Subway sold for $14 billion to US private equity firm in one of the biggest deals in fast food history

It marks one of the biggest deals in fast food history and spells a massive payday for the heirs of the founders.

Popular sandwich brand Subway has been sold overnight for an eye-watering $US9.55 billion (A$14.8 billion), according to reports.

Private equity firm Roark Capital Group has bought the US brand on Thursday, local time.

Roark Capital Group will pay about $US9 billion outright, with the rest due in future earnout payments.

Reuters reports that for the full price to be paid, Subway’s cash flow would need to reach certain milestones over at least a two-year period. If this doesn’t happen, the deal is worth US$8.95 billion (A$13.96 billion), the outlet reported.

The company originally had an asking price of more than US$10 billion but the private equity firm negotiated them down on the basis that the US fast food market was oversaturated.

Since January, Subway was reported to have been looking for buyers, with the company confirming this was the case in February.

The food mega-chain revealed it had hired financial firm JP Morgan to help them through the process.

The deal came from a position of strength off the back off record profits in the previous financial year.

“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” Subway CEO John Chidsey said in a statement.

The company added that the deal was still “subject to regulatory approvals and customary closing conditions”.

The chain has been snapped up for $14 billion. Picture: Jim Watson / AFP

It marks one of the biggest fast food deals in history.

For some context, Inspire Brands bought Dunkin’ Donuts for US$11.3 billion (A$16.8 billion) in October 2020.

In a small twist, Roark owns Inspire, which also operates Subway rival Jimmy John’s over in the states.

Subway has more than 37,000 restaurants in more than 100 countries.

The fast food outlet has around 1200 stores across Australia, including over 300 stores in the state of NSW, where it has its largest foothold in the country.

The foot-long sandwich seller has enjoyed large gains in the past few years against the backdrop of the Covid-19 pandemic.

Its global profits jumped by 9.2 per cent last year to US$9.8 billion (A$15.28 billion). A whopping 750 stores opened in 2022.

Subway’s sales rose by 7.8 per cent in its North American stores, exceeding projections by US$700 million (A$1 billion).

In a more recent revenue update in July, Subway revealed it had generated its 10th consecutive quarter of positive sales at stores open at least a year, including a 9.5 per cent increase at its North America locations.

That said, its profits are not what they were at its peak in 2015, when it had 27,219 locations in the US and raked in US$11.5 billion (A$17.93 billion) in revenue.

Subway has been in business for 58 years. Picture: Daniel Leal / AFP

Subway is a 58-year-old company.

The brand was founded in Connecticut, the US, in 1965 and derived its name from the fact it was originally called “Pete’s Drive-In: Super Submarines”.

It was co-founded by Fred DeLuca, who was 17 at the time of the first restaurant’s launch, as well as his friend Peter Buck. Mr Buck lent Mr DeLuca US$1000 to get started.

Mr Buck died in November 2021. He left half of the company to charity.

The sale will mean a big payday for the heirs of Mr Buck and Mr DeLuca.

Originally published as Subway sold for $14 billion to US private equity firm in one of the biggest deals in fast food history