Subway franchise owner Mark Roden says the cafe concept he's trying in Flagstaff aims to capture part of the coffee clientele that heads to a nearby Starbucks.


FLAGSTAFF - The spacious restaurant with its chic lighting, flat-screen TVs, stuffed chairs, pastries and bistro sandwiches is not typical of Subway.

The bright images of vegetables that line the sandwich counter have been replaced by strands of wheat; the artwork is more sophisticated; and the smell of fresh-baked bread is gone. The décor and expanded menu are part of a café concept being tested by the nation's largest sandwich chain that aims to steal a portion of the breakfast market, lure coffee drinkers from its competitors and get customers to stick around for a while.

"Sometimes in our Subway locations, we want people to get up and go," said Mark Roden, who opened a Subway Café in Flagstaff this week. "Here, we want people to stay."

Roden is following a path few other franchise owners have so far. The first of the cafés opened in Washington, D.C., to fill a request from a landlord who was looking to serve tenants in an office building, said Subway spokesman Les Winograd. About 15 others have opened up since, and the company plans to expand on a case-by-case basis.

Blueberry crumb cake and chocolate chunk muffins are displayed along with marble pound cake and key lime Danishes at the Subway Café, while the menu advertises espresso drinks, panini sandwiches and chicken Caesar salads, among other things. A seating area equipped with electrical outlets was built for businesspeople who are looking for a place to sit and work with Wi-Fi access while they eat, Roden said.

Those elements are in line with offerings at Starbucks and McDonald's, making the target of the Subway Cafés clear, said Nima Samadi, a restaurant industry analyst with IBISWorld Inc.

"They're using this as a litmus test to see if there's an opportunity to combine their traditional offerings with this expanded breakfast market, see if people are willing to abandon their traditional allegiances with McDonald's and Starbucks," Samadi said.

Roden is eyeing the customers from a Starbucks tucked inside a grocery store in the same plaza, employees who work in the surrounding businesses and the high school students across the street who have an open campus.

He said he has poured more than $250,000 into the space that has an industrial feel with open ceilings and exposed ductwork, hoping the environment and prices will convince people his store is the best option for food and coffee.

"Flagstaff is a good coffee town," he said. "The hedge for me is, how do you get people to come in and try your coffee?"

Terry Balentine, a real-estate agent who works nearby, says he was impressed with the Subway Café's mocha drink after he tried it Wednesday, but he didn't downplay the quality of Starbucks, either.

"If it's good quality but cheaper, I would definitely go with the cheaper," he said.

Those familiar with Starbucks might recognize the Seattle's Best Coffee being sold at the Subway Café as a subsidiary of Starbucks, which Samadi said is not uncommon and might even help Subway because some people already have a taste for it.

For Margaret Newell, the decision on where to get coffee comes down to convenience. She was shopping for groceries Wednesday and stopped by Starbucks - as she does once or twice a week - for two double chocolate chip frappuccinos and a berry hibiscus refresher.

"I just like coffee and am happy as long as I'm getting it, and really looking for flavor variety," she said.

It's highly unlikely that the Subway Cafés would surpass Starbucks in coffee sales or McDonald's in the breakfast market, Samadi said. But he said that's not necessarily the goal of Subway, which introduced its breakfast sandwiches two years ago and recently topped McDonald's with the most restaurant locations but lags in sales. McDonald's led the industry with $32.4 billion in U.S. sales last year, followed by Subway's $10.6 billion and Starbucks' $9.1 billion, according to Technomic Inc.'s 2011 Top 500 chain restaurant report.

"This is an opportunity where they (Subway) can leverage an established brand name and really make inroads into a new meal time that was otherwise a weakness for them," Samadi said.

"Sometimes in our Subway locations, we want people to get up and go. Here, we want people to stay."

Mark Roden

who opened a new Subway Café in Flagstaff