Subway seeks buyer, impact on franchisees unexplained

Subway, the American sandwich chain that went global, has reportedly been put up for sale after nearly six decades of family ownership.

The news first broke in the Wall Street Journal, which said the estimated value of the company could reach as much as USD10 billion.

The company later issued a statement, noting, “[Subway announced] that its shareholders are exploring a possible sale of the company,” the company said in the statement. The company also announced that an investment bank has been hired to advise on the potential transaction. “J.P. Morgan is advising the company and will conduct the sale exploration process.”

With nearly 37,000 outlets in more than 100 countries, the company’s operations are highly reliant on franchising operations.

An enquiry was made by the Times to clarify whether its franchises would be affected should the potential transaction take place; and if so, to what extent.

No reply has been received by press time in response to the enquiry made last week.

In contrast, the chain said in the aforementioned statement that “[the] management team remains committed to the future and will continue to execute its multi-year transformation journey, which includes a focus on menu innovation, modernization of restaurants and improvements to its overall customer experience.”

When compared with its rival fast food chains such as McDonald’s and KFC, Subway is less adept at adapting its menu to local preferences, at least judging from its Macau operations. Only recently has the chain’s local operations started catering to a wider clientele by offering localized options, such as minced pork or chicken patty sub, numbingly spicy chicken sub, as well as red bean and matcha cookies.

The company ended 2022 by exceeding global sales projections and achieving eight consecutive quarters of positive sales. It attributed this performance to new product innovations and growth in its digital and non-traditional channels.

However, in Macau, customers have occasionally complained about the lack of outlets in certain parts of the city, such as Areia Preta, with delivery platforms refusing to take jobs due to the long distance.

In 2022, the company recorded a 9.2% increase in within-store sales, compared to 2021, and a 29.1% increase in within-store sales, compared to 2020. The company also recorded double-digit growth in digital sales around the world compared to 2021, and these more than tripled since 2019.

Subway started in 1965, when 17-year-old Fred DeLuca asked his family friend and nuclear physicist Dr Peter Buck for advice on how to pay for his college tuition.

With an idea to open a submarine sandwich shop and an initial USD1,000 investment from Dr Buck, the two formed a business partnership that later transformed into the current sandwich chain.

Initially, the shop was named Pete’s Drive-In: Super Submarines, to highlight the fact that the investment was made by Dr Buck based on the idea from DeLuca. Later, in 1968, the company was rebranded Subway, with the first franchise opening in 1974.