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Subway on the Block?

01/16/2023

Recent reports in the financial press have suggested that the ownership of the Subway franchise may be exploring a sale. Subway was founded in 1965 when Dr. Peter Buck loaned Fred DeLuca $1,000 to establish a sandwich kiosk to earn money for his future medical training.  DeLuca subsequently deferred medical school and went on to build the enterprise into a chain of 37,000 locations in 100 nations involving 20,000 franchisees.

 

Dr. Buck a nuclear physicist died in November 2021 at the age of 90, outliving his partner Fred DeLuca who passed in 2015.  After a difficult period under the management of Suzanne Greco sister of Fred DeLuca, shareholders turned to industry veteran John Chidsey who serves as CEO. 

 

Industry observers consider that Subway sold too many franchises that competed, reducing revenue and profit. Menus remained at best uninspiring and Corporate management failed to support franchisees with promotional activities. The chain terminated 1,000 under-performing stores in 2022 and has received criticism from franchisees and federal scrutiny over business practices to boost sales. Subway recently embarked on an intensive promotional program using television and social media and has revamped menus.

 

Observers consider that the privately-held company may be worth $10 billion and could attract an investment group or an existing second-tier franchise chain that could enhance return to both operators of stores and shareholders.