business news in context, analysis with attitude

The Wall Street Journal reports that "sandwich chain Subway has retained advisers to explore a sale of the closely held company, according to people familiar with the situation.

"The process, which is in the early stages, is expected to attract potential corporate buyers and private-equity firms, and could value Subway at more than $10 billion, the people said. Still, it is possible there won’t be a sale or other deal."

Subway is not officially commenting on the speculation.

According to the Journal, "Subway’s approximately 21,000 U.S. locations did $9.4 billion in sales in 2021, up 13% from the year prior as the chain recovered from the pandemic and operational improvements boosted sales, according to industry research firm Technomic. The company had around 37,000 stores around the world as of 2021 and was the biggest restaurant chain by U.S. locations."

In addition, the story says, "A deal for Subway would be a bright spot for M&A, which has been lackluster as market volatility and fears of a recession take their toll. Deal volume dropped by 41% in the U.S. last year to $1.5 trillion, according to Dealogic. The retail sector has been particularly challenged, as consumers change their spending habits following the pandemic."

KC's View:

Subway has faced operational issues over the past few years, but to me there is no issue more damning than the fact that the company is having trouble convincing people that its tuna fish sandwich are made with real tuna.