Subway is being purchased by Roark Capital, marking a new phase in the company's history after being owned by the same family for more than half a century.
The chain's selling process, which was made public in February, has finally come to a close with Thursday's announcement, August 24.
Many would-be buyers, such as restaurant conglomerates, were put off by Subway's rumored $10 billion asking price, leaving only private equity groups to compete in an auction. TDR Capital and Sycamore Partners were also mentioned as potential buyers.
On Monday, August 21, the Wall Street Journal claimed that the company's final bid was about $9.6 billion. However, Subway and Roark had not announced the sale price until a Reuters story on Thursday.
Roark's Lineup of Food Franchises
A person walks into a Subway sandwich store on Water Street on August 21, 2023, in New York City.
There are now over a dozen fast-food franchises in Roark's portfolio. CNBC said Subway has more locations than any of them, and its yearly revenues are higher than all of them except Dunkin' Donuts.
Roark owns Dunkin' Donuts, Baskin-Robbins, Sonic, Arby's, Buffalo Wild Wings, and Jimmy John's via a holding company, Inspire Brands. Under the umbrella of Focus Brands, the company also manages the Auntie Anne's, Carvel, Cinnabon, Jamba, McAlister's, Moe's Southwest Grill, and Schlotzsky's chains.
In the early days of the COVID-19 pandemic, Roark also spent $200 million on the Cheesecake Factory to assist the struggling restaurant avoid bankruptcy.
Subway CEO John Chidsey told the Wall Street Journal that Roark intends to maintain Subway as a standalone company within its portfolio.
Since Chidsey's 2019 hiring, Subway has been working to improve its financial situation. The business has updated its offerings, expanded its franchise network, and increased its use of cutting-edge technology. Same-store sales increased by 9.8% in the first half of the year, suggesting that the recovery is taking hold.
Chidsey, in a statement issued on Thursday, said the transaction proved the great worth of the brand and the franchisees throughout the globe, as well as Subway's future growth potential.
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Ending the 50-Year Family Ownership
Subway, founded in 1965 by Fred DeLuca and Dr. Peter Buck in a small Connecticut sandwich store, has now expanded to become a worldwide fast-food chain.
The company's revenues have reportedly been declining over the last decade or so. Its ambitious expansion and $5-foot-long sandwich promotion placed a strain on franchisee profitability. In 2015, the business was dealt further blows with the death of CEO DeLuca and the high-profile prosecution of former spokesperson Jared Fogle.
According to franchise disclosure records, Subway's number of US locations dropped to around 20,600 by the end of 2022 from an all-time high of 27,100 in 2015. The franchised business is still shutting stores, although at a far slower rate.
After DeLuca's passing, he bequeathed his family 50% ownership of the business. Buck left his shares to a foundation that was managed by his sons after his death in 2021. Chidsey said he talked the two families into selling the business.
