Subway sandwich chain sells itself to Dunkin' owner Roark Capital

Roark Capital is buying Subway, ending the sandwich chain's much than 5 decades of household ownership and marking a caller epoch for the struggling company.

The announcement Thursday ends the chain's lengthy merchantability process, which publicly kicked disconnected successful February. Subway reportedly sought $10 billion, a precocious terms that alienated galore imaginable suitors similar edifice conglomerates, leaving lone backstage equity firms to duke it retired successful an auction. Other reported bidders included TDR Capital and Sycamore Partners.

Subway and Roark did not denote a transaction price, but the Wall Street Journal reported Monday that the firm's last bid was astir $9.6 billion.

Roark's existent portfolio includes much than a twelve edifice chains. Subway dwarfs each of them by fig of restaurants, and brings successful much yearly income than each but Dunkin'.

Through holding institution Inspire Brands, Roark owns Dunkin', Baskin-Robbins, Sonic, Arby's, Buffalo Wild Wings and Jimmy John's. Separately, housed nether Focus Brands, the steadfast owns Auntie Anne's, Carvel, Cinnabon, Jamba, McAlister's, Moe's Southwest Grill and Schlotzsky's. Roark besides invested $200 cardinal successful the Cheesecake Factory during the aboriginal days of the Covid pandemic to assistance the struggling concatenation stave disconnected insolvency.

"In essence, Roark brings much to the array than different investors would have, and portion the woody closed based connected acold hard cash, the result is simply a bully one," Neil Saunders, a retail expert and managing manager of GlobalData analytics, wrote successful a note.

Roark plans to support Subway arsenic a abstracted entity wrong its portfolio, Subway CEO John Chidsey told the Journal.

Subway has been trying to crook astir its concern nether Chidsey, who joined the institution successful 2019. The institution has revamped its menu, recruited caller franchisees and invested successful technology. In the archetypal of fractional of the year, its same-store income climbed 9.8%, showing that the turnaround whitethorn beryllium taking hold.

"This transaction reflects Subway's semipermanent maturation potential, and the important worth of our marque and our franchisees astir the world," Chidsey said successful a connection Thursday.

Founded successful 1965 by Fred DeLuca and Peter Buck, Subway grew from a azygous sandwich store successful Connecticut to a planetary edifice giant.

But for astir a decade, the company's income person fallen. Its fashionable $5 footlong sandwich woody and assertive improvement enactment unit connected franchisees' profits. The concatenation was wounded further by the high-profile proceedings of erstwhile spokesperson Jared Fogle and the decease of CEO DeLuca, which some occurred successful 2015.

Subway ended 2022 with astir 20,600 locations unfastened successful the U.S., down from its highest of 27,100 successful 2015, according to franchise disclosure documents. While the concatenation is inactive closing franchised locations, the gait has slowed down considerably. The concatenation shuttered 571 units past year, down from the much than 1,600 restaurants it closed successful 2020.

DeLuca's fractional of the institution was near to his household aft his death. Buck, who died successful 2021, bequeathed his to a foundation tally by his sons. Chidsey told Restaurant Business Online that helium convinced the 2 families to see selling the company.