You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your sub shop. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a sub shop?
The startup costs associated with opening a sub shop business vary a lot. A shop may be opened for around $60,000, or it might cost hundreds of thousands of dollars.
Here’s a breakdown on some costs associated with a shop that may cost about $60,000. Major expenses that contribute to this include:
- Purchasing inventory (about $1,500)
- Acquiring equipment (about $15,500)
- Franchise costs (about $4,000)
- Three months of lease payments (about $7,500)
- Promotional expenses (about $6,300)
- Remodeling (about $8,000)
Other smaller expenses include deposits, professional fees, cash for the cash register, licensing and permit fees, supplies and incidental expenses.
Many sub shop business owners open a franchise location. Entrepreneur has a list of 10 sandwich franchises, which cost between $84,300 and $432,800.
Business owners can reduce their startup costs some by purchasing used equipment, which is often much less expensive than comparable new equipment, and opening in a small space so that rent is kept minimal. Opening a local shop can also be cheaper than a franchise, as it eliminates any franchise fees.
What are the ongoing expenses for a sub shop?
The ongoing expenses for a sub shop business include employee wages, rent, costs for supplies and costs for ongoing promotional campaigns.
Who is the target market?
Sub shop businesses appeal to many customers. Sandwiches can be adapted to many taste preferences and health requirements, and they’re convenient, affordable meal options.
How does a sub shop make money?
A sub shop business makes money by selling submarine sandwiches, other foods and beverages to customers. Some shops also cater events.
How much can you charge customers?
Submarine sandwiches typically cost less than $10. Subway, for instance, charges between $3.75 and $5.50 for 6-inch subs, and $5.50 and $8.95 for 12-inch subs. Firehouse Subs prices many of its sandwiches between $5.49 and $9.49. (These figures don’t include special sales.)
How much profit can a sub shop make?
A sub shop’s revenue depends on how many customers it serves. Because submarine sandwiches aren’t too expensive, a shop relies on a high volume of customers to make a profit. Therefore, it’s important to be in a high traffic area so that there are lots of potential customers. Signs will help draw passersby in, as will special deals.
How can you make your business more profitable?
A sub shop can increase its revenue by upselling certain toppings that cost more, sides and beverages.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your sub shop is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a sub shop. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Food establishments are randomly inspected by the local health department on a regular basis. These inspections will check for compliance with local health laws, typically related to prevention of food contamination. Tips for faring well on a health inspection can be found here.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain a “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP or BMI.
Certificate of Occupancy
A sub shop is generally run out of a small retail location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a sub shop.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your sub shop will be in compliance and able to obtain a CO.
Protecting your logo and designs prevents competitors from stealing your art and ideas. This overview from the United States Patent and Trademark Office has all you need to know about trademark protection.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a sub shop
It’s important to offer a range of different sandwich options to appeal to people’s varying tastes. In addition to submarine sandwiches, shops may want to offer wraps or salads. These are easy to make if a place already has the supplies for sandwiches, but they have fewer carbs.
Additionally, shops should have a variety of sandwiches (and wraps or salads), such as:
- Sandwiches with meat
- Vegetable-only sandwiches
- Hot sandwiches
- Cold sandwiches
Offering a wide variety of toppings can also help a shop attract lots of different customers.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Some sub shop businesses have set themselves apart from others by offering special, unique sandwiches. These may be seasonal sandwiches, local favorites, ethnic sandwiches or one-of-a-kind creations.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Sub Shop In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Anyone who likes serving people and is passionate about food might be well-suited for running a sub shop business. There’s lots of hands-on work involved in a sub shop, as sandwiches are typically assembled to order as customers request them.
Because people eat submarine sandwiches for lunch, dinner and at other times, sub shops are usually open during most of the day. Owners ought to expect to work almost every day, although some shops close for one day a week and major holidays.
What happens during a typical day at a sub shop?
A sub shop business owner spends much of their time making sandwiches for customers. This involves:
- Welcoming customers into the shop and taking orders
- Assembling sandwiches per customers’ requests
- Ringing up customers on a cash register and giving them sandwiches
In between customers, supplies must be restocked and the shop has to be cleaned.
Owners can expect to place orders for more supplies, receive orders, make schedules for any employees and perform other administrative tasks at least once a week.
What are some skills and experiences that will help you build a successful sub shop?
Sub shop business owners should be familiar with how to efficiently make sandwiches, as that is the main product their business sells. Sub shop owners can learn how to assemble sandwiches and familiarize themselves with the other aspects of serving customers by working in a shop for a few months.
Business owners should also be familiar with how to manage employees and workflows. Talking with other owners of sub shops is an easy and inexpensive way to learn about these parts of running the business.
What is the growth potential for a sub shop?
A sub shop business may be just one location, or it can be a national chain. Many successful shops grow to be regional, either establishing a local chain or opening multiple franchises in one area.
Should you consider joining a franchise?
Joining a sub shop franchise can be a good option for entrepreneurs who prefer to use a proven model rather than start from scratch. While joining one can mean slightly higher initial costs and less control, a quality franchise offers great benefits such as initial and ongoing support, marketing assistance, and brand recognition.
Opening a sub shop franchise typically requires $100,000-$1,500,000. Larger sub shop franchises like Subway and Jimmy John's typically cost more, while more niche favorites like Togo's often have lower startup costs.
Interested in joining a sub shop franchise? Check out our favorites.
TRUiC's YouTube Channel
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
How and when to build a team
A small sub shop business can be run with just one person, but there is a great deal of work involved and having no employees limits a shop’s growth potential. As soon as possible, you’ll likely want to hire at least one employee. Having an employee can help increase how many customers your shop can serve during peak times, like the lunch hour, and it will let you focus on tasks that will grow the business more.