American sandwich chain Subway is set to be sold to a U.S.-based private equity firm that owns Baskin-Robbins and Dunkin' Donuts.
On the 21st (local time), The Wall Street Journal (WSJ) reported that private equity firm Roark Capital Group is close to finalizing a deal to acquire Subway for $9.6 billion (approximately 13 trillion KRW). WSJ cited sources saying, "The contract could be finalized this week."
Earlier this month, TDR Capital and Sycamore Partners entered the bidding for Subway, but negotiations with Roark Capital Group have accelerated in recent days, bringing the acquisition deal close to completion, WSJ reported. However, WSJ noted that since the contract is not yet finalized, there remains a possibility that a higher bidder could emerge.
Subway, a fast-food chain specializing in sandwiches and salads, first opened in 1965 in Bridgeport, Connecticut. The founding family owned the company privately for over 50 years, but after the deaths of the founder and co-founder, it has been operated by professional management since 2019.
According to market research firm Technomic, Subway ranks as the 8th largest restaurant chain in the U.S. by number of stores and sales. Subway has 20,810 stores in the U.S. (as of the end of last year), accounting for more than half (56%) of its global total of 37,000 stores.
Subway grew its business by aggressively expanding stores in low-rent areas in the U.S., such as subway stations, but due to intensified competition from similar businesses and continued poor performance, it has been closing stores across the country. The number of stores, which reached 33,800 in 2010, sharply declined during the COVID-19 pandemic, dropping by more than 38% as of the end of last year.
Due to store closures and decreased customer visits, sales peaked at $18 billion (approximately 24.14 trillion KRW) in 2012 but plunged to $9.8 billion (approximately 13.14 trillion KRW) last year, marking over a decade of poor performance. To overcome this chronic slump, Subway has been attempting to turn things around through menu revamps, store remodeling, and increased marketing expenses.
Subway plans to use this sale as an opportunity to find new growth avenues in overseas markets. Since 2021, it has aimed to open more than 9,000 new overseas stores through franchise agreements, with plans to open over 4,000 new stores specifically in the Chinese market.
Roark Capital Group, a private equity firm based in Atlanta, U.S., has been aggressively investing in restaurant chains and the food industry. It currently owns pretzel chain Auntie Anne's, sandwich chains Arby's and Jimmy John's, ice cream brand Baskin-Robbins, and donut brand Dunkin' Donuts.
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