The Billionaire Trying To Save Subway

Count Greg Flynn, the country’s largest restaurant franchisee, as a believer in Subway’s new owner, Roark Capital, and its founder and managing partner, Neal Aronson.

“Neal has a genius to him,” says Flynn, who owns 360 locations of Roark-backed Arby’s as well as franchises of Panera Bread, a Subway competitor. “People are loyal to him and want to be around him.”

In other words, Flynn says Aronson has the meats.

Subway, owned by its pair of founding families for six decades before last month’s sale to Roark, became notorious for selling so many franchises that there were places where a hungry customer could stand at the door of one Subway and be able to see another. About 2,000 shops have shuttered since 2020, forcing the company to relinquish the title of biggest U.S. restaurant company to McDonald’s. The smaller, nimbler Jersey Mike’s is breathing its salami breath down Subway’s neck, and according to at least one franchising expert, Subway franchisees have endured years of “petty and bureaucratic” management.

“The franchisees’ issues are that they have to get their sales and profitability up,” John A. Gordon, principal at Pacific Management Consulting Group, tells Forbes. “They’ve had a franchisor forever that has not been working for them — petty and bureaucratic.” The family shareholders of Subway’s founders couldn’t be reached for comment.

Enter Aronson, the tall, low-key, 58-year-old investor, who outbid some ten other suitors by offering more than $9.7 billion for Subway, contingent on the chain hitting certain financial milestones as it turns around. In Roark, Subway and its 37,000 locations ended up going to a buyer who already owned 30,000 sandwich sellers. Among them: Jimmy John’s, Arby’s, Sonic, Hardee’s, Schlotzky’s, McAlister’s Deli, Culver’s and Carl’s Jr.

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