Subway is sparking growth in China, fueled by one of the largest development deals in restaurant history. 

The sandwich chain is looking to open almost 4,000 restaurants in the next two decades alongside new master franchisee Shanghai Fu-Rui-Shi Corporate Development Co., which will have exclusive rights to develop Subway locations across Mainland China. The agreement, if completed, would grow the chain’s Chinese footprint by 7x.  

The franchisee company was formed by a group of private investors, including Asia Investment Capital. The consortium plans to hire a CEO with significant quick-service experience in the Chinese market. 

Subway said it’s experienced positive sales in China as of late thanks to a growing digital platform and new menu items. The company believes its new master franchisee will accelerate that even further. 

“This agreement is a significant milestone in Subway’s international growth strategy as we continue to focus on strategically expanding our footprint and maintaining our position as one of the world’s largest restaurant brands,” Subway CEO John Chidsey said in a statement. “China is a key market with significant long-term growth opportunity, and we look forward to bringing the Subway experience to even more guests in the region.” 

This is Subway’s 13th master franchise deal in the past two years. Combined, these agreements equate to more than 9,000 restaurant commitments. In November 2021, the company announced it inked a deal with Everstone Group to open more than 2,000 stores in India, Sri Lanka, and Bangladesh over the next 10 years. A few months later it signed an agreement to debut more than 700 units in Thailand across the next decade. 

Each of these moves—including the most recent China partnership—is part of a plan to double Subway’s Asia Pacific footprint from roughly 3,500 units to more than 6,000. The sandwich concept is the second-largest restaurant chain in the world in terms of footprint, following McDonald’s. It’s first in the U.S. 

Subway is one of several fast-food chains jockeying for growth opportunities in China. Tims China, which opened more than 600 Tim Hortons shops in the country in three years, recently signed an agreement to lead growth for Popeyes as well. Popeyes China is bringing $30 million in cash and Tims China will add another $60 million to accelerate development. Last year, Papa Johns revealed it had a deal to open more than 1,350 outlets in South China—the brand’s largest development contract ever. About three years ago, Domino’s invested $40 million to acquire a minority interest in Dash Brands, the chain’s master franchisee in China. 

Fast Food, Franchising, Growth, Operations, Story, Subway