From a single sandwich shop which he opened to raise money to go to medical school, Fred DeLuca conquered the world of fast food.
Born in 1947 in Brooklyn, New York City, DeLuca grew up throughout New York state and Connecticut.
In 1965, while living in Bridgeport Connecticut, DeLuca approached a family friend at a barbeque to ask for a loan to attend university. The friend, Dr Peter Buck, agreed to lend DeLuca $1000 – but not to fund his tuition. Buck advised DeLuca to open a sandwich shop and raise the tuition that way.
DeLuca’s store was initially called “Pete’s Submarines” in honour of it’s backer, but when advertising on the radio, DeLuca’s thick Brooklyn accent rendered it “Pizza Marines”. The store was renamed Pete’s Subways, and eventually just named Subway in 1968.
Although he was able to raise the funds to attend university, DeLuca found he preferred business. Abandoning the idea of studying medicine, DeLuca earned a BS in Psychology from the University of Bridgeport.
In 1967 DeLuca and Buck formed “Doctor’s Associates Inc”. The company has never been affiliated with any medical organisation, as Dr Buck’s title denotes his PhD in Physics, and DeLuca would tell people “He’s the doctor, I’m the associate.”
The first sandwich store was not a success, but despite this, DeLuca opened a second store “to create the illusion of success”. Although that store also lost money Buck and DeLuca decided to sell the illusion further by opening a third branch. This one, in a much nicer location, did make money, and DeLuca realised the importance of location in the restaurant business.
Although he had set a target of opening 30 stores in his first decade of operation, by 1974 DeLuca was only halfway to that goal. At this point he started offering the Subway restaurants as franchises, broadening the potential for growth.
Franchising was a huge success, and in 1978 Subway opened its 100th store. By 1982 there were 300 outlets across the U.S. and in 1984 the first international Subway restaurant opened in Bahrain.
Two decades after the first franchise opened, DeLuca was CEO of a company with over 8000 stores worldwide.
Known as a very hands-on CEO, DeLuca would make regular surprise visits to Subway restaurants across the US. Intense and competitive, but also pragmatic, DeLuca was an ideal figure to head the franchise programme and weather the regular controversies that began to dog Subway as it grew.
Franchise operators would be aggrieved when having paid what was often their life savings to buy a Subway franchise, another branch would open up in close proximity and cut into their revenue. There were further claims of Subway misrepresenting the value of a franchise to potential owners and that they were selling franchises to people who were unable to understand the terms of the contract they were signing. In 1998 there were over 160 lawsuits pending against the company and the U.S. Federal Trade Commission launched an investigation. The investigation was dropped, but lawsuits remained a regular feature.
In 2000, DeLuca employed Jared Fogle as a spokesman for Subway, after Fogle lost around 100 kilograms in part by eating Subway sandwiches. He became a worldwide figure, and DeLuca has attributed between one-third and half of the company’s growth between 1998 and 2011 to Fogle. Although Subway reduced Fogle’s prominence in their marketing from 2008, the company did not cut ties with Fogle until 2015 – when he pleaded guilty to crimes involving child pornography and molestation.
In 2010 Subway became the largest restaurant chain in the world, surpassing McDonalds. Subway has opened an average of 1500 stores a year since 1987, and in 2016 it boasts 44,692 branches in 111 countries and territories around the world.
In 2013 DeLuca handed the running of the company over to his sister Susanne Greco, at the same time as he announced he was being treated for leukaemia.
Although he made a partial return to business in 2014, it wasn’t to last. Fred DeLuca passed away in September 2015, and is survived by his wife and son.
From that $1000 start-up loan, at the time of his death DeLuca had a personal net worth of $3.5 billion.
5 quotes about small business from Fred DeLuca
- You only fail if you quit.
- Knowing less and actually doing something is far better than knowing everything and never doing anything at all.
- Business isn’t a science. It’s not like mixing this chemical with that chemical to get a predictable outcome. You can make a plan and set a goal and even be reasonably sure that you’ll reach that goal, but until you do, you won’t know if you will.
- Think like a visionary. Always look for the big picture.
- 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.