Subway’s Great Results
Fast-food restaurant franchise company Subway is for sale. Can the owners get $10 billion for the company?
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Subway is for sale. There has been a general belief that the fast-food restaurant franchise company was in trouble. Not so. Same-store sales in the most recent quarter rose 12.1%. McDonald’s probably envies that, along with almost every fast-food chain operator in America. (These are the 30 oldest restaurant chains in America.)
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John Chidsey, the CEO of Subway, indicated the balance of the year would be as good, if not better: “With strong sales momentum across our restaurants and a refreshed focus on strategic brand growth, there has never been a more exciting time to be part of the Subway brand.”
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The Subway news is also impressive because the company has over 20,000 locations in America. McDonald’s has just over 13,000.
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Among the arguments about why Subway has a bright future is that fast-food locations attract people with low budgets during a recession. Preparing food at home can be expensive, particularly during an inflationary period.
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Subway has done a good job joining other fast-food chains with an app that lets people order food before they enter a location. And it has a loyalty program. These are enough to keep it competitive, but not enough to allow it to outperform. Although it is not clear to outsiders, its menu must be well-designed to attract customers at an impressive rate.
Subway’s owners hope to get at least $10 billion for the company. Based on sales data, they should get that.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
