Chai Shai Chaishai with me

Subway has been acquired by a private equity company.

(Qnnflash) – Subway has successfully completed its divestiture to Roark Capital, a private equity firm, so concluding a comprehensive six-month quest for a suitable purchaser. This development marks the conclusion of the sandwich chain’s nearly sixty-year tenure as a business owned and operated by a single family.

Subway has declared that the aforementioned deal represents a significant milestone in the company’s extensive and ongoing transformation process. This development entails the amalgamation of Subway’s extensive worldwide reach and robust brand influence with Roark’s profound knowledge and proficiency in restaurant and franchise business models.

Roark Capital Group possesses assets in several prominent restaurant chains, such as Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carvel, and Sonic, among other others.

In a statement, Subway CEO John Chidsey expressed that this purchase signifies Subway’s capacity for sustained expansion and underscores the significant worth of our brand and our franchisees on a global scale. Subway’s prospects are promising under the partnership with Roark, and the company remains dedicated to maintaining a mutually beneficial strategy that prioritizes the interests of franchisees, customers, and staff.

The specific details of the financial terms of the agreement were not made publicly available. Nevertheless, according to a report by the Wall Street Journal, the acquisition cost was approximately $9.6 billion, a figure significantly lower than the initial asking price of $10 billion for the company. Subway has stated that the finalization of the agreement is contingent to obtaining regulatory clearances and fulfilling customary closing conditions.

In February, Subway initiated the process of seeking potential buyers for its business.

The acquisition of Roark is a significant event in the realm of fast food, ranking closely after Inspire Brands’ notable acquisition of Dunkin’ for $11.3 billion in October 2020. Roark is the proprietor of Inspire, a company that furthermore manages Jimmy John’s, a competitor to Subway.

In recent years, Subway has undergone a significant transformation, characterized by the introduction of a revitalized menu that includes freshly sliced meat, extensive store renovations, and a heightened focus on expanding its global presence. The company made an announcement in July regarding its sales performance, revealing a good trend for the 10th consecutive quarter. This included a 9.5% growth in sales at its North America stores, although particular numerical figures were not disclosed.

According to Technomic, the number of Subway stores in the United States experienced a fall to 20,576 last year, despite the observed sales reversal. There has been a significant decline in the number of locations since its peak in 2015, with a notable fall from 27,219.

Another concern regarding Roark is the comparatively lower annual revenue at Subway US locations in comparison to its competitors in the sandwich-making industry. According to data provided by QSR Magazine, the three primary competitors of Subway, namely Jersey Mike’s, Firehouse Subs, and Jimmy John’s, generate approximately $1 million in revenue each establishment. In contrast, the average Subway outlet generates less than $500,000 in revenue.

Nevertheless, the income generated by the United States has experienced a resurgence in recent years, reaching $9.8 billion in 2022. This represents a 4% increase compared to the previous year. However, it is important to note that this figure falls significantly short of the high revenue of $11.5 billion achieved in 2015.

According to Neil Saunders, the general director of GlobalData, Roark has received a substantial and stable business in Subway. However, in order to enhance both sales and profitability, certain modifications need to be implemented. This encompasses the objective of improving operational effectiveness through the consolidation of franchisees, exploring strategies to capture a larger portion of meal occasions in a highly competitive industry, and fostering greater consumer engagement through menu innovations.

According to Saunders, it is evident that Saunders perceives an opportunity to utilize Roark’s substantial experience and investments in the foodservice sector, as well as its track record of fostering the growth of restaurant brands, to apply a similar strategy to Subway.

In recent times, Subway made a public declaration regarding the departure of Trevor Haynes, who served as the president of Subway’s operations in North America. Haynes had been associated with the company for a considerable span of 18 years. Next month, the individual in question will be succeeded by Douglas Fry, who now holds the position of leader in Subway’s Canada operations.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button