Value Added: Being The Boss

Here's Tom Heath's latest column on Washington's entrepreneurial set:


Farhat Elmohtaseb doesn't want to answer to a boss, or punch a clock or work his way up some corporate ladder. He is right where he wants to be: the owner and operator of four Subway sandwich shops in downtown Washington.

It's a nice life. The 43-year-old lives in Fairfax County and -- when he is not training sandwich makers -- follows a few small investments. Thanks to his Subway success, he has some investments in office buildings, and in Time Warner and Tyco stock.

The entrepreneur loves being his own boss for a lot of simple reasons. "The income is not limited. You aren't working for somebody and waiting for your next promotion. Your income depends on how hard you want to work."


Farhat Elmohtaseb owns four Subway shops in downtown Washington.

Ah yes, the income. Elmohtaseb is a partner in the Subway franchises with his brother. He won't say how much he makes, but I estimated his annual take is comfortably in the six figures.

Each store grosses somewhere around $70,000 per month. His expenses are a little more than $50,000 a month, including around $25,000 for food and $10,000 in rent. There's salaries, utilities and insurance, as well. Take out another $5,000 or so in royalties to Subway's headquarters. He has almost zero debt, so Elmohtaseb and his brother split, by my estimation, somewhere around $10,000 a month profit -- per store. He pays himself a salary.

Elmohtaseb arrived in Washington in 1989 to start a banking career after graduating from the University of Toledo with an MBA. Before that, he earned a bachelor's degree in financial management from Bowling Green State University in Ohio. It didn't take him long to realize he wasn't meant for finance.

"I wanted more of a challenge," he said. "When you own a business, you put your degree and all the knowledge you have into effect. Either you make it or you don't."

Elmohtaseb started his first Subway franchise in 1992 under Larry Feldman, the Subway Sandwich King of the Mid-Atlantic. I wrote about Larry a few days ago. Feldman has the rights to Subway's territory in Maryland, Virginia, Delaware and D.C., which means he oversees 1,019 stores -- at last count. Subway franchisees have to go through Feldman to get a store. Feldman and his top assistant, Alan Warmund, helps franchisees pick locations, train staff, operate the stores, market, maintain quality control and build a customer base. In return, Feldman gets a cut of the Subway headquarter's franchise royalties.

Elmohtaseb considers himself an operator of Subway stores, not a passive investor.

"I didn't invest and walk away. You have go to have commitment. I started at 14 hours a day. Now I am down to eight hours a day, five days a week. My vision is to be a successful person. Not for money, but for the goals I set to own my own business and to see it on top."

He rarely makes sandwiches any more. Elmohtaseb spends most of his time shuttling between his stores, making sure they open on time, have all the food and accessories they need, and ensuring every customer gets what they want.

He is constantly interviewing job applicants and training them. His Subways employ between them and 10 people each. Turnover is high when you make sandwiches for around $8.50 an hour.

Elmohtaseb is zealous about keeping prices low and making sure customers do not have to wait longer than six minutes to get their sandwich. Although Subway headquarters sets guidelines for prices, different markets can increase or lower those prices based on costs.

Keeping costs low has increased the customer base, helping Elmohtaseb make more money even though rising food costs have squeezed the margin on his sandwiches. Store traffic this year is up between 15 and 20 percent.

"You have to provide customer service," he said. "With a lot of highly educated people, it's not easy to fool everybody. The speed is all important. The majority of people have half an hour to eat. They don't want to waste 20 minutes in line."

The stores are around 2,000 square feet, which is the size of a spacious living room. He has about 20 tables on average. There are some leather armchairs for quick business meetings or for someone to spread out with their laptop. Depending on location, startup costs can run between $200,000 and $300,000, including renovating the space and installing equipment, buying furniture.

Elmohtaseb at one time had six Subway stores, but he sold two in Georgetown to concentrate on the ones clustered near Connecticut Avenue. They all do a brisk business. One store was located in a food court off the Farragut North Metro stop, but it was in a basement with no light. When a landlord a few yards away at L Street and Connecticut Avenue urged him to move into his ground floor, Elmohtaseb jumped and the store took off.

He keeps an eye on the competition, which includes a Pot Belly Sandwiches down the street and a Quiznos Sub shop across L Street. There's even a local health food startup called On the Fly that is biting at his heels.

"I am confident, but everybody concerns me," he said. "I don't even want my customers to try anything else. Even if they do, I want them back. I have had people who have been coming to my stores for the last 10 years, on a daily basis, Monday through Friday."

As a reward, Elmohtaseb occasionally shows up at his customers' offices with platters of sandwiches.

He even offered to deliver a platter to my office at The Washington Post. I passed.

Just what I need.

By Dan Beyers  |  July 8, 2008; 2:52 PM ET  | Category:  Value Added
Previous: ExecuTube: The Subway King of the Mid-Atlantic | Next: Roundup: Lockheed, Gannett, LandAmerica, Alex. Brown

Comments

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Man, that's a lot of bread, LOL. I love stories like this because all things being equal, it's customer service that people long for. A place they can go and expect to be treated with respect, where the people recognize them. I love that he takes platters to his customer's offices. You can't beat that kind of marketing.

Posted by: EC | July 8, 2008 4:59 PM

well it amazes me how much people will spend at some of these fast food places - but the restaurant biz is a very difficult and its easy to loose your shirt - good article!

Posted by: david | July 8, 2008 5:14 PM

Thanks to Farhat, I've lost 50 lbs in the last year sticking to the Jerry diet and faithfully going to his store every day... he is the best!

Posted by: Jerry... | July 8, 2008 5:18 PM

Interesting. I would love to know more about Potbelly and their business model.

Posted by: Anne | July 8, 2008 5:23 PM

O-Wow, this is SO inspiring for new entrepreneurs. A great success story, thanks for covering!

Posted by: Cida | July 8, 2008 5:27 PM

I imagine being your own boss is something MANY are thinking of lately in an uncertain economy. This is a great piece on how its possible, strong work again.

Posted by: Tony Keller | July 8, 2008 5:42 PM

Seems like such a hard way to make a living. Between employee issues, competitors and a declining economy, it's probably only going to get tougher. So many headaches, I wouldn't go near it.

Posted by: cheryl | July 8, 2008 7:39 PM


PERSEVERANCE PLUS DETERMINATION TO DO GOOD, PLUS THE NECESSARY SEED MONEY TO START A BUSINESS, WAS THE UNBEATABLE FORMULA FOR BUILDING FELDMAN'S "SUBWAY" FRANCHISE FROM SCRATCH AND FOR HIS FRANCHISEES LIKE MR. ELMOHTASEB. THEY BOTH DESERVE KUDOS FOR THEIR EFFORTS.

OFFER AN OVERSIZED SANDWICH AND PEOPLE WILL COME. (IF THEY ARE NOT ON A DIET.)

Posted by: rob | July 8, 2008 10:23 PM

Tom - there seems to be a common thread in your articles. Success is possible only with hard work and unbelievable dedication and determination. And a positive attitude is key!

Posted by: SB | July 9, 2008 6:29 AM

Tom,
Great job on this Subway story. It is great to see a successful franchise owner. Hard work, combined with some high traffic locations can be a winning combo!
Joel Libava
The Franchise King Blog
Cleveland

Posted by: Joel Libava | July 9, 2008 6:58 AM

Tom,
I always enjoy the local flavor of your columns! I'm tired of hearing about defense contractors. It's great that someone at The Post is finally focusing on the little guy

Posted by: Polly Elmore | July 9, 2008 8:33 AM

Wow it's so nice to hear such a success story like this one, i think he's right you have to have commetment to make it and Farhat seemed liked he had it planned well

Posted by: Stacy | July 9, 2008 10:53 AM

I know this Owner (Farhat) i usully eat at his store on 21st&M, they are the best i like their services, they are fast and very clean. I'm always impresed by the way the store is ran. Good luck you deserve it.

Posted by: Mark Garrett | July 9, 2008 10:58 AM

Thanks Tom , very good article, keep it up.
The story is very intersting .

Posted by: Art | July 9, 2008 11:01 AM

The best best best Subway stores i've seen,i visit 2 of thier stores , very clean and the best customer service i've ever seen.

Posted by: D.Doug | July 9, 2008 11:11 AM

Wow i know this guy,he's cool
i eat at his subway, what a small world

Posted by: Mike | July 9, 2008 11:30 AM

Nice Article Tom

Posted by: Lisa B | July 9, 2008 11:32 AM

I guess it takes more than money to be successful , that's an inspriation to me. very good

Posted by: Anonymous | July 9, 2008 11:34 AM

Very hard working man, this is the key to succeess.

Posted by: cc | July 9, 2008 11:37 AM

i eat at his subway everyday, i don't even order the sub any more i just sit down and my food comes to me without ordering, they know what i like, great service.
Love it

Posted by: Jeff Brown | July 9, 2008 11:41 AM

getting local in the service biz is THE way to go!!

Posted by: ALD | July 9, 2008 12:02 PM

Subway has great sandwiches, you get to pick out every detail of the sandwich, it's just the way you want it every time. Good owners and employees make a big difference in the stores.

Posted by: j | July 9, 2008 2:16 PM

Very intersting, this is what you get when people put their heart into something, not only they make it but they make big

Posted by: Kelly | July 9, 2008 3:29 PM

Great story

Posted by: Tom c | July 11, 2008 3:27 PM

I know Farhat very well. He is a great guy and very pleasing personality.
Keep up the good work. Wink

Posted by: Ravi Johal | July 13, 2008 3:24 PM

I enjoyed reading your value added article about the Subway Franchisees, in particular, Farhat Elmohataseb. It is great to see the American Dream is still alive and well. Hard work and and dedication to one's goals seems to be the formula for success

Posted by: Alan Warmund | July 14, 2008 1:07 PM

It is the American dream, is it not? Owning your own business and being able to have a significant stake in determining income is what "moves" entreprenuers. These stories should (and do) inspire others.

Posted by: Mike Weiss | July 14, 2008 5:26 PM

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