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.”
