Subway Under Roark Capital: One Year Later

In August 2023, Roark Capital Group completed its acquisition of Subway for approximately $9.6 billion, closing the largest restaurant franchise transaction in history. The deal drew immediate attention from franchisees across Roark's existing portfolio — Arby's, Buffalo Wild Wings, Jimmy John's, Sonic, and others — who recognized that the private equity firm was assembling a food service empire with significant franchisee implications.

One year later, the picture emerging from Subway's FDD filings, franchisee forums, and market data is more complicated than either the optimists or the skeptics predicted.

ROARK'S PORTFOLIO STRATEGY AND WHAT IT SIGNALS: Roark Capital is not a traditional operator. It is a private equity firm with a stated focus on consumer and franchise brands. Its portfolio strategy involves acquiring established franchise systems, implementing operational standardization, accelerating technology investment, and improving unit-level economics through centralized purchasing and supply chain leverage.

For Subway franchisees, this approach carried specific implications from day one. Roark's other restaurant brands have consistently pushed remodel programs as a condition of lease renewal, tightened approved supplier lists to improve corporate margin on food costs, and introduced technology platform fees that represent a new ongoing expense for franchisees. The question was whether Subway's new ownership would follow the same playbook.

FDD CHANGES AFTER ACQUISITION: Comparing Subway's pre-acquisition FDD to its first post-Roark disclosure reveals several meaningful changes. The most significant is the introduction of a technology fee structure that formalized costs that had previously been discretionary or rolled into general marketing fund contributions. Franchisees are now paying a defined per-location monthly fee for POS system access, digital ordering infrastructure, and loyalty program participation.

The marketing fund contribution rate remained unchanged at 4.5% of gross sales, but the allocation of those funds shifted noticeably. A larger proportion is now directed toward digital channels and the MyWay Rewards loyalty program — changes consistent with Roark's data-driven marketing approach across its portfolio. Whether this produces better same-store sales results for individual franchisees is a question the data has not yet definitively answered.

ONGOING UNIT CLOSURES AND THE SCALE OF THE CHALLENGE: Subway's domestic unit count peaked at approximately 27,000 locations and has been contracting for several years. Under Roark's first year of ownership, closures continued. The net change in domestic unit count through 2024 remained negative, though the pace of closures appears to have slowed compared to the 2019 through 2022 period when Subway lost hundreds of locations annually.

The challenge is structural. Many Subway locations were opened in the 2000s and early 2010s under franchise agreements and lease terms that have since become economically difficult to sustain. Labor costs have risen significantly in most markets. The fast casual competitive set — Chipotle, Sweetgreen, and a growing number of regional chains — has captured consumers who previously viewed Subway as a value option. Closing underperforming locations is necessary for system health, but each closure represents a franchisee who has lost their investment.

THE FRESH FORWARD REMODEL REQUIREMENT: Roark accelerated the rollout of Subway's "Fresh Forward" remodel program, which updates store design, equipment, and digital ordering infrastructure. The remodel cost ranges from approximately $75,000 to $200,000 depending on location size and current condition. Franchisees who do not complete the remodel face consequences at lease renewal.

Franchisee response to the remodel program has been sharply divided. Operators who completed early remodels report modest same-store sales improvements, particularly in digital order volume. Operators facing remodel deadlines with marginal locations — locations that were already struggling before the remodel requirement was introduced — view the investment as throwing good money after bad. Several franchisee groups have engaged legal counsel to challenge the enforcement timeline.

HAS FRANCHISEE PROFITABILITY IMPROVED: The honest answer, one year out, is that it is too early to know definitively and the available data is mixed. Subway does not publish unit-level economics in a format that allows clean year-over-year comparisons. Anecdotal franchisee reporting suggests that locations in stronger real estate positions with updated store formats are performing better than they were in 2022 and 2023. Locations in secondary markets with aging formats continue to struggle.

What Roark has clearly changed is the professional management quality at the corporate level. Decision-making has accelerated. Supplier negotiations have been more aggressive, producing some input cost relief for franchisees on key ingredients. The loyalty program is showing genuine traction in urban markets.

What has not changed as quickly as some franchisees hoped is the competitive position of the brand against fast casual alternatives. Subway's value proposition — fresh, customizable sandwiches at an accessible price point — remains intact, but the competitive environment has not softened.

WHAT EXISTING FRANCHISEES ARE SAYING: Franchisee sentiment, as measured across several independent operators and forum communities, falls roughly into thirds. Approximately one-third of franchisees are cautiously optimistic about Roark's ownership, citing the professionalism of new management, better technology infrastructure, and early signs of same-store sales improvement in remodeled locations. One-third are neutral — acknowledging that the new ownership has not made things significantly worse while waiting to see whether the remodel investment pays off. One-third are frustrated, primarily with the remodel cost burden and the pace of change relative to ongoing margin pressure.

The most consistent complaint among frustrated franchisees is not the direction of the changes — most acknowledge that remodeling and technology investment are necessary — but the financial timing. Being asked to invest $100,000 or more in a remodel when margins are still recovering from post-pandemic cost inflation feels, to many operators, like a capital call at the worst possible moment.

For prospective Subway franchisees, the Roark acquisition should be viewed as both a meaningful improvement in corporate management quality and a signal that the franchise will require ongoing capital investment in the years ahead. The brand's path to restored domestic unit growth runs through a remodeled, digitally integrated store fleet — and that investment will fall substantially on existing and incoming franchisees.