The Deal Comes After Nearly Eight Months of Negotiations and Regulatory Review
The wheels of deals sometimes turn slowly, and the $9 billion-plus sale of Subway to Roark Capital affiliates represents a case in point. Roughly eight months after the acquisition was announced, it closed — on April 30. Roark Capital is a private equity firm whose portfolio is concentrated in franchise and other multi-site businesses in the retail, restaurant, consumer and business services industries.
The Wall Street Journal reported that Roark spent $9.6 billion to buy Subway, the eighth-largest American restaurant chain with more than 20,000 U.S. locations and about 37,000 restaurants worldwide. When bidding opened in February 2023, Subway’s asking price was $10 billion. QSR Magazine said the Subway deal is the biggest transaction since umbrella franchisor Inspire Brands —also owned by Roark — bought Dunkin’ and Baskin-Robbins for $11.3 billion about three years ago.
Subway Growth… But Closures, Too
According to an April 30 news release from Subway, the completed transaction follows three years of sales growth and positive global net restaurant growth for the first time since 2016. Subway said its North American same-store sales increased 5.9% last year.
The Miami-based brand’s recently released 2024 franchise disclosure document reveals that Subway revenue rose 10.3% to $971.9 million in 2023, Franchise Times reported, with company vendors who sell ingredients and equipment to franchisees comprising 40% of that total. The FDD indicated that the company shut down over 400 of its U.S. restaurants in 2023, Franchise Times noted, and ended 2023 with 20,133 U.S. locations, its lowest restaurant total since 2005. Subway has closed 7,000 locations since 2015, Franchise Times said.
Over the past two to three years, Subway has been shadowed by negative press containing reports about franchisees disenchanted with the brand, including a highly negative 2022 review on the Last Week Tonight television show. In January 2024, franchisees criticized the performance of their $6,000 meat slicers in various news reports.
Deal Delayed by FTC
Completion of the Subway franchise acquisition was held up by the Federal Trade Commission, which studied whether Roark would have an unfair advantage among sandwich restaurant competitors, according to reports by Franchise Times and Reuters. In 2019, Inspire Brands had acquired Jimmy John’s and also owns other sandwich brands.
The news release quoted Subway CEO John Chidsey as saying the brand would continue to set a high bar “on delivering better food and a better guest experience, our next chapter will be the most exciting yet.” No changes are expected in the company’s leadership, strategic planning or operating plans.
The brand is committed to its Build a Better Subway program in support of its franchisees, employees and guests, the news release continued, with a focus on culinary and digital innovation, international expansion and restaurant modernization. QSR Magazine reported that by the end of February, 12,000 of Subway’s North American units had been updated out of 18,000-plus global updates.
Roark Capital’s Brands
Based in Atlanta, Roark Capital manages about $38 billion in assets. QSR Magazine said its restaurant portfolio and holding companies have stakes in Arby’s, Auntie Anne’s pretzels, Baskin Robbins, Buffalo Wild Wings, Carvel, The Cheesecake Factory, Cinnabon, Culver’s, Dunkin’, Hardee’s, Jimmy John’s, McAlister’s Deli, Mister Donut, Moe’s, Schlotzsky’s and Sonic Drive-In.
