, Australia

Jon Smith Subs flagship store closes

By Jeff Vassel

(Editor’s Note: The commentary piece has been lightly edited for clarity. Reposted with permission. Link to original post here.)

Jon Smith Subs is an American sandwich brand that was founded in 1988, then in 2016 commenced franchising in the US. In 2019, the business opened its first and only Australian store at Docklands, Victoria, however it has now closed.

Was Jon Smith Subs the victim of Covid, competition, choosing a poor location or all of these factors?

When Jon Smith Subs started franchising, there were plans to open multiple stores a year in Australia, beginning with the first store at Docklands. The plan never eventuated with Covid-19 most likely putting a halt to a lot of QSR expansion plans and as we know brands that weren’t set up for Drive Thru, or Delivery sales, and located in major CBD locations were the most severely impacted by forced closures.

Another problem during and post-Covid is that workers in the major capital cities only just started returning to offices in the CBDs. So for businesses that rely on morning and lunch trade, this has proven too much for many of them to survive.

The other major issue is the dominance of Subway in Australia. With over 1,200 stores, not only is Subway the largest sandwich business in Australia, it is the largest franchised brand even surpassing McDonald’s for total store numbers.

From 2002-2006 another US sandwich brand (Quiznos) operated a handful of franchised stores in Australia before eventually closing all stores and pulling out of Australia all together. Much of Quiznos’ problems could be put down to under estimating the financial clout of Subway and the fact that the product Quiznos offered (toasting their subs), although quite unique at the time, was more expensive than Subway and it wasn’t long before Subway hit back and Quiznos decided to retreat for good.

From all accounts, Jon Smith Subs had a good product, although pricing was higher than Subway but the brand countered that with “fresh” ingredients made to order and table service. There is a market for more competition in this country but you have to be prepared to see out the inevitable Subway fightback.

In terms of how much the location affected sales, I always found it interesting why the first location chosen was in Docklands. The Docklands precinct has had a checkered past and, more recently, another makeover launched in 2020 as “District Docklands” is almost complete.

Many businesses have struggled to make a living at Docklands, much of it can be put down to the disjointed layout of the precinct, the fact that the major attraction (Melbourne Star) opened with much fanfare in 2008, then closed 40 days later due to serious safety concerns, then finally re-opened in 2014 was a terrible outcome for the area.

The Docklands precinct itself is not very well connected to Melbourne’s CBD which for many businesses is a prerequisite for attracting busy office workers venturing out for lunch. Because of its isolated location, it was never going to be feasible to expect office workers to venture into Docklands at least 20 minutes walk away (in one direction) and therein lies the problem.

Without the constant supply of these workers, and a location that has been described by some as a wind tunnel and having no soul, it was a poorly designed residential and commercial hub that divides Melbournians and has proven a death knell for many businesses over the years.

With all of the above in mind, it was an interesting choice to open a flagship store in this location for a brand that had absolutely no brand presence in Australia.

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