Subway, the renowned sandwich chain, has announced its impending acquisition by Roark Capital, a prominent private equity firm specializing in restaurant management. This transaction is expected to pave the way for Subway’s expansion and enhancement across its outlets.
The specific financial details of the deal have not been revealed. However, recent reports from The Wall Street Journal indicate that Roark Capital, based in Atlanta, is poised to offer approximately $9.6 billion for Subway, which operates as a privately owned entity.
Subway’s CEO, John Chidsey, who took the helm in 2019, emphasized that this acquisition aligns with Subway’s growth aspirations and the inherent value of its brand. The company intends to continue its trajectory of restaurant modernization and global expansion under the ownership of Roark Capital. Notably, Subway has confirmed that its existing leadership team will remain in place post-acquisition.
Roark Capital is a heavyweight in the private equity sector, boasting assets totaling $37 billion under its management. The firm specializes in franchised businesses and backs two holding companies, namely Inspire Brands, the parent of Arby’s, Dunkin’, Jimmy John’s, and Buffalo Wild Wings, and Focus Brands, which holds ownership of Auntie Anne’s, Carvel, Cinnabon, and Jamba.
Founded in 1965, Subway maintains dual headquarters in Miami and Connecticut and remains under the ownership of its founding families. Over the years, it has emerged as a global powerhouse in the restaurant industry, boasting a network of 37,000 outlets spanning more than 100 countries.
While Subway continues to assert its dominance internationally, it has faced challenges in the U.S. market. The chain has experienced a decline in market share in recent times, losing ground to rapidly growing competitors like Panera and Firehouse Subs, renowned for their diverse menus and modernized establishments. According to Technomic, a consulting company, Subway’s hold on the $43 billion U.S. sandwich and deli market has dipped to approximately 23%, down from 34% in 2017.
Subway has diligently sought to regain its competitive edge, embarking on initiatives such as menu revamps and introducing a lineup of chef-developed sandwiches. The chain’s recent positive performance indicators, including a global same-store sales increase of 9.8% compared to the previous year, further add momentum to its acquisition. Subway has invested in the refurbishment of 10,000 U.S. restaurants and recently allocated $80 million to equip its 20,000 U.S. establishments with deli meat slicers, a pioneering move for the brand.