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Subway's sale process extends into late summer

Richard Collings
an illustration of a dollar sign created with the subway logo

Illustration: Tiffany Herring/Axios

The sale process for sandwich chain Subway is being delayed into August and could last into September, a source familiar with the situation tells Axios.

Why it matters: A sale of Subway would be one of the largest restaurant deals in recent years — provided the auction ends in a deal.

Driving the news: The New York Post reported last week that bid deadlines were pushed back because Subway failed to get the $10 billion offer it was seeking.

  • It also reported that the process has attracted new suitors.

Catch up fast: Axios reported in late June that bidders were lining up financing as a shifting deadline for second-round bids approached.

  • Suitors are finding difficulty compiling multibillion-dollar debt packages to back a turnaround play.

Details: Multiple bidders remain engaged in the process, the source tells Axios. The company does not expect bids to eclipse $10 billion, the source says.

  • Price, rising interest rates and a difficult financing market for restaurant deals continue to weigh on the process.

By the numbers: Subway had $750 million in EBITDA in 2022, according to PitchBook.

  • The most recent restaurant deals include Inspire Brands' $11.3 billion acquisition of Dunkin' for 18.9x EBITDA in 2020 and Darden's $715 million purchase of Ruth's Hospitality this year for 9.9x EBITDA, also per PitchBook.

Be smart: Subway's process began at a time when M&A and debt financing, which often go hand in hand, were both challenged and restaurants were difficult to operate.

What we're watching: Could this be another busted deal in consumer retail, or will the extra time help Subway's financial adviser JPMorgan get this across the finish line?

What they're saying: The owners of Subway could have sold the chain 10 or 20 years ago for double what they're likely to get in today's market, one industry source says.

  • A second source familiar with the situation has countered that the chain is at least worth more today than it was a couple of years ago because of recent turnaround efforts.

The bottom line: An asset is worth only what people are willing to pay for it.

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