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Private equity firm acquires Subway in reported $9.6 billion deal

Subway has found a buyer!

Roark Capital is buying Subway.
Roark Capital is buying Subway.

The 58-year-old sandwich giant, which initially announced it was exploring a possible sale in February 2023, has entered into a definitive agreement to be acquired by affiliates of Roark Capital, a private equity firm which owns numerous fast-casual franchise chains through two holding companies.

Privately-held Subway did not release a monetary value for the acquisition, but the Wall Street Journal reported the final bid from Roark Capital was roughly $9.6 billion. This marks one of the biggest deals in the fast food industry since Roark subsidiary Inspire Brands acquired Dunkin’ Brands for $11.3 billion in October 2020.

One of the worlds’ largest quick service restaurant brands, Subway is based in Milford, Conn., and has more than 37,000 restaurants (with about 21,000 located in the United States) across more than 100 countries. The restaurants are owned and operated by Subway franchisees.

Subway has been on a rebound in recent years after undergoing a serious slump. It has updated its menu and restaurants while also putting an increased emphasis on digital growth. It plans to remodel 3,600 locations across North America this year, and in June 2023 entered into its largest master franchise agreement ever with Shanghai Fu-Rui-Shi Corporate Development Co., Ltd. to expand its presence in mainland China by 4,000 stores over 20 years.

In April, Subway reported its ninth consecutive quarter of positive sales as its turnaround continues to take hold. The company saw a 12.1% increase in global restaurant same-store sales.

The privately held company also said in February 2023 that it exceeded sales projections in 2022, achieving eight consecutive quarters of positive same-store sales growth, with a 9.2% jump in 2022 compared to 2021. Digital sales have more than tripled since 2019.

Roark is a private equity firm with $37 billion in assets under management. Roark focuses on investments in consumer and business service companies, with a specialization in franchise and franchise-like businesses. In addition to Dunkin’, under its Inspire Brands holiding company Roark owns Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings and Jimmy John’s.

Under the banner of its Focus Brands holding company, Roark owns Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s Southwest Grill and Schlotzsky’s. Roark also holds a $200 million stake in The Cheesecake Factory.

“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” said John Chidsey, CEO of Subway. “Subway has a bright future with Roark, and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees.”

J.P. Morgan is serving as financial advisor and Sullivan & Cromwell LLP is serving as legal counsel to Subway. Timing is subject to regulatory approvals and customary closing conditions.

Written by Dan Berthiaume
Senior Editor, Technology