This PESTEL/PESTLE analysis of Subway shows the external factors that shape the foodservice industry and its markets worldwide. This industry environment determines the company’s opportunities and the threats to its restaurant chain operations, regarding the political, economic, social, technological, environmental (ecological), and legal factors (the PESTLE/PESTEL factors). Navigating through these external factors and trends in the remote or macro-environment can boost success in achieving the business targets and goals of Subway’s mission statement and vision statement. Success in the fast-food industry requires appropriate strategies and tactics for exploiting opportunities while mitigating the effects of external threats shown in this PESTLE/PESTEL analysis of Subway.
The external factors evaluated in this PESTEL analysis influence Subway and its competitors, including multinational fast-food restaurant chains, such as McDonald’s, Burger King, and Wendy’s, as well as the foodservice operations of coffeehouses, like Starbucks. The Five Forces analysis of Subway shows fierce competition. Subway needs to ensure that its strategies are at least on a par with the strategic implementations of competitors to successfully operate in the industry environment illustrated in this PESTLE analysis.
Political Factors
Governmental policies and political trends impacting the foodservice industry are considered in this PESTLE/PESTEL analysis. The following political factors affect Subway:
- Emerging free-trade agreements in regional markets
- Protectionist policies in some countries
- Political risks resulting from geopolitical conflicts
Emerging free-trade agreements among allies and neighboring countries are an opportunity in this PESTLE analysis of Subway. This external factor can grow fast-food markets and improve the ease of doing business. However, protectionism is a political factor that can threaten Subway’s multinational growth in some countries. Also, risks due to geopolitical conflicts are a threat in this PESTEL analysis, considering the company’s dependence on positive relations that facilitate multinational foodservice business development.
Economic Factors
Economic conditions and trends are assessed in this PESTEL/PESTLE analysis of the fast-food restaurant business. Subway’s business is subject to the following economic factors:
- Rising or unstable inflation
- Economic growth of developing countries
- Changing labor markets
Rising or unstable inflation is a threat in this PESTEL analysis of Subway, which depends on competitive pricing for price-sensitive consumers. However, economic growth in many developing countries comes with growth opportunities for the submarine sandwich business. For example, Subway’s generic competitive strategy and intensive growth strategies can support multinational business growth based on these external factors in terms of cost minimization, market penetration, and product development. Changing labor markets due to pandemics and other factors are also a threat in this PESTLE analysis of the quick-service restaurant company. This economic factor can cause instability in Subway’s human resources.
Social Factors
Social trends and sociocultural factors’ effects on consumers, workers, and decision-makers are considered in this PESTEL analysis. The following social factors influence Subway:
- Consumer demand for healthier food choices
- Increasing concerns about GMO
- High usage of mobile and online delivery services
Consumer demand for healthier food choices and increasing concerns about genetically modified organisms (GMO) are external factors that lead to opportunities and threats in this PESTLE analysis of Subway. These sociocultural factors can reduce demand for some food and drinks, although the company can always improve its products to satisfy changing consumer preferences. Subway’s marketing mix (4Ps) is a strategic approach for communicating the company’s improvements, including healthier food options, for such opportunities in this PESTLE/PESTEL analysis case. Moreover, the high usage of delivery services comes with opportunities in fast-food operations. Subway can improve its IT assets to better integrate and streamline delivery services and optimize efficiencies based on this aspect of the PESTLE analysis.
Technological Factors
Technological advancement and related trends impacting the quick-service restaurant chain are considered in this PESTEL/PESTLE analysis. Subway’s business environment involves the following technological factors:
- Process automation in foodservice operations
- High availability of third-party delivery services
- Developing technologies for urban farming
Process automation can enhance efficiency and productivity in Subway’s operations management. Thus, this external factor brings opportunities for foodservice business in this PESTLE analysis case. Also, Subway can integrate third-party delivery services to increase its market share. Another relevant technological factor is the development of urban farming technologies. This trend can improve supply chain stability and is an opportunity in this PESTEL analysis of Subway.
Environmental/Ecological Factors
Ecological trends and the natural environment’s influence on the fast-food industry are assessed in this PESTLE/PESTEL analysis. The following ecological/environmental factors affect Subway:
- Food supply disruptions
- Widespread availability of recyclable materials
- Improving availability of renewable energy
Food supply disruptions due to environmental conditions threaten food supply stability. This ecological factor is also considered a threat in the SWOT analysis of Subway. On the other hand, the widespread availability of recyclable materials is an opportunity in this PESTEL analysis case, pertaining to the sustainability of food packaging and other aspects of Subway’s business. Similarly, the improving availability of renewable energy around the world is an opportunity for the foodservice company. Better sustainability is achievable by integrating renewable energy solutions in office and facility operations, based on this PESTLE analysis of Subway.
Legal Factors
Laws and regulatory trends relevant to the submarine sandwich business are considered in this PESTLE analysis. Subway’s operations are subject to requirements and limits linked to the following legal factors:
- Developing nutrition and dietary regulations around the world
- Employment laws and regulations linked to inflation and other economic issues
- Increasing regulatory restrictions on GMO
Nutrition and dietary laws around the world affect funding for food purchases for government agencies and related organizations. In this PESTEL analysis of Subway, this legal factor threatens foodservice operations, but also creates opportunities for enhancing the healthiness of the company’s food and beverage products. New employment laws can impose additional requirements on the fast-food company. Moreover, regulatory restrictions regarding GMOs are a threat in this PESTEL/PESTLE analysis, regarding regulatory limits on what Subway can offer to consumers. The geographic divisions in Subway’s company structure (business structure) are designed to support strategies that account for the country-specific or region-specific legal factors in this PESTEL analysis.
Recommendations – PESTLE/PESTEL Analysis of Subway
The remote or macro-environmental factors in this PESTLE analysis come with challenges that threaten Subway’s multinational operations. The industry environment also involves opportunities for improving the foodservice business. The following recommendations are based on the external factors evaluated in this PESTEL/PESTLE analysis of Subway:
- Enhance market penetration strategies to improve the foodservice business based on the economic growth of developing markets.
- Improve renewable energy utilization to strengthen Subway’s sustainability efforts for its ESG and CSR goals.
- Continue product development strategies to satisfy changes in consumer demand favoring healthier food options at Subway locations. Such a recommendation relates to social trends in this PESTEL analysis of the foodservice business.
References
- About Subway.
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- Subway Quality and Food Safety.
- U.S. Department of Agriculture – Economic Research Service – Food Service Industry Market Segments.