On this picture illustration, a Subway meal is seen on a desk at a Subway restaurant on January 12, 2023 in Austin, Texas.
Brandon Bell | Getty Pictures
Roark Capital is shopping for Subway, ending the sandwich chain’s greater than 5 many years of household possession and marking a brand new period for the struggling firm.
The announcement Thursday ends the chain’s prolonged sale course of, which publicly kicked off in February. Subway reportedly sought $10 billion, a excessive worth that alienated many potential suitors like restaurant conglomerates, leaving solely non-public fairness corporations to duke it out in an public sale. Different reported bidders included TDR Capital and Sycamore Companions.
Subway and Roark didn’t announce a transaction worth.
Roark’s present portfolio consists of greater than a dozen restaurant chains. Subway dwarfs all of them by variety of eating places, and brings in additional annual gross sales than all however Dunkin’.
By way of holding firm Encourage Manufacturers, Roark owns Dunkin’, Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings and Jimmy John’s. Individually, housed below Focus Manufacturers, the agency owns Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s Southwest Grill and Schlotzsky’s. Roark additionally invested $200 million within the Cheesecake Manufacturing unit throughout the early days of the Covid pandemic to assist the struggling chain stave off insolvency.
Subway has been attempting to show round its enterprise below CEO John Chidsey, who joined the corporate in 2019. The corporate has revamped its menu, recruited new franchisees and invested in expertise. Within the first of half of the 12 months, its same-store gross sales climbed 9.8%, exhibiting that the turnaround could also be taking maintain.
“This transaction displays Subway’s long-term development potential, and the substantial worth of our model and our franchisees around the globe,” Chidsey mentioned in an announcement Thursday.
Based in 1965 by Fred DeLuca and Peter Buck, Subway grew from a single sandwich store in Connecticut to a world restaurant large.
However for roughly a decade, the corporate’s gross sales have fallen. Its in style $5 footlong sandwich deal and aggressive growth put stress on franchisees’ income. The chain was damage additional by the high-profile trial of former spokesman Jared Fogle and the loss of life of CEO DeLuca, which each occurred in 2015.
Subway ended 2022 with roughly 20,600 places open within the U.S., down from its peak of 27,100 in 2015, in keeping with franchise disclosure paperwork. Whereas the chain remains to be closing franchised places, the tempo has slowed down significantly. The chain shuttered 571 models final 12 months, down from the greater than 1,600 eating places it closed in 2020.
DeLuca’s half of the corporate was left to his household after his loss of life. Buck, who died in 2021, bequeathed his to a charity run by his sons. Chidsey advised Restaurant Enterprise On-line that he satisfied the 2 households to contemplate promoting the corporate.