Sandwich chain Subway agrees to sell itself to Arby's owner Roark Capital

By Anirban Sen

Subway has agreed to sell itself to private equity firm Roark Capital in a deal valuing the sandwich chain at more than $9 billion, sources said, ending a long-drawn auction that saw several bids from buyout firms.

Roark beat out a late challenge from a rival bidding group led by TDR Capital and Sycamore Partners, which also submitted a final bid of more than $9 billion, according to people familiar with the matter.

Subway, which has roughly 37,000 restaurants in more than 100 countries, did not disclose the terms of the deal on Thursday.

The deal will make Roark Capital one of the largest restaurant operators in the world. It controls Inspire Brands, the owner of restaurant chains including Jimmy John's, Arby's, Baskin-Robbins and Buffalo Wild Wings.

"Roark brings more to the table than other investors would have," said Neil Saunders, managing director of GlobalData.

Its experience of helping restaurant brands grow will be helpful, "especially in the U.S. market where it remains well below the peak it hit a few years ago", he said.

Subway said in February it was exploring a possible sale, drawing interest from private equity firms including Roark, Advent International, TDR Capital and TPG as well as Goldman Sachs' asset management arm.

The restaurant chain had then hoped to fetch more than $10 billion, owing to its strong brand and international business.

But the buyout firms countered that it was worth less as they deemed its US business saturated.

Owned by its founding families since its first outlet opened in 1965, Subway had for several years struggled with competition from rivals until it revamped its menu and increased marketing spend in 2021.

Those efforts seem to be paying off as Subway's same-store sales in North America rose 9.3% in the first half of 2023.