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Business

Subway agrees to $9.6B sale to Dunkin’ owner Roark Capital: report

By
Ariel Zilber and
Josh Kosman
Published Aug. 24, 2023
Updated Aug. 24, 2023, 1:30 p.m. ET

Subway on Thursday ended its drawn-out auction to sell the family-owned sandwich chain by agreeing to a $9.6 billion deal with the private equity firm that owns Dunkin’ Brands.

The sale to Roark Capital, which also backs several other fast-food chains through its restaurant conglomerate Inspire Brands, brings to close an era during which Subway was owned by its two founding families for more than 50 years.

“The transaction is a major milestone in Subway’s multi-year transformation journey, combining Subway’s global presence and brand strength with Roark’s deep expertise in restaurant and franchise business models,” Subway said in a statement.

The Atlanta-based private equity firm, which has $37 billion in assets under management, is also an investor in Auntie Anne’s, Baskin Robbins, Buffalo Wild Wings, Sonic Drive-In, and Arby’s.

In 2020, Inspire Brands paid $8.8 billion for Dunkin’ Brands Group.

Subway has agreed to be acquired by private equity firm Roark Capital in a deal valued at around $9.6 billion.
Subway has agreed to be acquired by private equity firm Roark Capital in a deal valued at around $9.6 billion. Getty Images

Roark was the highest bidder in the roughly nine-month long auction for Subway, which has about 37,000 restaurants in more than 100 countries.

However, the chain has been losing market share in the US to rivals like Jersey Mike’s.

The firm, which is expected to focus on expanding Subway’s international footprint, could combine Subway and Dunkin’ in the same locations to better attract investors, restaurant consultant John Gordon said.

Subway has recently signed up some international deals while Dunkin’ has struggled to gain a foothold abroad because it needs separate bakeries to make doughnuts and does not have a large enough number of restaurants to justify the investment, Gordon said.

Ed Shanahan, executive director of the Dunkin’ Donuts Independent Franchisee Association (DDIFO), told The Post he did not expect Roark to merge Dunkin’ and Subway in the US — despite Dunkin’ raking in most of its sales during breakfast and Subway during lunch and dinner.

“Don’t break what works,” Shanahan said.

Subway’s chief executive John Chidsey said the company’s management structure will remain in place after the deal and that the chain will remain its own entity within Roark’s investment portfolio, according to the Wall Street Journal.

“They understand our business,” Chidsey told The Journal.

The deal will help Subway expand internationally, according to the company's CEO, John Chidsey.
The deal will help Subway expand internationally, according to the company’s CEO, John Chidsey. Getty Images

He said that Subway is looking to expand internationally by adding around 23,000 restaurants overseas within the next few years.

“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” Chidsey said.

“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.”

Roark’s acquisition comes after reports earlier this month that private equity firms such as TDR Capital and Sycamore Partners were negotiating a possible partnership which would see them team up to make a joint bid for Subway.

Subway was founded in 1965 by 17-year-old Fred DeLuca and family friend Peter Buck — opening their first shop, Pete’s Super Submarines, in Bridgeport, Conn.

“From the family’s perspective, it was a compelling offer that I think works for everybody,” Chidsey said told The Journal.

With Post wires