Sandwich Shop Business Overview
A sandwich shop prepares and sells various types of sandwiches, subs, and related items for customers to eat on-site, take out, or have delivered. These establishments range from small independent delis to large franchise operations like Subway or Jimmy John’s.
The most common business models in this food service category include:
- Franchise Operation: Opening a location of an established brand with proven systems, training, and marketing support in exchange for franchise fees and royalties
- Counter-service Shop: A traditional setup where customers order at the counter and food is prepared in view, offering dine-in and takeout options
- Delivery-focused Operation: A shop that mainly handles delivery and takeout orders
- Mobile Shop: A food truck or cart offering sandwiches at various locations throughout the day
Related: Checklist To Start A Business
How Do Sandwich Shops Make Money?
Sandwich shops generate their income by preparing custom sandwiches and subs in addition to complementary products like beverages, chips, salads, desserts, and more.
Industry Statistics
Sandwich and sub shops operate in the Sandwich & Sub Restaurants industry under NAICS code 722513 – Limited-Service Restaurants. Here are some statistics that show the current state and future direction of the industry.
Sandwich Shop Industry Size & Growth: The sandwich and sub shop industry generated $45.2 billion in revenue last year. Over the past 5 years, the industry has grown by 1.8% annually. The industry is expected to continue expanding at 1.4% annually over the next five years, reaching $48.5 billion. This steady growth reflects sustained consumer demand for convenient meal options and the increasing popularity of food delivery services. (IBISWorld)
Number of Sandwich Shops: There are 20,222 sandwich shops operating nationwide. Large chains control a small portion of the market, with Subway holding the largest share at 8.5 billion in revenue, followed by Jimmy John’s at 2 billion and Jersey Mike’s at 1.7 billion. The majority of shops remain independently owned, showing room for new entrants in the market. (IBISWorld)
Sandwich Shop Profit Margin: The average profit margin for sandwich shops ranges between 5-10%, with the industry average at 5.3%. This margin accounts for food costs, labor, rent, and other operating expenses. (IBISWorld)
Startup Stories
Also See: Ideas for Naming a Sandwich Shop
Costs To Start a Sandwich Shop
Starting a sandwich shop can cost between $50,000 and $250,000. The lower end represents a small counter-service location in a modest space, while the higher end reflects a larger establishment in a prime location. For franchise opportunities, costs typically range from $200,000 to $500,000, which includes franchise fees and initial setup expenses.
Here are some of the main costs to consider when opening a sandwich shop:
Location and Build-out: A retail space suitable for food service requires proper ventilation, plumbing, and electrical systems. Costs include rent deposits, renovations, and installing necessary fixtures. The build-out process also involves meeting health department requirements and food safety standards.
Equipment: Commercial-grade refrigerators, prep tables, sandwich stations, ovens, and display cases form the backbone of operations. Additional equipment includes sinks, storage shelves, point-of-sale systems, and smallwares like knives, cutting boards, and food storage containers.
Initial Inventory: Opening inventory includes meats, cheeses, produce, bread, condiments, and packaging materials. This also covers drinks, sides, and other complementary items that customers expect with their sandwiches.
Furniture and Fixtures: Tables, chairs, counters, and food prep surfaces need to be commercial-grade and meet health code requirements. This category also includes menu boards, lighting, and kitchen organization systems.
These estimates provide a general idea of startup costs, but actual expenses will vary.
Resources:
Association of Nutrition & Foodservice Professionals
National Restaurant Association