The meal deal: Britain's low-cost, high fat binge

Nadine Rooke and Caroline Hollingshead have just walked out of McDonald's on the Strand, in central London. They have eaten a Big Mac meal (Rooke), a McChicken Sandwich meal (Hollingshead), and shared nine chicken McNuggets. The friends, who work for a magazine in an office near by, insist that this hasn't always been their typical lunch. "We used to get sandwiches at Pret, but that can get expensive," says Rooke, 30. "So we've been coming here to save money."

But Hollingshead, 29, says there is more to the draw of the "golden arches" than cheap chips. "We're under more and more pressure at work because of how things are," she says. "We crave fast food because we know it's bad."

As our pockets empty, we're looking for cheaper ways to fill our stomachs. And as the stresses of working in downsized Britain build, more of us are supersizing our lunches at places like McDonald's. We know it's a short cut to obesity, heart disease and type two diabetes, but we also know that, as well as being easy on the wallet, a portion of nuggets might make us feel a bit better, too.

Meanwhile, those behind the counters are also feeling pretty good. As the newsstands bulge with headlines reporting multiple job-losses, the fast-food chains are sticking up two greasy fingers at the recession, bringing to an end a long period during which they were cast as the devils on the high street – with McDonald's often singled out as the worst of the lot.

Both Super Size Me (2004) in which the film-maker Morgan Spurlock tried a month-long "McDiet", and Eric Schlosser's book Fast Food Nation (2001), an exposé of what the burger-and-fries regime had done to cows, children and waistlines in America, changed the way we looked at junk food. At the same time, prosperity brought alternatives in the form of fresher, healthier, organic and ethically sourced food. But the new diet was also more expensive. Now, an industry that looked like becoming a deep-fried anachronism is enjoying a remarkable reversal in fortunes.

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This year, McDonald's plans to open 1,000 new restaurants, including up to 20 in the UK. The chain will also create 4,000 British jobs and plough ahead with its nationwide refurbishment of stores, investing £37m this year in Arne Jacobsen-style chairs and black wall-panelling. It's a similar story at KFC, which recently unveiled a £150m expansion plan that will see the chain open up to 300 outlets in the next three to five years, creating 9,000 jobs. Meanwhile, Domino's Pizza has reported an "exceptional" start to 2009, beating profit predictions by 25 per cent and announcing 50 new outlets and 1,500 new jobs for this year.

But if there is one chain that stands out in the recession-bucking fast-food resurgence, it's Subway. This American sandwich company's stealthy proliferation on the high street has taken many by surprise. It took McDonald's 35 years to open its 1,260 outlets in the UK and Ireland; Subway reached that figure late last year after just 12 years in Britain. Via more than 1,400 outlets, Subway now serves two million customers a week (up from 35,000 five years ago) and opens five new outlets a week (new locations last month included Torquay, Chelmsford, Birmingham and Rushden).

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A short walk east along the Strand from McDonald's, past the scaffolding-clad Savoy Hotel, leads you to Aldwych and, off it, Kingsway, home to one of the highest concentrations of cafés, sandwich shops and sushi restaurants in the capital. A chain of chains that starts with Eat stretches north towards Holborn, taking in Costa, Wasabi, Pret A Manger and, on the other side of the street, the ubiquitous Starbucks. They'll all give you lunch plus change from a fiver but, at noon on a Tuesday, it is Subway's doors that swing most frequently.

Behind the store's ornate granite and glass façade, just visible through windows plastered with ads and offers in Subway's green-and-yellow livery, an army of "Sandwich Artists" (a job title trademarked by the company) wearing black polo shirts and red caps are knocking together filled submarine rolls at a furious pace. When I reach the counter, an "artist" called Stacey takes my order: "Er, a teriyaki chicken, please." And then, in true American style, I'm offered all the options. First, the size (I go for six inches rather than a foot). Then the bread ("wheat, please"), the "cheese and toasted?" ("no, thanks") the "double cheese?" (again, "no") the salad ("everything") and the sauce ("sweet onion"). Stacey's gloved hands are a blur of meat and lettuce as chopped olives and jalapenos are whisked out of neatly arranged tubs into the bread, baked fresh that morning. In less than two minutes, lunch is served.

I take it with me, in search of customers who can help to explain why Subway's sandwiches are a recession-proof stomach-filler.

Jessica Walton and Alice Jeffries are first-year students studying for a degree in French at King's College, and as they hurry to finish their homework they wolf down a Subway lunch. Walton, 19, is such a fan that the chain ought to pay her to walk the streets with a branded sandwich board. "It's definitely my favourite," she says between mouthfuls of the £1.99 Sub of the Day (a BMT Italian). "I used to go every day of the week for two years when I was at college in Darlington. I hate the meatballs. Meat – balls. That's disgusting. But generally they're cheap and taste pretty good."

Claudia Elliot, 21, is a third-year anthropology student (traffic from both the London School of Economics and King's has turned this branch of Subway into an unofficial student cafeteria). Her feelings toward Subway are more ambivalent. "Chain stores are evil, in my mind," she says. "I like to think of myself as someone who supports the local café. Subway is a corporate store and we don't need the proliferation of more chains. So, by supporting them – I'm feeling really bad now," she says, putting down her sandwich. "As much as I don't live by those principles, I'd like to."

If even someone like Elliot can be seduced by price and convenience to "sup with the devil", it's hardly surprising that the chain's tills are ringing so loudly. And Subway isn't the only chain discovering that the customers queuing at their counters are increasingly different from their usual constituency.

Take Domino's Pizza, whose blue and red mopeds are scooting around our towns and cities with greater frequency. One-third of the 2.7 million households it delivered to in the first six weeks of the year (when like-for-like sales jumped by 15 per cent) were new customers. What's more, these converts were spending more than the regulars. "We think that, rather than treating themselves to a meal in a restaurant, people are choosing to have one at home," says Georgina Wald at the Domino's group headquarters in Milton Keynes. "Those new customers are spending more than the average ticket, and they tend to buy more stuff – a side order or a dessert – to make it more of a treat, but one that's still cheaper than eating out."

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Such culinary downscaling means that the chains are drawing in even reluctant customers, but there's more to their resilience in a time of economic turmoil than being able to offer cheap, tempting food. Their business model is built not only to survive when times are bad – but to thrive. Living proof of this is Amir Mashkoor who, at the age of just 30, is at the centre of Subway's British boom.

Mashkoor owns the Kingsway branch as well as 24 others in, among other prime locations, Oxford Street, Regent Street and Victoria. He employs 430 people. "I joined thinking that I'd open one or two stores but I never imagined it would be this many," he tells me, over a Subway coffee in a corner table at the Kingsway branch.

When Mashkoor left Pakistan aged 17 to study in the UK, it was with dreams of making it big in the city – or rather, the City. And he did, succeeding as an investment banker with JP Morgan, following an economics degree at University College London. "It was glamorous, but I was working 110-hour weeks and didn't enjoy it," he says. On business trips to New York, Mashkoor was very taken by one particular sandwich shop close to Wall Street. It was Subway, a chain founded in 1965 by an ambitious high-school graduate from Connecticut.

When, in 2004, Mashkoor heard that the company was looking for franchisees in the UK, he wrote off the deposit he'd already put down on an MBA. "It was a leap of faith, but back then there were already about 30 stores in London and I knew it was going to take off," says Mashkoor. He was 25. The bet paid off, but first Mashkoor would have to take off the shiny Rolex ("my first bonus at JP Morgan") peeping out from the cuff of his navy blazer and get his hands dirty. He opened his first Subway in Islington in July 2004. "I had to work from 8am to midnight every day. One evening, this guy came in looking tired and stressed. I asked him what the matter was. He said I wouldn't understand. It turned out he'd had a really hard day at his bank. 'Are you an analyst?' I asked. He looked surprised, so I told him I'd been an associate at JP Morgan. 'What are you doing here?' he said."

Now, Mashkoor says, many of his former colleagues in banking are "sitting at home". Two more stores followed the first within six months, and he soon built his "sub empire" of 25 outlets. He attributes his success to hard work – he infuriates his wife by monitoring his stores' cameras online to check how busy they are – but he also owes much to the way Subway works. Rather than manage branches centrally, Subway hands responsibility to about 650 franchisees, of whom Mashkoor is one of the youngest and most successful.

Subway franchisees pay a fee of €10,000 (about £9,000) and put up the cost of opening the outlet, which the chain says can be as low as £100,000, depending on location and size. The franchisee then hands over 8 per cent of pre-tax takings in royalties, plus 4.5 per cent towards advertising. In return, he or she gets the support and the product of a huge business, most of the profits, and some autonomy.

Recruiting keen entrepreneurs to do all the work means that franchise-based chains can expand as quickly as they can find franchisees and locations (which Subway does with its own property arm). In a recession, recruiting is no problem. "We're getting a lot of interest at the moment," says Tom Endean of the British Franchise Association (BFA), whose members include McDonald's, Domino's, KFC and Subway. "The key is the mix of the determination, desire and passion that comes with a locally owned business, and the economies of scale, support and security of a large chain."

And it's the security that matters when Mashkoor and other franchisees ask their bank managers for big loans. Go in with a business plan for an independent sandwich store and you're likely to be laughed out the door. Turn up with Subway slapped on the front of your folder and you're probably quids in. No wonder the British and International Franchise Exhibition, taking place later this month at Olympia in London, has just launched an advertising drive; they're hoping that recession victims will follow Mashkoor's example.

All of this is also good news for people like the Subway sandwich artist Stacey Cropp. Like most of the chain's employees, she came to Britain (in her case a month ago, from New Zealand, with her boyfriend) to live and work. She thought the couple would face an uphill struggle. "We were really worried because we booked our tickets a long time ago," she says. "Some found it hard to find a job here." But three days after she stepped off the plane, Cropp applied for a job through Subway's website and got a call the same day.

Not everyone finds it that easy. As Cropp heads back to the sandwich counter to don a new pair of plastic gloves, two young women approach the store manager, Ahmeed, at the till. They exchange words and hand him CVs. Outside, and unaware of Subway's recruitment drive, the pair are downbeat about their prospects. "I have been here for one month and it's very, very difficult to find work," says Almudena Navarro, 25, who has come to London from Cordoba in Spain with her friend Veronica. "I can do anything – waitress, McDonald's, working in a shop – but I can't find a job. It's very expensive to live in London. I can wait only about one more month and I go back home." With that, the pair continue down Kingsway, stopping off in every restaurant in search of employment.

Mashkoor, meanwhile, who may soon find himself with a new Spanish sandwich artist, is getting ready to open his 26th branch in the Trocadero at Piccadilly, plus two more in the suburbs.

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Healthy eating is a mantra at Subway, whose "Eat Fresh" slogan is plastered over the shops and uniforms. Unlike McDonald's, which only started publishing nutritional information in 2006, Subway has pushed health for years. In the USA, a student called Jared Fogle became a celebrity when Subway employed him as an ambassador after he lost 17 stone on a diet of Subway's low-fat sandwiches, which have less than six grams of fat (a Big Mac has 24g of fat). Sue Baic, a registered dietician and member of the British Dietetic Association, says they're "actually really good". She adds: "They have a lot of fresh salad and you can choose wheat bread. There isn't a lot of margarine or butter. For somebody who needs fast food, it's a good choice."

Almost all chains have realised the importance of marketing their products as "healthy". Outside McDonald's on the Strand, Tim Copes, an administrator, has had a cheeseburger and fries. He's a McDonald's regular but says he isn't happy with the information sheets the chain has put on the plastic trays. "You should look at one," he says. "There's a bit on there about fat, saying it's basically good for you." In the top right-hand corner of the bright yellow sheet entitled "Our food, nutrition and you..." a section about fat reads: "Fat helps food taste good, provides energy, is part of every cell in your body and helps the body absorb Vitamins A, D and E." And then, the disclaimer: "However, an excess of fat is not recommended."

As more of us eat fast food – a new survey by Which? revealed that a quarter of UK adults think eating healthily is "less important" in a recession – will the economic downturn trigger a health crisis, too? And do the chains' health claims hold water?

A fun game to play on the nutritional information page on Subway's website is to create the "fattest" sandwich possible. See if you can beat this: a foot-long spicy Italian sub on Italian herb and cheese bread with mayonnaise and a standard serving of salad contains a gut-inflating 81.8g of fat, of which 30.6g is saturated fat, the form most closely linked to diabetes, obesity and heart disease. The Government's recommended daily intake of saturated fat is 20g for women and 30g for men. Now let's take our virtual sandwich to McDonald's website and measure it against their charts. By my calculations, you'd have to eat a Big Mac (24g of fat), nine Chicken McNuggets (21g), large fries (23g) and an apple pie (13g) to match the Subway sandwich.

Fat is a complicated substance – different types have different effects on the body – but the comparison shows that a snappy slogan and salad filler don't necessarily make a healthy meal. "It's a brilliant manipulation by the food industry to talk about healthy options," says Professor Philip James, chair of the International Obesity Taskforce and a former health adviser to Tony Blair. "The fast-food outlets are doing everything in their power to sabotage the Food Standards Agency's labelling system, which highlights bad food as well as good."

That is denied by McDonald's, which says it "works closely" with the FSA. "Most people are pretty good at managing their diets and lifestyles," adds the chain's communications chief, Nick Hindle. "But there's no getting away from the fact that what we offer is a treat. We've worked hard to improve the quality of our ingredients, and it's simplistic to say that people eating more fast food is bad for your health because you don't know what they were having before."

Britain is already bulging at the seams, with one-quarter of us believed to be obese; the Department of Health estimates that obesity costs the NHS more than £4.2bn a year. Ministers warned in a recent report that, if left unchecked, the problem could cost taxpayers in England £50bn by 2050, by when an estimated 90 per cent of today's children will be overweight or obese.

"It's a massive crisis," says James. "And the economic impact in terms of healthcare is going to be extraordinary." Worse than that, he says, is that the impact of fast food on health is weighted against the poor. He cites a paper published by the American Society for Nutritional Sciences in 2005, "Food Choices and Diet Costs: an Economic Analysis", which showed that "added sugars and added fats are far more affordable than the recommended 'healthful' diets based on lean meats, whole grains, and fresh vegetables". Obesity, the paper says, is a social and economic phenomenon – and US census statistics show a link between families living in poverty and incidence of obesity and diabetes.

The radical solution, James says, is to change the discrepancy between the prices of healthy and unhealthy food. "It has been shown that people drop their fruit and vegetable intake when they are short of money and tend to eat more sugars and fats, which are cheaper. I've proposed for years that the Government taxes unhealthy food. It's a necessary response to the credit crunch." Last week, a GP in Scotland – second only to the US in the world obesity stakes – added to calls for an "obesity tax" at a British Medical Association conference.

Predictably, the fast-food industry rejects the idea of a health tax, insisting it is doing all it can by offering more nutritious alternatives. At Subway, Mashkoor says firmly that it's not "junk food". At Domino's, customers are offered a low-fat cheese option. "We're the only delivery firm to offer a mozzarella with 30 per cent less fat," Domino's spokesperson Georgina Wald says. "And we're committed to offering that option." So what proportion of customers go for low-fat cheese? "It's about 2 per cent," Wald says.

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On the Strand, Nadine Rooke and Caroline Hollingshead are heading back to the office after their McDonald's binge. Like the customers at Domino's, they saw the healthy options. They will have walked past Mashkoor's Subway, with its invitation to "Eat Fresh". But a Big Mac is what they fancied – cheap and, in gloomy times, cheerful. For as long as they feel that way, the chains will be there to supply the food. Meanwhile, Rooke and Hollingshead have one more stop to make before they get back to their desks: "We're off to get a box of Creme Eggs."

Bite-sized Britain: The facts

*Subway's Meatball Marinara has 14 dedicated fan clubs (and as much salt as 12 packs of ready-salted crisps).

*KFC was the first US chain to cross the Atlantic, landing in 1965. The chain now has 760 stores in the UK and Ireland.

*The 10-year "McLibel" trial that pitted McDonald's against two activists who published a pamphlet critical of the chain, was the longest legal case in UK history.

*In recent poll that asked people if they "liked fast food too much to give it up", 45 per cent of UK and 44 per cent of US respondents said yes.

*Keep Britain Tidy says McDonald's contributes 29 per cent of Britain's fast-food litter, ahead of chippies or kebab shops (21 per cent), Greggs (18 per cent) and KFC (8 per cent).

*The first Wimpy opened in 1954 in central London. The name was inspired by the burger-eating Popeye character J Wellington Wimpy.

*In 2007, 24 per cent of English adults aged 16 or over were classified as obese. The figure stood at 15 per cent in 1993.

*McDonald's is offering one in eight of its staff apprenticeships in "multi-skilled hospitality" that will be the equivalent of five GCSEs at A* to C.

*In 2006, Ofcom announced a ban on junk-food ads during programmes aimed at children. A US study has suggested a ban on all fast-food advertising would cut obesity by 18 per cent.

*A 2006 study placed Britain third behind the US and Canada in a list of the biggest spenders per capita on fast food.

*On average, each child in the five-to-nine-year age group to which McDonald's markets its Happy Meals eats one Happy Meal every 13 days.

*In 2007, UK consumers spent £83 per head on fast food, up from £77 in 2006.

*In a School Food Trust survey in which towns were ranked according to the number of fast food outlets per secondary school, Brighton came top with 46, twice the national average of 23.

*Calorie counts in Big Mac recipes vary. The British version of McDonald's signature burger has 490 calories, compared with 600 in the Mexican version.