Subway Rumored To Be For Sale: What Franchisees Are Saying

Subway, the world’s largest fast-food chain with over 42,000 restaurants globally, has been in the spotlight for the past year as rumors continue to swirl about an impending sale. Layoffs, decreasing sales and leadership changes have many local franchise owners worried about the future of the company.

According to Technomic, the Milford, Connecticut-based sandwich restaurant dropped nearly $2 billion in U.S. sales last year and closed 1,796 stores nationwide. But the downhill trajectory extends beyond 2020. Since 2015, Subway has shrunk over 12%, closing 3,000 locally owned and operated units.

These results combined with several recent decisions made by Subway’s CEO, John Chidsey, have increased speculation about a sale. "He's following the exact playbook that he followed for Burger King," a veteran California Subway operator, told Business Insider. Chidsey's last job before Subway was CEO of Miami-based Burger King, where he slashed costs and ultimately sold the brand to 3G Capital in 2010.

Subway is heavily investing in new office space in Miami, having reduced its Connecticut headquarters staff by 40%, and making significant changes to its franchise structure that could make the company a more attractive acquisition target. This includes removing several hundred development agents who act as middlemen between the company and its franchisees, bringing more stores under direct management as ‘company territories’.

Despite plummeting sales and closing stores, Subway franchisees are saying that Chidsey is not stepping up to the plate. According to Business Insider, a number of franchisees said that Chidsey's only form of communication is a video message sent to operators every few months with no ability to provide feedback. 

"There is no channel right now that the franchisees really have to send back to corporate and for corporate to listen," a Subway franchisee in the Midwest told Business Insider. "There's been basically zero two-way communication."

Although no official details have been released about a Subway sale, persistent rumors paint Restaurant Brands International (parent company of Burger King) as exploring a deal. 

Subway franchise owners that spoke to Business Insider had mixed reactions to a potential sale. 

 "When we hear about Restaurant Brands International (RBI) we get excited. RBI you know, they resurrected Popeyes ... their brands are doing pretty well. But whatever they're doing, they're doing it right. I think most people are excited about future change," a California franchisee told the publication. 

A Midwestern operator, however, said, “I don't think we'd be better off with RBI. But something's got to change."

Read the full report here.