CNBC – Roark Capital is buying Subway, ending the sandwich chain’s more than five decades of family ownership and marking a new era for the struggling company.
The announcement Thursday ends the chain’s lengthy sale process, which publicly kicked off in February. Subway reportedly sought $10 billion, a high price that alienated many potential suitors like restaurant conglomerates, leaving only private equity firms to duke it out in an auction. Other reported bidders included TDR Capital and Sycamore Partners.
Subway and Roark did not announce a transaction price, but The Wall Street Journal reported Monday that the firm’s final bid was roughly $9.6 billion.
Roark’s current portfolio includes more than a dozen restaurant chains. Subway dwarfs all of them by number of restaurants, and brings in more annual sales than all but Dunkin’.
Through holding company Inspire Brands, Roark owns Dunkin’, Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings and Jimmy John’s. Separately, housed under Focus Brands, the firm owns Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s Southwest Grill and Schlotzsky’s.
“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world.”
Roark also invested $200 million in the Cheesecake Factory during the early days of the Covid pandemic to help the struggling chain stave off insolvency.
“In essence, Roark brings more to the table than other investors would have, and while the deal closed based on cold hard cash, the outcome is a good one,” Neil Saunders, a retail analyst and managing director of GlobalData analytics, wrote in a note.