In a significant development, Roark Capital has acquired Subway Sandwich Chain, marking the end of the sandwich chain’s over five-decade-long family ownership. This move heralds a new era for Subway, a company that has been working tirelessly to revitalize its business in recent years. In this article, we will delve into the details of this acquisition, the implications it holds for Subway, and the chain’s journey from a single sandwich shop to a global restaurant giant.
Subway Sandwich Chain: A New Beginning with Roark Capital
The announcement of Roark Capital’s acquisition of Subway marks a turning point for the iconic sandwich chain. After a lengthy sale process that began in February, Subway’s search for the right suitor has come to a close. While the chain initially sought a high price of $10 billion, it ended up in the hands of Roark Capital with a final bid of approximately $9.6 billion, according to The Wall Street Journal.
Roark Capital’s Impressive Portfolio
Roark Capital’s current portfolio boasts more than a dozen restaurant chains, but Subway stands out as a giant among them. The acquisition of Subway places it in a league of its own, with Subway’s vast network of restaurants and substantial annual sales. Some of Roark’s other prominent holdings include Dunkin’, Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings, Jimmy John’s, Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s Southwest Grill, Schlotzsky’s, and even an investment in the Cheesecake Factory during the challenging days of the Covid-19 pandemic.
Neil Saunders, a retail analyst and managing director of GlobalData analytics, notes that Roark’s investment in Subway brings unique advantages to the table. While the deal was driven by financial considerations, the outcome bodes well for the future.
Subway’s Future under Roark Capital
Roark Capital intends to maintain Subway as a distinct entity within its extensive portfolio. This decision aligns with Subway CEO John Chidsey’s vision for the company. Since joining Subway in 2019, Chidsey has been instrumental in implementing changes to rejuvenate the brand.
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Subway’s Remarkable Journey
Subway’s history is a testament to its resilience and global appeal. Founded in 1965 by Fred DeLuca and Peter Buck, it began as a single sandwich shop in Connecticut and transformed into a global restaurant giant. However, the last decade has been challenging for Subway, with declining sales and profitability.
Several factors contributed to Subway’s struggles, including the pressure on franchisee profits caused by the popular $5 footlong sandwich deal and aggressive expansion. The company also faced setbacks from the high-profile trial of former spokesman Jared Fogle and the unfortunate passing of CEO DeLuca in 2015.
As of the end of 2022, Subway operated approximately 20,600 locations in the U.S., down from its peak of 27,100 in 2015. While the chain continues to close franchised locations, the pace has notably slowed, with 571 units shuttered in the previous year compared to over 1,600 in 2020.
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A Shift in Ownership
Fred DeLuca’s half of the company was inherited by his family after his passing, while Peter Buck’s share was bequeathed to a charity run by his sons. John Chidsey’s persuasion ultimately led the two families to consider selling the company, culminating in the acquisition by Roark Capital.
Conclusion
Roark Capital’s acquisition of Subway marks the beginning of a new chapter for this iconic sandwich chain. With a history that stretches back to its humble beginnings in 1965, Subway has undergone a remarkable transformation over the decades. This change in ownership signals a promising new era for the brand.
Under the leadership of John Chidsey, who took the helm in 2019, Subway has undertaken significant initiatives to revitalize its business. From a menu overhaul to the recruitment of new franchisees and investments in cutting-edge technology, Subway has been on a determined path to regain its foothold in the competitive fast-food industry.
The early signs of Subway’s resurgence are encouraging, with same-store sales climbing by a substantial 9.8% in the first half of the year. These numbers underscore the potential for long-term growth and the enduring value of the Subway brand and its global network of dedicated franchisees.
As Roark Capital steps into the picture, Subway gains access to a wealth of experience and resources. Roark’s impressive portfolio of restaurant chains demonstrates its deep understanding of the industry. Subway now finds itself in a position to draw from this expertise, enabling it to navigate the challenges of today’s ever-changing consumer landscape.Subway Sandwich Chain Begins New Era Under Roark Capital Ownership
