Subways, the fast food chain, will go on sale for $9.6 billion
Atlanta-based private equity firm Roark Capital, which owns Inspire Brands (the owner of Arby's, Baskin Robbins, Buffalo Wild Wings, Dunkin', Jimmy John's and Sonic) and several other restaurant brands, is reportedly closing in on a deal for the purchase of the Subway chain of fast food sandwich shops around the world, according to the Wall Street Journal.
Roark has been engaged in "a long and heated auction" for Subway, People said, adding that the investment firm, with $35 billion in assets under management, has bid $9.6 billion.
On Jan. 11, WSJ first noticed that Subway was exploring a sale with a valuation of more than $10 billion. The sales process was a long process, now going into 7.5 months.
In February, Subway announced it had hired consultants for a sale. Then, in April, the New York Post reported that the auction attracted little attention with a lower valuation.
Rising interest rates and concerns about an economic slowdown weighed on the Subway sale, making debt more expensive and less available to buyout companies looking for business.
Reuters reported weeks ago that firms TDR Capital and Sycamore Partners were discussing a plan to join forces and buy the eighth-largest restaurant chain in the United States, with 20,810 locations, producing $9.8 billion in domestic sales. Internationally, the chain has 37,000 restaurants.
The chain has lapsed over the past decade. The chain's global sales exceeded $18 billion in 2012, market research firm Technomic said. In 2017, the crisis began to explode ” when the chain closed hundreds of stores. More stores were closed in 2018 due to plummeting sales.
In addition to declining growth, Subway was hit with a menu crisis when reporters tested the company's chicken, only to find only 42.8 percent of the product was actually chicken. And another test found there was something "weird" with its 100 percent tuna claim. This has forced the company to either make a major menu overhaul or move towards “freshness”. It spent $80 million on slicers for franchisees to provide customers with freshly sliced meats for the first time.
With co-founder Fred DeLuca dead, John Chidsey, the chain's first outside CEO, has been in charge since 2019. Perhaps Roark will have the magic touch to revive the dying brand.
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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/subways-la-catena-fast-food-andra-in-vendita-per-96-miliardi-di-dollari/ on Mon, 21 Aug 2023 20:17:53 +0000.