SummerSimo Travel Troubles Notes and The Purring Page

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 nearing a deal to buy the Subway chain of fast food sandwich shops spread around the world, according to the Wall Street Journal.

Roark has been engaged in “a long and heated auction” for Subway, the people said, adding that the investment firm, with $35 billion in assets under management, has offered $9.6 billion.

On January 11, WSJ first noted that Subway was exploring a sale with a valuation of over $10 billion. The sale process has been a lengthy one, now entering 7.5 months.

In February, Subway announced that it was hiring consultants for a sale. Then, in April, the New York Post had reported that the auction attracted little attention with a lower valuation.Rising interest rates and concerns about an economic slowdown have weighed on Subway’s sale, making debt more expensive and less available to buyout companies looking for business.

Reuters reported weeks ago that TDR Capital and Sycamore Partners were discussing a plan to join forces and purchase 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 declined over the past decade. The chain’s global sales exceeded $18 billion in 2012, market research firm Technomic said. In 2017 ala crisis began to explode ” when the chain closed hundreds of stores. More stores were closed in 2018 due to the sales slump.

In addition to declining growth, Subway was hit by a menu crisis when journalists tested the company’s chicken, only to find only 42.8 percent of the product was actually chicken. And another test found that there was something “off” with its claim of 100 percent tuna. This forced the company to make a major menu overhaul or move toward “freshness.” It spent $80 million on franchisee slicers to provide customers with freshly sliced meats for the first time.

With the death of co-founder Fred DeLuca, John Chidsey, the chain’s first outside CEO, has been at the helm since 2019. Perhaps Roark will have the magic touch to revive the dying brand.

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