Subway Reportedly Explores Sale as Major Restaurants Rethink Their Business

Subway may be the latest high-profile restaurant to undergo a major change amid industry-wide challenges.

The quick-service restaurant (QSR) is exploring a sale, valuing the company at more than $10 billion, The Wall Street Journal (WSJ) reported Wednesday (Jan. 11), citing unnamed sources.

“As a privately held company, we don’t comment on ownership structure and business plans,” a Subway spokesperson said in a statement emailed to PYMNTS. “We continue to be focused on moving the brand forward with our transformational journey to help our franchisees be successful and profitable.”

The sandwich chain has struggled in the last decade. The company’s U.S. arm generated $9.4 billion in sales in 2021, a 13% increase over 2020, but it has never matched its 2012 peak, when its global sales totaled $18 billion, the report stated, citing research from Technomic.

Subway may find now to be an inopportune time to be looking for a buyer, however, with challenging economic conditions prompting hesitance from investors about betting on the restaurant industry. Several news outlets noted a slowdown in merger and acquisition (M&A) activity over the course of 2022.

Certainly, on the consumers’ side, there has been more caution of late as to restaurant spending. Research from PYMNTS’ study “Consumer Inflation Sentiment: Inflation Slowly Ebbs, but Consumer Outlook Remains Gloomy,” which drew from a survey of more than 2,100 consumers, found that 78% have been eating at home more often to save money amid inflation.

The report of the brand’s potential sale comes as restaurants rethink their identity amid both industry-wide economic challenges and the ongoing paradigm shift resulting from the pandemic. For instance, Noma, a three-Michelin-star establishment in Copenhagen, Denmark, which has many times been rated the world’s best restaurant, announced Tuesday (Jan. 10) that it is shutting down its eatery to become a flavor lab.

“In 2025, our restaurant is transforming into a giant lab — a pioneering test kitchen dedicated to the work of food innovation and the development of new flavors, one that will share the fruits of our efforts more widely than ever before,” René Redzepi, Noma’s chef and co-owner, said. “We’ve spent the last two years planning, and we’re ready for the next many years of realizing our goal.”

Meanwhile, some players in the space are taking the opposite approach, investing more in the industry. Restaurant Business noted Tuesday that casual dining giant Darden Restaurants, owner of Olive Garden, LongHorn Steakhouse and several others, is looking to bring an additional brand onboard, seeking a full-service restaurant (FSR) with high growth potential that would appeal to many different kinds of consumers.

“We’ll continue to look,” CEO Rick Cardenas told investors, per the report. “It just takes a willing seller to sell for the price we’re willing to pay.”

Similarly, Nation’s Restaurant News noted Monday (Jan. 9) that fast-casual brand BurgerFi, which in addition to its titular chain also owns Anthony’s Coal Fired Pizza, is also looking to supplement its portfolio with additional brands, although CEO Ian Baines did not specify what kinds of brands.

Overall, it seems that the current economic climate is prompting many major restaurants to ask difficult questions about their futures, even if brands are split on how to answer those questions.