Published: Friday, November 27, 2020
McDonald's and Subway are two of the world's largest international fast food restaurant chains. Each company possesses astrong brand and is an established name inthe casualeating restaurant industry.With 40,953 locations worldwide, Subway beats outMcDonald's as the largest global chain. McDonald's currently has 37,855 locations globally. So, what'sbehind this difference in global positioning? And, are the differences meaningful beyond a number of restaurants?
Ownership Structure
The most important general difference between the two companies is that McDonald's is a public company while Subway is privately owned. The common stock of McDonald's is listed on the New York Stock Exchangeand it hasbeenincluded in the Dow Jones Industrial Average (DJIA) since 1985 due to its market capitalization and its position in theindustry. In contrast, Subway is owned and operated by theprivate company Doctors' Associates Incorporated.
The McDonald's brand is much more valuable than that of Subway despite both companies ranked among the world's most valuable brands, according to Forbes, up to 2018, when Subway was dropped from the list. Regular, open publication of the company's financials improves itsaccess to capital which, in turn, provides more opportunities to strengthen the company's brand, a key factorbehind its continued strongfinancial results. So, it seems that brand value alone does not explain the difference between the chain size of the two companies.
Investment and Capital Resources
For established companies such as McDonald's and Subway, franchising is one way to expand rapidly with minimal risk to the parent company. Both companies use franchising in their business models but to different extents. AllSubway stores are franchised.The company itself does not own any Subway restaurants. McDonald's owns about 20%of its restaurants, with the remaining80% owned and operated by independent franchisees.
Expertise gained from operating company-owned outlets enables parent companiesto improve the operating standards of the whole franchise chain. At the same time, the existenceof company-owned stores in McDonald's business structure places certain restrictions on its expansion capabilities. For example, aconventional franchise agreement supposes that the parent company owns the land and the building or secures long-term leases for its restaurants. This requires more capital, which can limittheability for expansion at the rate of other chains, like Subway.
Fee Structures
We have already discussed that thebusiness models of both companies are focused on franchising. A franchise license is an authorization granted by a company to an individual that enables the franchiseeto maintain control over purchasing, employment, pricing, and marketing decisions. To securea franchise license, the franchisee pays a set of fees to the parent company. Thefranchise fees to open a new McDonald's restaurant are much greaterthan that of a Subway restaurant. Thetotal investment needed to open a new McDonald's restaurant ranges from $1,215,000 to $1,945,000 plus an initial fee of $45,000, while theopening costs of a new Subway range from $116,000 to $263,000 withaninitial fee of $15,000. Thus, Subway is much more affordable for small entrepreneurs.
Geographic Segments
While the preceding factors speak to why the number of Subway locations exceeds that of McDonald's, the datareveals thatMcDonald's, with stores in 113 countries, has a broader geographic representation than Subway, which has stores in107 countries. In addition, insome countries, the number of McDonald's restaurants exceeds that ofSubway, particularly in China and Japan as well as Europe andSouth America. Subway, in turn, dominates in Australia, India, and the United Kingdom as well asNorth and Central America. The United States is the single largest market segment for both companies.
FAQs
With 40,953 locations worldwide, Subway beats out McDonald's as the largest global chain. McDonald's currently has 37,855 locations globally.
Which is bigger Subway or McDonald's? ›
Subway is now officially the largest restaurant chain in the world. The company passed McDonald's in the United States in 2002 but it has now passed it worldwide.
Is Subway the largest restaurant chain? ›
Although Subway was just knocked down to bronze on a global scale, the sandwich chain has held the top spot as the chain with the most locations in the U.S. for some time now. As of 2022, Starbucks and McDonald's had around 15,000 and 13,000 locations nationwide, respectively.
Is Subway or McDonald's worth more? ›
McDonald's: $37 billion in system-wide U.S. sales. Starbucks: $13 billion in system-wide U.S. sales. Subway: $10.8 billion in system-wide U.S. sales.
Is Subway bigger than McDonald's 2024? ›
What are the largest food chains in the United States in 2024? Subway, Mary's Gone Crackers and Starbucks are the largest food chains in the United States in 2024 based on the number of locations. Subway has the most number of locations with 20,603 locations across 54 states and territories.
Who is bigger than McDonald's? ›
The largest restaurant companies in the world are primarily chain operations with an international presence. Compass Group and Starbucks are the two largest restaurant companies as of 2023. McDonald's is the largest fast-food chain.
What is the world's largest restaurant chain? ›
McDonald's is the largest restaurant chain in the world, with 41,822 locations, about a third of which are in the U.S. The fast food chain saw sales of roughly $120 billion last year, according to FORTUNE.
Are there more Subway's than McDonald's in america? ›
Surprisingly, the correct answer is actually Subway! Subway is the most popular fast-food chain (most restaurant locations) in 49 out of 50 states. Delaware isn't as interested in eating fresh. In the US, there are 24,568 Subways compared to 13,793 McDonald's locations.
What is the #1 fast food restaurant in the world? ›
1. McDonald's. McDonald's Corporation is a QSR chain established in 1940 and headquartered in San Bernardino, California. McDonald's has over 69 million customers per day throughout its 40,031 locations in over 100 countries.
What is the #1 fast-food chain in America? ›
What is the number one fast food chain the US? McDonalds is the number one fast food chain in the US. McDonald's is the number one restaurant chain in America based on both sales and number of locations, and it has over 36,000 restaurants in over 100 different countries.
Looking at the overall meal, the Subway meal in terms of protein and sugar was slightly healthier than McDonald's and provided more vegetables, however it was higher in sodium. Remember both meals contributed the same total number of calories but on top of that, it was a large amount of calories.
Who is bigger McDonalds or Chick-Fil-A? ›
Chick-fil-A is the third-largest restaurant chain in the U.S. by sales — and the company that everyone in the restaurant industry is looking to beat. Even McDonald's, which outstrips Chick-fil-A by sales and footprint, is leaning into chicken to drive growth.
Who is bigger McDonalds or Burger King? ›
McDonald's is larger in terms of the number of outlets worldwide. As of 2020, they have around 39,000 stores, compared to Burger King's approximately 18,000.
What is the most sold item in McDonald's? ›
The most popular/most sold menu item at McDonald's worldwide is the French fries. This item is available in almost all McDonald's restaurants worldwide, and it has been a staple of the menu since the company's early days.
What is healthier Subway or McDonald's? ›
🍟 McDonald's: Often criticized for high-calorie, high-fat options, like burgers and fries. 🥪 Subway: Offers customizable sandwiches with a variety of fresh veggies and lean protein choices. 🥗 Healthier Options: Subway tends to have more health-conscious menu choices.
Is Subway owned by Mcdonalds? ›
All Subway stores are franchised. The company itself does not own any Subway restaurants. McDonald's owns about 20% of its restaurants, with the remaining 80% owned and operated by independent franchisees.
Is Subway the biggest fast food in the world? ›
Subway - 42,998 Locations
Subway is the largest and the fastest-growing restaurant chains in the world with 42,998 restaurants in 112 countries and territories.
What is the largest fast-food chain? ›
Is Subway the largest fast food franchise? ›
The top five are Subway, with 2,098 units in California as of year-end 2021. McDonald's has 1,158. Taco Bell has 839; Jack in the Box has 836 and Carl's Jr. has 628, according to Frandata.
