Report: Connecticut-based Subway exploring sale

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Subway is exploring interest from potential buyers, according to the Wall Street Journal, with the Milford-based company fielding inquiries reportedly from both other operating companies as well as private equity investment firms.

The Wall Street Journal cited multiple sources it did not identify by name, with Subway declining comment. The company would seek at least $10 billion in any sale, according to the report.

That would be among the biggest valuations on record. Two years ago, Inspired Brands acquired the Massachusetts-based parent company of Dunkin' and Baskin-Robbins for $11.3 billion. Inspire also owns sandwich chains Jimmy John's as well as Arby's, Buffalo Wild Wings and Sonic.

Subway has its headquarters in Milford and a corporate office in Florida where CEO John Chidsey lives. Last year, the company put in motion plans to move the Milford office this spring to a Shelton office park.

The company lists nearly 37,000 franchised sandwich restaurants and counters, making it the second largest chain globally after McDonalds.

In response to a CT Insider query Thursday, Subway did not elaborate further on a statement it provided the Wall Street Journal, and did not disclose how many employees it has today in Connecticut. The city of Milford reported the company's Sub Way headquarters staff at 700 people in 2021, with Subway subsequently confirming it shed 400 Milford jobs in the first half of 2022.

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

Subway hired Chidsey in 2019 as the permanent replacement for Suzanne Greco, with Chidsey the onetime CEO of Burger King. Greco had run the company since the 2015 death of her brother Fred DeLuca, who co-founded Subway with Peter Buck who died in November 2021.

The trade publication QSR reported Subway lost more than 1,000 U.S. locations in 2021, dropping its total at that point to about 21,150 franchised locations. Subway did not make the 2023 installment of the influential Franchise 500 list, with rival Jersey Mike's Subs ranking third. Subway was long a fixture at the top of the Franchise 500.

In 2021, the parent company of Burger King and Popeye's spent $1 billion to acquire Firehouse Subs, another fast-growth rival to Subway, Jersey Mike's and Jimmy John's.

The food market research firm Technomic reported global sales for Subway at $14.7 billion, and just under $9.4 billion in the United States. That ranked eighth for U.S. sales in the quick-service industry, behind McDonald's, Starbucks, Chick-fil-A, Taco Bell, Wendy's, Dunkin' and Burger King, with Domino's and Chipotle rounding out the top 10.

Chidsey told Fortune last summer he hoped to reinvigorate growth at Subway, envisioning the company even doubling its location count over time as it works to improve its food and experience in response to what consumers are telling it.

"They told us we hadn't had enough menu innovation over the past few years," Chidsey told Fortune. "They told us they wanted more 'craveable' food. They told us they thought some of our ingredients slipped in terms of quality. And then funnily enough, our franchisees told us the same thing."

Subway's chief transformation officer is John Scott, who earlier in his career led procurement for the restaurant industry distributor Chef's Warehouse based in Ridgefield.

The North American Association of Subway Franchisees, which has its office in Fairfield, had no comment on the possibility of Subway sale. In 2021, the industry trade publication Restaurant Business reported that Subway has been lessening its reliance on master business development firms to oversee franchising, bringing some of those duties in house.

Stamford is home to one of those independent firms, Restaurex Developments, whose territories include Fairfield, New Haven, Middlesex and Litchfield counties according to a 2022 annual report on file with the state of Minnesota. Restaurex also covers swaths of New York City and the lower Hudson River valley, and northern New Jersey.

For Connecticut, the nightmare scenario would be any additional downsizing or relocation of Subway's corporate staff under a new owner. In 2018, the fruit gift and catering company Edible Arrangements announced the shift of its headquarters to Atlanta on the heels of installing a new CEO.

And the state had another near-miss that same year after the $325 million sale of Norwalk-based Barcelona Wine Bar and Bartaco to Del Frisco's Restaurant Group, which moved the Connecticut chains' corporate functions to its headquarters in Irving, Texas.

But under pressure from an activist investor, Del Frisco's took a buyout from the Greenwich-based private equity firm L Catterton, which established a new Barcelona and Bartaco headquarters in Westport while selling Del Frisco's steakhouse chains to Landry's.

Includes prior reporting by Paul Schott and Luther Turmelle.

Alex.Soule@scni.com; @casoulman