Roark Capital Buys Subway For $9.6B

Today Subway announced that it has entered into a definitive agreement to be acquired by affiliates of Roark Capital. Multiple sources put the purchase price at approximately $9.6 billion.

Roark holds investments in a several QSRs and fast-casual businesses, including Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carvel and Sonic. The Atlanta-based private equity firm has $37 billion in assets under management. The Subway brand had been previously family-owned for more than 50 years.

Subway currently operates approximately 37,000 units in over 100 countries.

The deal marks one of the largest  acquisitions in QSR history, just under Inspire Brands’ $11.3 billion Dunkin’ acquisition in 2020. Roark also owns Inspire, which operates Subway rival Jimmy John’s.

"This transaction reflects Subway's long-term growth potential, and the substantial value of our brand and our franchisees around the world," said Subway Chief Executive Officer John Chidsey.



Analyst Neil Saunders, managing director of GlobalData, commented that Roark Capital’s purchase of Subway “is a sizeable bet on a chain that, while very well known, has sometimes struggled to generate growth. Roark’s strong operating experience will … be helpful to Subway, especially in the U.S. market where it remains well below the peak it hit a few years ago. In essence, Roark brings more to the table than other investors would have.”

He added, Roark "needs to make changes to improve both sales and profitability. This includes enhancing efficiency by trying to consolidate the number of franchisees, looking at ways to increase its share of meal occasions in a very competitive market, and engaging consumers more with menu innovations.

“All these things are very much in Roark’s wheelhouse, but the size of the Subway business requires discipline and determination to drive through change. International growth is another area of opportunity that Roark will be likely to pursue, if only because Subway is saturated in the U.S.”

Data from foot traffic analytics firm shows that in-store visits to Subway have been positive for six out of seven months of 2023, up to July, although overall visits still lag well behind pre-pandemic levels. 

Despite the uptick in foot traffic, recent research by marketing software company SOCi Inc., which ranked restaurant chains’ social reputation scores, placed Subway last with a score of 18. The average score was 45 out of 100. Chick-fil-A was number one with a reputation score of 66.   Each reputation score was calculated based on five parameters: the rate of new reviews, the average number of reviews per location, if reviews were positive or negative, how quickly companies responded and the average score a company receives on each platform across all locations.

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