [Music] [Music] foreign [Music] foreign [Music] foreign [Music] [Music] [Music] that's our show thanks so much for watching we're off next week we'll be back june 5th good night you

Channel: LastWeekTonight

Views: 9,798,105

Keywords:

Id: jDdYFhzVCDM

Length: 26min 46sec (1606 seconds)

Published: Sun May 22 2022

Reddit Comments

[u/earhere]

I miss when you could actually get a 5 dollar foot long for 5 dollars. Now it's like 8 dollars for a cold cut combo or black forest ham. Forget it if you want anything more advanced than that.

[u/Ardailec]

Subway and K-dramas was not a combo I'd ever expect but here we are.

[u/violue]

The K-Drama at the end was fucking outstanding

[u/spiritbearr]

Knew Community's thing was going to come up but I always figured there was some obscure parody law involved instead of just getting paid for it and Dan being a deliciously salty bitch about it.

Also didn't think Duncan was in those seasons.

[u/TheBigIdiotSalami]

American comedy writers making a Korean drama that's all slapstick is so funny I can't believe they haven't done it already

[u/[deleted]]

Jon "The Boy Toucher" Hein from The Howard Stern show is the voice in the clip starting at 5:39.

[u/Lunar2K0]

oh you think this is bad…come look at Dunkin’ Donuts in New England. Fucking EVERYWHERE. I can be standing on a block in Boston and have 3 Dunks in my line of vision with turning my head.

[u/MrBoliNica]

my subway period was college. there was one in our student union, and i ate there way to damn much. havent had it since.

[u/-RadarRanger-]

Quick shout-out to whatever legal eagle has to defend John Oliver's show every week. They are truly the hardest-working lawyers in Hollywood!