Companies

Subway food chain opens fifth branch opposite Yaya Centre

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Subway on Kenyatta Avenue, Nairobi. PHOTO | FILE

American food chain Subway has expanded its footprint in the Kenyan market with a fifth store in Nairobi.

The outlet, situated opposite the Yaya Centre shopping complex, is part of the expansion plan by Subway which expects to open an additional four branches by the end of 2016.

“We are actively reviewing spaces on Mombasa Road and in Upper Hill and hope to expand there in early 2016,” said CJ Bak, director of Liberty Eagle Holdings, the Subway Kenya franchise holder.

The franchise, which opened in Nairobi two years ago, has remained localised in the capital citing high rents in other towns as a limitation to expansion plans beyond the city.

High rent

“Many landlords ask for Nairobi-level rents, but our research shows that restaurant sales are typically much lower and it’s very hard to duplicate the supply chain outside of Nairobi,” said Mr Bak.

Subway is funding the expansion through own cash reserves, though the owners say they are mulling over “partnering” with banks to speed up growth plans. The chain is following the KFC and Java trend by opening outlets outside malls and at fuel stations to lure customers who shy away from frequenting shopping complexes due to parking and security concerns.

Subway has branches on Kenyatta Avenue in the central business district, Junction Mall, Shell Petrol Station along Limuru Road, and Thika Road Mall.

The franchise operates in 110 countries across the globe, making it one of the largest franchises in the world. The competition for fast food has been gathering speed with the entry of new names including Ocean Basket, Cold Stone, Domino’s, Naked Pizza, Spurs in addition to KFC making up the foreign chains with a presence in Nairobi.

American investors-owned coffee shop Nairobi Java House has also been on an expansion drive, with its branch network growing to over 30 shops.

The coffee chain is expected to open its Westlands and Waiyaki Way branches in the course of the year after adding a branch in the CBD, Hurlingham and Naivasha in the first half of the year.

In a report released in March by international audit and advisory firm PricewaterhouseCoopers (PwC), Nairobi residents have the fastest growing entertainment spend in Africa.

PwC said Nairobi’s current 12.5 per cent growth in entertainment and media expenditure is expected to continue up to 2018, as the middle class seeks to catch up on many of the products and services that urban dwellers in developed countries have long enjoyed.