Subway Was Just Sold to Roark Capital

It's official! More than six months after America's largest sandwich chain initially announced that it was pursuing a sale, it has found a buyer. In an interesting development, Subway's new owner is a growing fast-food empire that also owns some of its biggest rivals.

Subway announced today that it has entered an agreement where it will be purchased by affiliates of Roark Capital. While Subway didn't reveal the price of the acquisition in the announcement, The Wall Street Journal reported earlier this week that Roark was nearing a deal to purchase Subway for about $9.6 billion.

Roark Capital is a private equity firm with a whopping $37 billion in assets under management. Subway is set to join Roark's vast portfolio of companies, which includes several other major restaurant brands like Buffalo Wild Wings, Dunkin', Auntie Anne's, Sonic, Carl's Jr., and Hardee's. Notably, Roark also owns two of Subway's major rivals, like Arby's and Jimmy John's.

In today's announcement, Subway said that the acquisition will combine its "global presence and brand strength with Roark's deep expertise in restaurant and franchise business models."

"This transaction reflects Subway's long-term growth potential, and the substantial value of our brand and our franchisees around the world," Subway CEO John Chidsey said in a statement. "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."

The purchase is the latest development in a period of major change for Subway. After years of lagging sales, store closures, complaints about its food quality, discord with franchisees, and issues with its public image, Subway started rolling out several big changes to turn around its fortunes.

The chain kicked off what it calls a "multi-year transformation journey" in 2021 with its Eat Fresh Refresh campaign. This campaign was a menu overhaul that upgraded or expanded upon its core items, including the bread, meats, toppings, and sandwich lineup. Subway made another major change in 2022 with the introduction of "Subway Series," a line of sandwiches that come with pre-set ingredients rather than the customizable sandwiches the chain traditionally served.

Subway's transformation journey has also included the introduction of freshly sliced meats, the remodeling of thousands of restaurants, and bringing in larger, more experienced franchisees to replace the mom-and-pop operators it has traditionally relied on.

These changes seem to be paying off. Subway recently reported its tenth consecutive quarter of positive same-store sales.

"The company will continue to execute its strategy with a focus on sales growth, menu innovation, modernization of restaurants, overall guest experience improvements, and international expansion," Subway said in today's acquisition announcement.