Roark Capital Acquires Subway in $9.6 Billion Deal, Ending Five Decades of Family Ownership
Austin, Texas – In a landmark deal that marks a new era for Subway, Roark Capital has announced its acquisition of the iconic sandwich chain, bringing an end to more than five decades of family ownership. The announcement, made on Thursday, concludes Subway’s lengthy sale process that began in February and attracted considerable attention from potential suitors. While the transaction price was not disclosed, the Wall Street Journal reported that Roark’s final bid amounted to approximately $9.6 billion.
Roark Capital, known for its portfolio of over a dozen successful restaurant chains, including Dunkin’, Baskin-Robbins, and Arby’s, now adds Subway to its impressive lineup. Through holding company Inspire Brands, Roark wields considerable influence in the food industry. “In essence, Roark brings more to the table than other investors would have, and while the deal closed based on cold hard cash, the outcome is a good one,” remarked Neil Saunders, a retail analyst and managing director of GlobalData analytics.
Subway CEO John Chidsey revealed that the plan is to maintain Subway as a separate entity within Roark’s portfolio, indicating faith in the company’s potential for growth. Chidsey, who joined Subway in 2019, has been instrumental in the chain’s revitalization efforts. Subway has focused on revamping its menu, expanding its franchise network, and investing in technology. These efforts seem to be paying off, as same-store sales for the first half of the year increased by an impressive 9.8%.
Founded in 1965 by Fred DeLuca and Peter Buck with a single sandwich shop in Connecticut, Subway has since grown into a global restaurant giant. However, the past decade has seen a decline in sales. The brand’s highly popular $5 footlong sandwich deal, coupled with aggressive expansion, put pressure on franchisees’ profits. Subway was also beset by challenges such as the infamous trial of former spokesperson Jared Fogle and the passing of CEO DeLuca in 2015.
As of the end of 2022, Subway had approximately 20,600 locations operating in the United States. This figure represents a significant decrease from the chain’s peak of 27,100 in 2015. While franchised locations are still being closed, the pace of closures has considerably slowed down. In 2021, Subway shuttered 571 units, a significant drop from the over 1,600 restaurants closed in 2020.
The family ownership of Subway came to an end with the passing of DeLuca and Buck. DeLuca’s share of the company was left to his family, while Buck bequeathed his portion to a charity run by his sons. Chidsey played a vital role in convincing both families to consider selling the company, leading to Roark Capital’s successful bid.
“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” expressed Chidsey in a statement following the announcement. With Roark Capital’s acquisition, Subway embarks on a new chapter, seeking to build on its rich heritage and propel the beloved sandwich chain to even greater heights.