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    Subway Expanding New Café Concept

    The first of these restaurants opened in Washington, D.C., and 15 others have followed.

    FLAGSTAFF, Ariz. -- Chic décor and an expanded menu are part of a café concept being tested by the nation's largest sandwich chain. Subway aims to steal a portion of the breakfast market, lure coffee drinkers from its competitors and get customers to stick around for a while, according to a report by the Associated Press.

    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.

    The new cafés are spacious restaurants featuring chic lighting, flat-screen TVs, stuffed chairs, pastries and bistro sandwiches. The bright images of vegetables that line the sandwich counter in a traditional Subway location have been replaced by strands of wheat, while the artwork throughout is more sophisticated and the smell of fresh-baked bread is gone.

    Blueberry crumb cake and chocolate chunk muffins are displayed along with marble pound cake and key lime Danishes at the Subway Cafe, where the menu advertises espresso drinks, Panini sandwiches and chicken Caesar salads, among other things. A seating area equipped with electrical outlets was built with business people in mind, who are looking for a place to sit and work with Wi-Fi access while they eat, according to the AP report.

    Those elements are in line with offerings at Starbucks and McDonalds, making the target of the Subway Cafes 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 McDonalds and Starbucks," Samadi said.

    Those familiar with Starbucks might recognize the Seattle's Best Coffee being sold at the Subway Cafe 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.

    It's highly unlikely that the Subway Cafes would surpass Starbucks in coffee sales or McDonalds 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 McDonalds with the most restaurant locations, but lags in sales. McDonalds led the industry with $32.4 billion in U.S. sales last year, followed by Subway's $10.6 billion and Starbuck's $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.

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