On this photo illustration, a Subway meal is seen on a table at a Subway restaurant on January 12, 2023 in Austin, Texas.
Brandon Bell | Getty Images
Roark Capital is buying Subway, ending the sandwich chain’s greater than five a long time of family ownership and marking a latest era for the struggling company.
The announcement Thursday ends the chain’s lengthy sale process, which publicly kicked off in February. Subway reportedly sought $10 billion, a high price that alienated many potential suitors like restaurant conglomerates, leaving only private equity firms to duke it out in an auction. Other reported bidders included TDR Capital and Sycamore Partners.
Subway and Roark didn’t announce a transaction price, but The Wall Street Journal reported Monday that the firm’s final bid was roughly $9.6 billion.
Roark’s current portfolio includes greater than a dozen restaurant chains. Subway dwarfs all of them by variety of restaurants, and brings in additional annual sales than all but Dunkin’.
Through holding company Encourage Brands, Roark owns Dunkin’, Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings and Jimmy John’s. Individually, housed under Focus Brands, the firm owns Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s Southwest Grill and Schlotzsky’s. Roark also invested $200 million within the Cheesecake Factory in the course of the early days of the Covid pandemic to assist the struggling chain stave off insolvency.
“In essence, Roark brings more to the table than other investors would have, and while the deal closed based on cold hard money, the consequence is an excellent one,” Neil Saunders, a retail analyst and managing director of GlobalData analytics, wrote in a note.
Roark plans to maintain Subway as a separate entity inside its portfolio, Subway CEO John Chidsey told the Journal.
Subway has been attempting to turn around its business under Chidsey, who joined the corporate in 2019. The corporate has revamped its menu, recruited latest franchisees and invested in technology. In the primary of half of the yr, its same-store sales climbed 9.8%, showing that the turnaround could also be taking hold.
“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees all over the world,” Chidsey said in a press release Thursday.
Founded in 1965 by Fred DeLuca and Peter Buck, Subway grew from a single sandwich shop in Connecticut to a worldwide restaurant giant.
But for roughly a decade, the corporate’s sales have fallen. Its popular $5 footlong sandwich deal and aggressive development put pressure on franchisees’ profits. The chain was hurt further by the high-profile trial of former spokesman Jared Fogle and the death of CEO DeLuca, which each occurred in 2015.
Subway ended 2022 with roughly 20,600 locations open within the U.S., down from its peak of 27,100 in 2015, in keeping with franchise disclosure documents. While the chain remains to be closing franchised locations, the pace has slowed down considerably. The chain shuttered 571 units last yr, down from the greater than 1,600 restaurants it closed in 2020.
DeLuca’s half of the corporate was left to his family after his death. Buck, who died in 2021, bequeathed his to a charity run by his sons. Chidsey told Restaurant Business Online that he convinced the 2 families to contemplate selling the corporate.