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Subway, the world’s largest submarine sandwich maker, will open its first Ukrainian shop by the end of this year and it will most likely be in Kyiv, Subway Russia Service Company president John Owen told the Kyiv Post in a telephone interview.

Already the
world’s largest restaurant chain in terms of number of units and locations,
Subway has made the sizable Russian market its third largest in Europe with 545
restaurants, opening two units every three days, said Owen.

“Last year we
opened 220 restaurants in Russia,” said Owen.

And he hopes to
establish a fast pace in Ukraine where plans are in place to open 100 units in
the next three years in “Kyiv, Odesa and eastern Ukraine.”

Subway’s
flexible business model allows it to open restaurants “in places where others
can’t,” explained Owen, because of the company’s minimal equipment and space
requirements, allowing it to operate almost anywhere.

Subway Russia president John Owen.

Unique
locations have been found in an automobile assembly plant in Ohio, a brewery in
California, a floating restaurant aboard a river boat in Germany, and in a circular
nook in Moscow’s Domodedovo Airport.

Owen continued:
“From a business standpoint, we require less (start-up) capital, much less
space, and are flexible in design, we can go into different spaces and
locations.”

The American
Subway executive said its units only need about 100 square meters, but can go as
small as 30 square meters to function.

In Russia,
Subway has pursued partnerships with universities and railway stations to open
restaurants on their premises, including inside Metro Cash & Carry stores
and gas stations.

“We’re looking
to pursue the same kind of partnerships in Ukraine,” said Owen.

The company is
still determining whether the Ukraine Subways will be company or franchise
owned, or a combination of both. And as in Russia, franchise-owned units would
likely start off by paying 8 percent in monthly royalties from overall turnover.

Owen said that
consumers in Russia and Ukraine like the idea of “dictating what you want”
while seeing a sandwich being made in front of them.

In Ukraine,
Owen has observed the market to being closer to Europe in expectations, but
“only slightly higher than from Russia.”

“Ukraine is
closer to Europe, they have more European expectations (such as a) modern look
and experience,” he said.

Although he
said it costs about $125,000 to start a Subway in Russia,
Owen wouldn’t specify how much it costs to open one in this region. He said
that usually 50 percent of start-up costs go toward purchasing equipment, 20
percent to refurbish a location, and 30 percent for miscellaneous costs.

As in Russia,
Owen said Subway will try to source as much cold cut meat locally, “especially
vegetables,” but may initially face difficulty finding bread suppliers because
of its proprietary formula. Each unit employs 7-10 employees.

“Ukraine’s
market isn’t saturated,” said Owen. “There’s plenty of opportunity.”

Headquartered
in Milford, Conn., the Subway chain was co-founded by Fred DeLuca and Dr. Peter
Buck in 1965. It has nearly 40,000 restaurants in 102 countries, of which
25,906 are in the U.S., according to the
company’s website
.

 

Kyiv Post editor Mark Rachkevych can be reached at [email protected].