Subway (restaurant)
Subway IP LLC, trading as Subway, is an American multinational fast food restaurant franchise that specializes in submarine sandwiches and wraps. It was founded by Fred DeLuca and financed by Peter Buck in 1965 as Pete's Super Submarine Sandwiches in Bridgeport, Connecticut. After several name changes, it was renamed Subway in 1972, and a franchise operation began in 1974 with a second restaurant in Wallingford, Connecticut.
It was the fastest-growing franchise in the world in 2015 and, as of September 2023, has over 37,000 locations in more than 102 countries and territories. More than half its locations are in the United States. It is the largest single-brand restaurant chain and the largest restaurant operator in the world. Its international headquarters are in Shelton, Connecticut.
History
Foundation and early years
In 1965, Fred DeLuca borrowed $1,000 from his friend Peter Buck to start "Pete's Drive-In: Super Submarine Sandwiches" at 3851 Main Street in Bridgeport, Connecticut, and in the following year, they formed Doctor's Associates Inc. to oversee operations of the restaurants as the franchise expanded. The holding company derives its name from DeLuca's goal to earn enough from the business to pay tuition for medical school, as well as Buck's having a doctorate in physics. In 1968, the sandwich shop was renamed Subway. In 1976, a franchise operation began with a restaurant in Wallingford, Connecticut.The first Subway on the West Coast was opened in Fresno, California, in 1978. The first Subway outside of North America opened in Bahrain in December 1984. The first Subway in Canada opened in St. John's in 1986. The first Subway in the United Kingdom opened in Brighton in 1996.
In 1989, Subway acquired Cajun Joe's, a Boston, Massachusetts-based chain which sold fried chicken and Cajun cuisine. The venture proved unsuccessful, and most were closed by the end of the 1990s.
Development since the 2000s
In 2004, Subway began opening stores in Walmart supercenters, and surpassed the number of McDonald's locations inside U.S. Walmart stores in 2007. Since 2007, Subway has consistently ranked in the Entrepreneur Franchise 500. In 2015, it ranked third on the "Top Global Franchises" list, and first as the "Fastest Growing Franchise." At the end of 2010, Subway became the largest fast food chain worldwide– with 33,749 restaurants; 1,012 more than McDonald's.In January 2015, Suzanne Greco became president and CEO. Her brother Fred DeLuca, the company's first CEO, had been ill for two years and died of leukemia in September 2015. In 2016, Subway closed hundreds of restaurants in the United States, experiencing a net loss in locations for the first time. However, with 26,744 locations, it remained the most ubiquitous restaurant chain in the United States.
In July 2017, Subway unveiled redesigned restaurants, dubbed 'Fresh Forward', with new company branding. The company installed self-order kiosks, USB charging ports at tables, and added new menu items.
In 2017, Subway closed more than 800 U.S. locations. In April 2018, it announced it would close about 500 more that year. According to Abha Bhattarai of The Washington Post, this was a result of three consecutive years of falling profits and a 25 percent reduction in foot traffic in Subway stores since 2012. Franchisees also complained that the company's deep promotions further ate away at profits. In January 2018, Subway invested $25 million in a re-branding campaign targeting young consumers to revitalize its image and boost sales. In 2019, John Chidsey joined Subway as the company's first CEO who was not a founding family member. He focused on improving established U.S. locations rather than building new restaurants. In December 2020, Subway partnered with ezCater to offer a new online catering platform.
In 2023, the family announced that they were in the process of selling the company to private ownership. The company enlisted the help of JP Morgan with the sale. The price of the company was reported to be around $10 billion. Several potential buyers made offers for the company. These included the asset management division of investment bank Goldman Sachs, TDR Capital, and TPG Inc. On August 24, Subway announced that Roark Capital would purchase the company for $9.6 billion. The deal's reported value would make it the third-biggest US acquisition in restaurant history, behind Burger King's 2014 acquisition of Tim Hortons for $11.4 billion and Inspire Brands' purchase of Dunkin' Brands in 2020 for $11.3 billion.
In November 2023, the Federal Trade Commission announced it was looking into investigating the deal as it would possibly give Roark a monopoly in the sandwich shop industry via the firm's existing ownership of Subway's competitors McAlister's Deli and Jimmy John's. On April 30, 2024, Roark officially acquired Subway after the FTC determined that Roark did not have an unfair advantage.
On March 19, 2024, Subway signed a 10-year deal with PepsiCo that began on January 1, 2025, ending the restaurant chain's partnership with The Coca-Cola Company that was first signed in 2003, went into effect the following year in 2004, and the Coke switchover was completed by 2005. Subway's international locations had already gone back to serving Pepsi products between 2015 and 2018. Pepsi previously had a deal with them when they were founded that lasted until the Coca-Cola switchover.
By the end of March 2024, the company's Brazilian unit went into bankruptcy with over BRL 482 million in debt. SouthRock Capital, operator of Brazilian Subway restaurants, later declared Chapter 15 bankruptcy in June 2024.
Corporate affairs
Ownership
, Subway was owned by the private equity group Roark Capital. Prior to that, Subway had been owned by its founding families for six decades. In 2019, John Chidsey joined Subway as the first chief executive officer outside of the DeLuca family.Structure
As of 2017, the Subway Group of companies was organized as follows:- Subway IP Inc. is the owner of the intellectual property for the restaurant system.
- Franchise World Headquarters, LLC leads franchising operations. FWH Technologies, LLC owns and licenses Subway's point of sale software.
- Franchisors include Doctor's Associates Inc. in the U.S.; Subway International B.V.; Subway Franchise Systems of Canada, Ltd.; etc.
- Advertising affiliates include Subway Franchisee Advertising Fund Trust, Ltd.; Subway Franchisee Advertising Fund Trust, B.V.; Subway Franchisee Canadian Advertising Trust; etc.
- IPC Europe, manager of the Subway franchisees and the Subcard loyalty scheme in European countries.
Headquarters
Previously the headquarters were in Milford, Connecticut, taking up three land portions. In 2024 the former buildings were razed.
There are five regional centers supporting the company's international operations. The regional offices for European franchises are located in Amsterdam ; the Australian and New Zealand locations are supported from Brisbane ; the Asian locations are supported from offices in Beirut and Singapore; and the Latin American support center is in Miami.
Franchising
The startup cost of owning a Subway franchise is significantly lower than competitors, beginning at around $200,000 to $500,000. However, Subway franchisees also pay some of the highest percentages of profits back to Subway compared to competitors.Locations
As of February 2023, Subway had approximately 37,000 locations in more than 100 countries, all independently owned and operated by a network of franchisees. Subway has the highest concentration of locations in North America with more than 20,000 in the United States, 2,881 in Canada, and 758 in Mexico, as of 2019. This was almost as many U.S. locations as McDonald's and Starbucks combined, as of 2018. Outside North America, the countries with the most locations are Australia, Brazil, and the United Kingdom, as of 2019.Products
Overview
Subway's core product is the submarine sandwich. It also sells wraps, salad, paninis, and baked goods. Subway also sells breakfast sandwiches, English muffins, and flatbread. In 2006, "personal pizzas" debuted in some US markets. These are made to order and heated for 85 seconds. Breakfast and pizza items are only available in select locations. In November 2009, Subway signed a deal to serve exclusively Seattle's Best Coffee coffee as part of its breakfast menu in the US.Subway's best-selling sandwich, the B.M.T., contains pepperoni, salami and ham. It was introduced as a reference to Brooklyn-Manhattan Transit, connecting to the "subway" name.
In April 2017, Subway announced the addition of paninis to its menu. Chipotle Steak & Cheese, Triple Cheese, Chicken Cordon Bleu, and Italian B.M.T. Melt were the four variations announced. In September 2018, Subway debuted the Chipotle Cheesesteak sandwich for a limited time. Regional testing of a crispy chicken sandwich also began taking place in Arkansas. In January 2024, Subway debuted Sidekicks, a new range of footlong baked goods in partnership with Cinnabon and Auntie Anne's.