No bread, no buyers.
Subway Restaurants’ auction has drawn paltry interest from prospective buyers—so little in fact that the chain is pushing back the deadline and will likely lower its price.
After taking the first round of bids in late February, sources said Subway did not set a deadline for second-round bids. That’s usually a sign that the auction is off to a rocky start.
$7 billion seems to be the magic number for the sandwich chain and that is much less than the $10 billion it had been seeking when news of the auction was first reported by the Wall Street Journal in January.
Now, with this failure to get traction out in the open, committed offers won’t likely be due until later in April; this delay hopefully will attract new suitors, per sources.
Rival fast-food giants like Yum Brands (owner of Taco Bell and KFC), and Restaurant Brands International (owner of Burger King) aren’t participating. That hurts Subway, as these buyers are in a good position to buy the company. Subway’s main prospects for purchase are private equity firms, and Subway isn’t allowing potential purchasers to team up.
Subway’s decline is well-documented. At its 2015 peak, Subway had more than 27,000 stores, but they have since fallen to just over 20,000. Meanwhile, Jersey Mike’s made a massive 17% jump in net restaurants over the same period, though they only have around 2,500 locations.
It remains to be seen if a purchase will materialize.