Subway, the family-owned sandwich chain, has announced the end of its auction process with the agreement to sell the company to private equity firm Roark Capital for a staggering $9.6 billion. This deal marks the end of an era as Subway has been owned by its two founding families for over 50 years. In a statement, Subway called the transaction a "major milestone" and emphasized the combination of Subway's global presence and brand strength with Roark's expertise in restaurant and franchise business models.

Roark Capital, based in Atlanta, has $37 billion in assets under management and is known for its investments in various fast-food chains through its restaurant conglomerate, Inspire Brands. Roark also backs Auntie Anne's, Baskin Robbins, Buffalo Wild Wings, Sonic Drive-In, and Arby's. This acquisition of Subway comes after Inspire Brands paid $8.8 billion for Dunkin' Brands Group in 2020.

The sale to Roark Capital is seen as an opportunity for Subway to reestablish itself in the fast-food market, particularly in the US where it has been losing market share to competitors like Jersey Mike's. The firm is expected to focus on expanding Subway's international footprint and may even consider combining Subway and Dunkin' in the same locations to attract investors, according to restaurant consultant John Gordon. While Subway has recently signed up for international deals, Dunkin' has struggled to gain a foothold abroad due to the need for separate bakeries to make doughnuts and a lack of sufficient restaurants to justify investment.

Despite the potential for synergy between Subway and Dunkin', Ed Shanahan, executive director of the Dunkin' Donuts Independent Franchisee Association (DDIFO), does not expect Roark to merge the two brands in the US. Dunkin' generates most of its sales during breakfast, while Subway excels during lunch and dinner. Shanahan believes it is best not to "break what works."

Subway's CEO, John Chidsey, assured that the company's management structure will remain intact after the deal and that Subway will continue to operate as its entity within Roark's investment portfolio. Chidsey expressed his optimism about Subway's future and its plans to expand internationally by adding approximately 23,000 restaurants overseas in the next few years. He emphasized that the transaction reflects Subway's long-term growth potential and the value of the brand and franchisees worldwide.

This acquisition by Roark Capital comes after reports of negotiations with potential partners, such as TDR Capital and Sycamore Partners, who were considering a joint bid for Subway. However, Roark emerged as the highest bidder in the nine-month-long auction. Subway was founded in 1965 by Fred DeLuca and Peter Buck, and since then, it has become one of the world's largest restaurant chains with over 37,000 outlets in more than 100 countries.

Subway has faced challenges in recent years, losing market share to competitors like Panera and Firehouse Subs. To boost growth, the chain has undergone efforts to modernize its stores, refresh its menu, and upgrade ingredients. Roark Capital specializes in franchised businesses and owns multiple restaurant chains, including Arby's, Baskin-Robbins, Buffalo Wild Wings, Dunkin', Jimmy John's, and Sonic.

The deal between Subway and Roark Capital is expected to be finalized soon, marking a new chapter for the beloved sandwich chain as it seeks to regain its position in the fast-food industry.