Subway in Israel

Subway's history in Israel consists of two franchise periods separated by several years. The first began in either 1992 or 1993 and ended in January 2003 after financial difficulties and the cancellation of the franchise agreement.[1][5] A renewed operation was announced in 2009, although another account dates Gur Gal's receipt of the franchise to 2011; the last branch closed in 2014.[6][5]

Both periods involved plans for substantial nationwide expansion, but neither achieved a stable national network. Contemporary and retrospective reports differ over the precise entry dates and branch counts, while consistently describing both operations as unsuccessful.[7][2]

Several later accounts date Subway's first entry into Israel to 1992, when businessman Hagai Harizman and partners began the operation and opened 15 branches within a short time.[1][8] A 2014 Ynet report instead dates the entry to 1993 and identifies Yair Tamir as the operator, while a 1996 Globes account documents Tamir acquiring control of Subway Israel from the Harizman Group and private Israeli investors.[5][7]

At the time of the July 1996 transaction, the chain operated 16 restaurants—two company-owned and 14 operated as secondary franchises—and generated annual sales of roughly $3 million.[7] The company was valued at approximately $1 million. Tamir purchased a 45% stake initially, with an option to acquire another 50%, while Moshe Shaltiel retained the remaining 5%.[7] Tamir set a target of 30 restaurants by the end of 1996, with six company-owned and 24 franchised.[7]

During the Tamir era, Subway pursued a co-location strategy with the American frozen-yogurt chain TCBY. The brands placed outlets beside each other, beginning at Dizengoff Center in Tel Aviv, and subsequently opened adjacent locations in Tel Aviv, Ramat Yishai, and Kfar Yona.[9] Tamir described the arrangement as cross-branding: the two franchises could reduce management and licensing costs, coordinate recruitment and training, and promote each other—for example, by offering a Subway sandwich to a customer buying ice cream.[9]

Despite its expansion ambitions, the operation ran into serious financial trouble. By 2002, Globes reported that Subway Israel had reportedly been losing money for approximately five years and that Tamir had spent several years seeking buyers or partners. Discussions with Yellow, Burger Ranch, and the Arie and Ofer real-estate company did not produce an agreement.[4] The Industrial Development Bank alleged that Subway Israel encountered financial difficulties during 2001 and stopped meeting its obligations, and a court ordered a bankruptcy warning to be served on Tamir in connection with the bank's claim.[4]

Subway's international organization later cancelled Tamir's contract over what it described as continuing violations, including non-payment of royalties.[2] A liquidation order was issued in January 2003, and the branches closed.[1]

The second period retained a franchise-based model but centered on Gur Gal, a former hotel manager. Globes reported Subway's return in 2009, when the company rented a 130-square-meter restaurant on Maskit Street in Herzliya Pituah under a five-year lease with an option for another five years.[6] Gal selected the area after market research found strong awareness of Subway among workers in its high-tech business district.[6] He announced plans for 130 restaurants nationwide and was negotiating for a location on Rothschild Boulevard in Tel Aviv.[6]

Those targets were never approached. A 2014 Ynet report says Gal received the Israeli franchise in 2011 and opened seven branches in central Israel.[5] A later Ynet account similarly says the operation remained below ten branches and reports that it closed in 2014 because it was unprofitable and failed to meet its targets.[2]

After the closure, a different development model was proposed. Regional representative Glenda Graham of GG Development and her husband Scott planned to recruit individual local franchisees rather than appoint another Israeli master franchisee.[5] The proposal envisioned an eventual network of approximately 100 branches, with estimated opening costs of NIS 500,000–700,000 per branch and monthly royalties of around 10%.[5] Subway also sponsored and planned to attend a franchise conference in Rishon LeZion on June 18, 2014.[5]

No third operational period is documented in the cited reports, and Israel does not appear on Subway's official All Subway Locations page.[2][3]

Subway's two closures were repeatedly analyzed in Israeli business coverage as examples of the difficulty international food chains can face when applying a global formula to local market conditions.[1][2] The most frequently cited problem was limited adaptation to Israeli tastes. A 2002 Globes report described the sandwiches as insufficiently tailored to local preferences and less sophisticated than those offered by local café chains, while also noting competition from inexpensive baguettes.[4]

Dudi Ben David, head of the Israel Franchise Promotion Center, told Ynet in 2014 that Subway had failed because of inadequate adaptation and poor management. He argued that adjustment to Israeli tastes and stronger oversight of the network could improve its prospects.[5] Reports also cited inconsistent standards among points of sale, management errors, and strained relations with Subway's international headquarters.[4][2]

Kosher operation presented an additional challenge. A branch offering both meat and dairy sandwiches would face difficulty obtaining kosher certification, while some branches in the later operation lacked certification.[5][2] Together with competition from established café chains and locally adapted products, these constraints help explain why Subway's expansion plans did not produce a lasting Israeli network.

Israeli news sources do not provide a fully consistent chronology. Ynet's 2024 account and Maariv date Subway's initial Israeli entry to 1992.[1][8] A later Ynet account also uses 1992, while a 2014 Ynet report gives 1993.[2][5]

Reported branch counts also vary. Ynet's 2024 account and Maariv say 15 branches opened during the early expansion, while Globes recorded 16 operating restaurants in 1996.[1][7] Ynet reported a peak of 19 branches in 2014, Globes said in 2009 that the previous franchisee had operated 21, and the later Ynet account gives a peak of 22.[5][6] These figures may describe different stages or counting methods, but the sources do not explain the differences.[2]

The second period has similar discrepancies. Globes reported Subway's return in 2009.[6] Ynet reported in 2014 that Gal received the franchise in 2011 and that the last branch closed in 2014.[5] Ynet's 2024 account says the renewed 2009 effort ended after two years, whereas the later account again places the final closure in 2014.[1][2] The available sources do not fully reconcile these timelines.