Fred DeLuca may not be a name that is synonymous with business. It may not even be a name that many people have heard of, but it is a name that should provide inspiration to budding entrepreneurs everywhere. DeLuca is the founder of Subway, the sandwich restaurant chain, and his philosophies and principles provide an excellent example of how to build up and make a fortune from the simplest of ideas.
Fred DeLuca began the Subway Sandwich chain as a 17 year-old in need of money for college. His company grew from two unsuccessful outlets in suburban Connecticut in 1965, to over 36,400 stores around the world today. Subway sandwiches are available in 99 countries, and it is the largest fast-food franchise operation in the world. Yes, it is even bigger than McDonald’s.
As a teen he earned money by collecting empty bottles and cashing them in for 2 cents each. When he was 10, he moved to New York, and there he further honed his entrepreneurial skills with a paper route that grew to more than 400 addresses. His goal was to study medicine at Bridgeport University and become a doctor, but money left him short of achieving that dream. DeLuca took up a job at a hardware store to help pay for his tuition, but still, he found his $1.25 minimum wage was not enough.
That’s when the family received a phone call from Dr. Pete Buck, a long-time friend who had just switched jobs and moved closer into town. “I was worried about how I was going to pay my college tuition fees with the $1.25 per hour job I was doing at the local hardware store, so I decide to ask Pete for advice.” The response was not what he was expecting. Dr. Buck told him to open a submarine sandwich shop as he’d seen a sandwich shop in his hometown experience huge success. He explained that if Fred was willing to do it, he would be his partner.
Fred continues: “With a $1,000 loan from Dr. Buck, our partnership was formed and we opened Pete’s Super Submarines in August 1965. The very first day DeLuca opened up shop, he had spent the better part of the morning sitting out back, cutting vegetables with a three dollar knife on an old sheet of plywood.
At the end of that summer, he had only $6 left over. This outcome did not discourage Buck and he suggested that they open a second store, for higher visibility. As DeLuca told Fortune it was done to create the image of success. The second store lost money as well. DeLuca and Buck opened a third store. They changed the name from Pete’s Submarines to the catchier name Subway. The venture began making a profit, earning $7,000 its first full year
“There is no doubt that the first year was a huge challenge and a learning experience for us both, but we persevered and opened our second store a year later. We learnt on our feet and quickly realized that marketing and visibility were going to be key factors in the success of our business so the third outlet was in a highly visible location and it’s still serving sandwiches today,” he said
As Fred quotes “The world doesn’t stand still and we don’t deserve to be where we are unless we stay ahead of things and take the necessary steps to remain competitive.”
When he brought a friend on board to help run one of his stores, it gave DeLuca the idea that well-trained owner-operators would be the best suited to build the Subway chain. This led him to start franchising his business and the rest is history.
Despite his $2.5 billion fortune, he maintains a very modest and frugal lifestyle, driving a seven-year-old car and often flies economy, rather than the more expensive business class and lives by the philosophy of keeping everything simple. He does not take uncalculated risks and guards his achievements wisely.
As such, he is an excellent role model for entrepreneurs everywhere. His business model was an innovative and extremely successful one that tapped into his own business knowledge whilst attracting the aspirations of others. As such, it has proved to be a winning formula. With a lot of hard work and steady progress, Fred DeLuca has proved that big entrepreneurial business and the rewards that come with it are possible.
Last, we would like to conclude his story with a food for thought from Fred DeLuca: “I didn’t have big family expenses. I didn’t have high expectations. I was willing to try solutions that other people may not even have thought of. I’m not saying they were all smart solutions, but I tried them.”