Sub Counts: Subway is shopping itself around

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Sandwich artists

Sandwich specialist Subway is exploring a sale, eyeing a deal that the Wall Street Journal reports could value the chain north of $10bn.

The news comes at a time when Subway’s business is looking fresh, having reportedly posted record sales in 2021 and 2022, after roughly a decade of stagnation.

Subway started life in 1965 as Pete’s Super Submarines in Connecticut, co-founded by then 17-year-old Fred DeLuca and family friend Peter Buck, who loaned DeLuca $1,000 to start the business to try and pay college tuition. Running each store themselves, the pair successfully opened 16 shops in less than a decade, but things were taken to the next level when they began franchising in 1974.

Sub counts

Since then, Subway has managed the brand carefully, positioning the chain as a healthier alternative. That branding, combined with a lean franchise model, propelled Subway towards the top of the franchise food chain — meaning that any potential acquirer will get a company with more than 21,000 sites in America (per QSR), 30% more than second-place Starbucks.

Indeed, setting up a Subway franchise reportedly costs somewhere between $100k-250k, a fraction of what’s needed to set up a McDonald’s equivalent — where costs can exceed $2 million.

However, although each store requires a lower upfront cost, they also sell less. A typical Subway pulls in a relatively-meager ~$440k of sales-per-store, the second-lowest in the QSR 50. Low costs also mean that Subway stores pop-up constantly, which means stores can find themselves “eating from opposite ends of the same sandwich”, hurting sales for both.

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