From ‘Try one for Pete’s sake’ to over 37,000 sites worldwide: Subway snapped up for a reported $9.6bn

By Gill Hyslop

- Last updated on GMT

Subway - formed in 1964 as a single shop in Connecticut - has been acquired for a reported $9.6bn. Pic: Subway
Subway - formed in 1964 as a single shop in Connecticut - has been acquired for a reported $9.6bn. Pic: Subway

Related tags Subway franchise Mergers and acquisitions Roark Capital

The acquisition by private equity firm Roark Capital is one of the biggest acquisitions in fast food history, following Inspire Brands’ $11.3bn purchase of Dunkin’ in October 2020. Roark also owns Inspire.

Roark has deep expertise in the consumer and business service sector, with $37bn in assets under management. The Atlanta-based PE firm specialises on franchise and multi-location businesses and currently holds investments in chains like Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carvel and Sonic, among others.

The transaction - announced six months after Subway put itself up for sale in February - is a major milestone for the global sandwich franchise, which started as a single shop in Connecticut.

“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,”​ said John Chidsey, CEO of Subway.

“Subway has a bright future with Roark and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees.”

Recipe for success

Subway 1

The Subway story began in 1964, when 17-year-old medical student Fred DeLuca used a $1,000 loan to open a submarine sandwich shop in Bridgeport. Called Pete’s Super Submarines - a nod to DeLuca’s mentor and business partner Dr Peter Buck, a nuclear physicist - was opened on 28 August with the slogan, ‘Try one for Pete’s sake!’

Subway 2

The concept instantly resonated and the shop sold a whopping 312 foot-long subs with cheese, ham, salami and a variety of veggies on its first day. “We ran out of all ingredients … I’d done a great job of promotion,”​ said DeLuca.

The business was renamed Subway after the fourth store opened in 1967.

With 16 outlets under their belt, the partners decided to branch out via a franchise business model, which paved the way for the chain’s explosive growth.

Today the eighth-largest fast food chain in the world, Subway opened its 100th​ store in 1978 and now has almost 37,000 sites in more than 100 countries, serving not only freshly made-to-order sandwiches, but wraps, salads and bowls to millions of consumers on-the-go.

Subway restaurants are owned and operated by franchisees - both single and multi-unit business owners - who are committed to delivering the best guest experience possible in their local communities.

The way forward

Subway 4

The acquisition by Roark ends the sandwich chain’s near six-decade run as a family-owned business. DeLuca died at the age of 67 in 2015, but his sister Suzanne Greco, who had been head of operations and R&D, took up the reins. In 2019, she handed over the reins to Chidsey, a Burger King veteran and Subway’s first CEO from outside the two families.

Dr Buck - who famously claimed to consume five Subway sandwiches a week - died at the age of 90 in 2021.

It also comes on the heels of Subway’s 10th​ consecutive quarter of positive sales at stores open at least a year, including a 9.5% increase at its North America locations. In 2022, US revenue came in at $9.8bn, up 4% from the year prior.

Roark is expected to maintain its strategy with a focus on sales growth, menu innovation, modernisation of restaurants and overall guest experience improvements and international expansion.

Chidsey told The Wall Street Journal the aim is to grow to around 60,000 outlets worldwide - including 4,000 in China in the next two decades.

Terms of the deal were not disclosed; however, the Wall Street Journal reported the purchase price was ‘around $9.6bn’, which is just shy of Subway’s asking price of $10bn.

JP Morgan is serving as financial advisor and Sullivan & Cromwell LLP is serving as legal counsel to Subway. Timing is subject to regulatory approvals and customary closing conditions.

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