Subway food chain targets more prime city spots for new outlets

A Subway restaurant at the Junction Mall in
A Subway restaurant at the Junction Mall in Nairobi. Photo/Salaton Njau 

American food chain Subway has stepped up its Kenya expansion plans, terming its outlets in Nairobi as the “best” performing in Africa.

The food chain, which opened its first outlet at The Junction last year and runs another one on Kenyatta Avenue, has set a target to unveil a new store every three to four months with the third branch near the Village Market set for opening in the next two months.

The franchise for Subway International in Africa is held by Liberty Eagle Holdings, a company that is jointly owned by two entrepreneurs.

“We are just starting to market the brand in Nairobi yet our average sales per store is already the best in Africa for Subway,” said Christopher Bak, a director and co-owner of Liberty Eagle Holdings who, however, declined to disclose the food chain’s performance figures.

The American group has more than 42,000 outlets in 107 countries around the globe. In Africa, the chain has outlets in Egypt, Djibouti, Tanzania and Zambia.

Liberty Eagle Holdings Ltd is headquartered in Dar es Salaam. “We are very pleased with our performance in Kenya and we are actively searching for locations to set up new restaurants,” he added.

Subway last week placed newspaper advertisements seeking lease and rental space of between 600 and 1,000 square feet. The food chain is seeking long-term leases in Westlands, Hurlingham, Upper Hill, Lavington, and along Thika and Mombasa Road in Nairobi.

Liberty Eagle Holdings submitted and won a bid to open yet another Subway outlet at the new Terminal 4 of the Jomo Kenyatta International Airport (JKIA), but an appeal lodged against the tendering process is pending determination before the Public Procurement Oversight Authority.

The JKIA branch would add to 165 outlets that Subway already operates in major airports around the globe.

“We hope that they will again agree that we are an attractive partner for the new terminal,” said Mr Bak, who jointly owns the Subway Africa franchise with business partner Alden Edmonds.

The two are funding the expansion from sales revenues and their own cash injection. Their attempts to borrow from local banks have not yet been successful, a factor they attribute to Kenyan lender’s insistence on collateral security to cover any loans.

“We’re interested to partner with Kenyan banks to fund this growth, but most of them seem to prefer to finance property development and to lend against land holdings,” said Mr Bak. Most Kenyan retail outlets are housed in rental or leased space, yet banks are only keen on lending against land title deeds.

Subway says it will soon start offering catering options for office workers in Nairobi’s central business district. Subway’s expansion bid may, however, be slowed by the shortage of prime space in Nairobi .

Property valuation expert Reginald Okumu says most retailers are only keen on leasing ground floor spaces where there is a lot of foot traffic, which has escalated rental charges for the few available prime spaces.

An American born entrepreneur, Mr Bak’s stint as a fund manager in Africa informed his decision to invest in the continent.