Roark Capital Group is reportedly in the running to buy Subway, adding to its already large restaurant portfolio.
The world's largest sandwich chain is valuing itself at more than $10 billion. If a deal occurred at that price point, it would be the biggest transaction since Inspire Brands purchased Dunkin' and Baskin-Robbins for $11.3 billion. Subway confirmed in mid-February that it was exploring a sale, but didn't comment on potential suitors or a timeline. J.P. Morgan is advising the company.
"The management team remains committed to the future and will continue to execute against its multi-year transformation journey, which includes a focus on menu innovation, modernization of restaurants and improvements to its overall guest experience," Subway said in a statement on February 14.
Roark is not only invested in Inspire (parent of Arby’s, Baskin Robbins, Buffalo Wild Wings, Dunkin’, Jimmy John’s, and Sonic), but also Focus Brands ( Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s, and Schlotzsky’s), The Cheesecake Factory, Hardee's, Carl's Jr., and Culver's. The Atlanta-based firm has $35 billion in assets under management. Since its inception, affiliates have acquired 105 franchise/multi-unit location brands that generate $70 billion in revenue across about 67,7000 locations.
Bloomberg said Wednesday that Roark hasn't made a final decision and that it could opt against pursuing Subway. The publication reported some companies are valuing Subway at as much as $8 billion.
Earlier this month, U.K. media outlet Sky News said Goldman Sachs, Bain Capital, TDR Capital, TSG Consumer Partners, and TPG are potentially looking into the situation. The report described Goldman Sachs involvement as "intriguing" because it "participates in relatively few auctions of this nature." The company is the largest potential bidder, with more than $2 trillion in assets under management worldwide. Next highest is Bain Capital, with $160 billion in assets under management.
Subway is one of the world's largest restaurant chains, with almost 37,000 stores across the world. It's the biggest chain in terms of U.S. stores, with around 20,000. It's coming off a 2022 in which it surpassed global sales projections and achieved eight straight quarters of positive same-store sales. Global comps lifted 9.2 percent year-over-year and 29.1 percent against 2020. The top 75 percent, about 17,000 restaurants, saw same-store sales grow 12.5 percent against 2021. These units also consistently beat decade-old weekly AUV benchmarks.