Financing

Here's how many restaurants Subway closed last year

The fast-food sandwich giant slowed its rate of closures in 2022 but still shuttered 571 U.S. restaurants. It has the lowest number of restaurants since 2005.
Subway closures
Subway has 571 fewer locations than it operated a year ago. / Photograph: Shutterstock.

Subway slowed its U.S. closures to the lowest rate since 2016, according to new data from the company’s franchise disclosure document.

But it still closed 571 restaurants and now operates 20,576 restaurants in the U.S., the lowest number the chain has operated since 2005.

The Miami-based sandwich giant has closed more than 6,500 restaurants since its domestic closures started in 2016. That’s nearly one out of every four Subway restaurants in the U.S., and an average of more than 900 per year.

Only six restaurant chains have as many locations in the U.S. as Subway closed over the past seven years.

The news comes as Subway continues its search for a buyer, with a deal expected by the end of May or into early June.

Reports continue to suggest the company is pushing for a $10 billion valuation. Reuters over the weekend said the company has received offers ranging between $8.5 billion and $10 billion. J.P. Morgan, its financial advisor, now hopes a $5 billion debt package featuring loans and bonds could help spur a deal that meets the company’s asking price.

Subway would not comment on that report.

The company is getting interest from more than 10 buyers, most of them private equity and other investment firms, though at least one international-based restaurant operator is believed to be among the bidders.

Rising interest rates have increased borrowing costs, which could make financing a deal like this more difficult. And that could make it harder for Subway to get the price it wants. But John Chidsey, Subway’s CEO, said at the Restaurant Leadership Conference last month that this was a “perfect time” to find a buyer because there simply isn’t that much out there.

Subway more recently said that its same-store sales rose 11.7% in North America, and 12.1% globally, in the first quarter, driven in part by strength in digital sales.

Subway’s system sales in the U.S. increased 4% last year despite the closures, according to Technomic, and are up 17.5% over the past two years.

While the chain decreased in the U.S., it did add international locations for the first time in five years with a net addition of 67 locations. It operates 16,100 international locations but believes it could have more than three times that if it simply could get the same global presence as chains like Domino’s, Burger King and McDonald’s.

Subway has struggled for most of the past decade amid leadership challenges after the death of co-founder Fred DeLuca, marketing challenges following the arrest of former spokesman Jared Fogle, and difficulties evolving from a heavy discounting strategy it used effectively during the Great Recession. Unit volumes started falling after that period and operators began closing units in droves. Until last year, it closed about 1,000 restaurants per year. 

Subway has undertaken a massive turnaround strategy over the past three years. The company has overhauled its menu, adding a line of new subs called the “Subway Series” after improving its ingredients, and this year it is adding slicers into its restaurants. It is also bringing multi-unit operators into the system and has been shifting away from a franchising model that uses business developers to sell and monitor franchises in the U.S.

Internationally, it is bringing in operators who’ve run other brands, something the company wouldn’t do in past years.

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