Subway Sandwich Chain Nears Sale
Private-equity firm Roark Capital poised to clinch deal with $9.6 billion bid
Roark Capital is nearing a deal to buy the Subway sandwich-shop chain for about $9.6 billion.
After a long, heated auction, a deal for the closely held company could be finalized this week, people familiar with the matter said. Roark has been battling it out with a group of rival private-equity firms including TDR and Sycamore, and in recent days pulled ahead.
It is still possible the other group could come back with a higher offer and prevail.
Milford, Conn.-based Subway, known for its foot-long sandwiches and quick-service restaurants, has been owned by its two founding families for more than five decades. The Wall Street Journal reported in January that the company was exploring a sale. In February, Subway announced it had retained advisers to help run the process.
Subway is the eighth-largest U.S. restaurant chain, with $9.8 billion in domestic sales across 20,810 locations last year, according to market-research firm Technomic. It has around 37,000 restaurants globally.
Subway became one of the world’s largest restaurant chains by aggressively building new locations, but stumbled in the last decade. The chain’s global sales peaked at $18 billion in 2012, Technomic said. Stores closed and franchisees exited the system, while new sandwich-shop rivals expanded.
Late co-founder Fred DeLuca ran the chain for decades before he was diagnosed with leukemia, and his sister Suzanne Greco took the reins of the company. (She retired in 2018.) Peter Buck—who lent DeLuca $1,000 to open a sandwich shop in Bridgeport, Conn., in 1965 and helped co-found the chain—died in 2021. The DeLuca and Buck families still have interests in Subway.
John Chidsey, the chain’s first CEO from outside of Subway’s founding families, has worked to turn around the chain since taking the helm in 2019.
Subway has steadily closed U.S. locations, but is expanding abroad. It has signed 15 deals with international franchisees since 2021 and aims to open around 9,000 restaurants through the agreements. Subway said its deals include one to open nearly 4,000 locations in China in the next 20 years.
Subway has also updated its U.S. menus to try to appeal to new customers. The chain said in July that it installed deli slicers in all of its U.S. restaurants to offer freshly sliced meats for the first time. The company said it spent $80 million to provide the slicers to franchisees.
Roark, based in Atlanta, is no stranger to restaurant and food investing. Its portfolio has included pretzel purveyor Auntie Anne’s, sandwich chains Arby’s and Jimmy John’s, as well as ice cream brands Baskin-Robbins and Carvel.