Restaurant chain Subway linked to pursuing sale for US$10bn

US – American multinational fast-food restaurant franchise, Subway, is exploring a potential sale that could value the sandwich chain at more than US$10 billion, a source said.

The company, based in Milford, Connecticut, is one of the world’s largest quick-service restaurant chains, with about 37,000 locations in more than 100 countries.

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.

The chain has also pioneered the concept of preparing food in front of consumers in an assembly line fashion, an idea that chains would later adopt such as Chipotle Mexican Grill.

The source said the process, which is at an early stage, is expected to attract potential corporate buyers and private-equity firms, adding that Subway could still decide against pursuing a sale.

In 2021, media reports said Subway deliberations for a sale, but the restaurant chain denied it. If the privately held company does sell, the transaction follows 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 made strides with its digital business thanks in part to the launch of Subway Delivery, which lets delivery customers order 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.

The chain has struggled to grow sales since 2014, shuttering at least 6,000 restaurants to rightsize its bloated footprint to less than 21,000 by 2021.

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.

Subway attributes most of the momentum to July’s launch of “Eat Fresh Refresh,” the largest menu update in the chain’s 56-year history.

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.

In November 2022, the chain publicly unveiled its first Grab and Go “smart fridge” filled with pre-made sandwiches, snacks, and drinks.

The machine debuted in September at the University of California San Diego and the company plans to add more across North America in high-trafficked areas like other college campuses, airports, and hospitals.

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