Subway, the sandwich chain with approximately 37,000 restaurants worldwide, has agreed to be acquired by private equity firm Roark Capital for over $9 billion. This deal concludes a lengthy auction process that involved multiple bids from various buyout firms. Roark Capital emerged as the winner, surpassing a final bid of over $9 billion from a rival bidding group led by TDR Capital and Sycamore Partners. The specific terms of the deal were not disclosed by Subway.
The acquisition of Subway by Roark Capital will position the private equity firm as one of the largest restaurant operators globally. Roark Capital already controls Inspire Brands, the parent company of popular restaurant chains such as Jimmy John’s, Arby’s, Baskin-Robbins, and Buffalo Wild Wings. Neil Saunders, the managing director of GlobalData, commented that Roark Capital brings unique advantages to the table compared to other potential investors. Their experience in helping restaurant brands grow, particularly in the U.S. market, will be valuable for Subway, which has not yet reached its previous peak in the country.
Subway first announced its exploration of a possible sale in February, attracting interest from several private equity firms, including Roark Capital, Advent International, TDR Capital, TPG, and Goldman Sachs’ asset management arm. At the time, Subway had hoped to fetch over $10 billion due to its strong brand and international presence. However, buyout firms argued that its U.S. business was saturated, leading to a lower valuation.
Despite facing competition from rivals in previous years, Subway experienced a turnaround after revamping its menu and increasing marketing efforts in 2021. These efforts paid off, as evidenced by a 9.3% increase in same-store sales in North America during the first half of 2023.
In conclusion, Subway’s acquisition by Roark Capital marks a significant milestone for the sandwich chain and positions Roark Capital as a major player in the global restaurant industry. The deal reflects the value of Subway’s brand and international reach, as well as the potential for growth in the U.S. market.
