US – Global sandwich chain Subway has confirmed to be on sale after almost six decades of family ownership but did not indicate the valuation of a possible takeover.
Founded in 1965 by Fred DeLuca and Dr. Peter Buck, Subway has had rapid growth since opening its first shop but has tapered off in recent years amid intense competition and soaring costs.
Milford, Connecticut-based fast-food restaurant franchise is now one of the world’s largest restaurant chains, with 37,000 outlets in more than 100 countries.
In a statement posted on its website, Subway said: “there is no timetable for a sale or even assurance that a sale will go through and it doesn’t intend to make any further public comments until the process is finished.” It has hired J.P. Morgan to advise and help conduct the exploration process.
If the sale is reached, using the valuation of US$10billion as reported by Bloomberg, it would be one of the biggest deals in the fast-food industry since Inspire Brands bought Dunkin’ for US$11.3 billion in October 2020.
In addition, the transaction will follow several recent attempts to drive growth, including a shift toward multi-unit operators, expansion via automated vending fridges, and a significant menu revamp.
The chain has struggled to grow sales since 2014, shuttering at least 6,000 restaurants to right-size its bloated footprint.
Despite the aggressive contraction of its store network, roughly 75% of Subway’s US footprint (or 16,000 restaurants) reported a same-store sales increase of at least 7.5% in the finance books of 2021 compared to 2019.
The chain has made strides with its digital business thanks to the launch of Subway Delivery, which delivers customers’ orders directly from the chain’s app or website, and other online ordering improvements. In 2021, Subway’s digital sales topped US$1.3 billion, tripling its 2019 digital sales.
It also began buying out development agents, developers who contracted with the company to sell and oversee franchisees in specific regions of the country—and whose actions were often considered synonymous with the chain’s more aggressive expansion strategies coming out of the great recession in 2009 and 2010.
In 2021 and last year, it refreshed its menu and upgraded ingredients, introducing a line of chef-developed sandwiches.
The rollout included more than 20 upgrades—11 new and improved ingredients, six new or returning sandwiches, and four revamped signature sandwiches. Turkey, ham, and steak were elevated, and roast beef and rotisserie chicken returned to the menu.
The multinational sandwich chain also unveiled its first Grab and Go “smart fridge” filled with pre-made sandwiches, snacks, and drinks in November 2022.