Roark Capital Acquires Subway, Ending Over 50 Years of Family Ownership
Photo: Alexander Soule/Hearst Connectic
Subway, a global sandwich giant, is now under new ownership as private equity firm Roark Capital finalizes its purchase. This acquisition signifies the end of over half a century of Subway’s family-led business, initiating a fresh chapter for the brand.
The public announcement on Thursday concluded months of anticipation since Subway began its sale process in February. Initially, Subway’s expected $10 billion valuation deterred many major restaurant groups, narrowing the bidding contest to primarily private equity firms like TDR Capital and Sycamore Partners. Ultimately, while the official transaction amount remains undisclosed, Roark Capital’s winning bid reportedly stood close to $9.6 billion, as per The Wall Street Journal.
Roark Capital, no stranger to the restaurant industry, boasts an impressive portfolio of over a dozen restaurant brands. With this acquisition, Subway outnumbers other brands in Roark’s portfolio in terms of outlets and is second only to Dunkin’ in annual sales. Roark’s investments span prominent names like Dunkin’, Baskin-Robbins, Sonic, and Arby’s, among others. The firm notably infused $200 million into the Cheesecake Factory during the pandemic’s onset, aiding its financial recovery.
Retail analyst Neil Saunders from GlobalData Analytics highlighted Roark’s intrinsic value for Subway. He stated, “Roark offers more than just monetary investment. Their expertise and knowledge of the restaurant industry will be instrumental for Subway’s future.”
Subway will continue to operate independently under Roark’s umbrella, as confirmed by Subway CEO, John Chidsey. Since joining Subway in 2019, Chidsey has implemented numerous positive changes, including a menu overhaul and technological upgrades. These initiatives seem to be bearing fruit, with Subway witnessing a 9.8% rise in same-store sales in this year’s first half.
Reflecting on the acquisition, Chidsey commented, “This transaction is a testament to Subway’s enduring brand strength and the potential of our global franchisees.”
Subway, established in 1965 in Connecticut by Fred DeLuca and Peter Buck, became a global sensation over the decades. However, the brand faced numerous challenges in recent years, including the controversial trial of its ex-spokesperson Jared Fogle, the demise of CEO DeLuca in 2015, and dwindling sales. By the end of 2022, Subway operated approximately 20,600 outlets in the U.S., a reduction from its 27,100 peak in 2015.
Post DeLuca’s passing, his share went to his heirs, while Buck’s portion, following his 2021 death, was handed to a charity steered by his children. The decision to sell was reportedly influenced by Chidsey, who persuaded both families to consider the option.
