Subway sandwiches fails to get $10B bid, extends deadline again: sources
Subway has pushed back bidding deadlines yet again in a drawn-out auction of the struggling sandwich chain after the privately-held company failed to get the $10 billion it was seeking, The Post has learned.
The nation’s largest fast-food chain, which had demanded final bids by last week, will extend the auction into next month after attracting some new bidders, multiple sources close to the situation said.
“The process is weak,” a lending source said. “The price is not meeting their valuations.”
The previous suitors have largely been private equity firms. But relatively high interest rates for leveraged buyouts has limited their ability to meet Subway’s price tag, sources said.
“The financing is still very tricky,” another source said.
The company, founded in 1965, has not provided a new drop-dead date for final bids.
A Subway spokeswoman declined to comment.
Subway CEO John Chidsey began taking initial bids in February and delayed previous deadlines when the offers fell short.
The Post reported in April that prospective buyers weren’t likely to shell out more than $7 billion.
One of the main concerns is the chain does not own any of its roughly 37,000 franchises, and about half of them are losing money, sources said.
Subway generates almost all of its revenue from charging 8% royalty fees.
Upstart sandwich chains Jersey Mike’s and Jimmy John’s have also cut into Subway’s market share.
Subway average restaurant revenue adjusted for inflation from 2012 through 2022 is down 24%, Restaurant Business Magazine reported.
McDonald’s, by comparison, is up 11%.
Chidsey has been threatening to yank stores from mom-and-pop operators who don’t start spending money on renovations and to resell them to larger operators who might be better able to spruce up the locations, The Post recently reported.
The company’s co-founders Fred DeLuca and Peter Buck began their sandwich-making empire from one sub shop in Bridgeport, Conn.. DeLuca died in 2015 and Buck passed away in 2021.
Their heirs control the company but are not involved with running the business on a day-to-day basis.