Subway Under Roark Capital: Same-Store Sales Rising, but the Footprint Keeps Shrinking

Subway's numbers tell two stories at once, and they point in opposite directions.

Same-store sales rose 6.4% globally in 2023, capping 12 consecutive quarters of positive comparable sales. In North America specifically, comps climbed 5.9%. Among the top-performing 75% of the system, roughly 17,000 units, the gain was 10.1%. Those are genuinely strong numbers for a chain that had spent the better part of a decade as the punchline in every fast food industry discussion.

At the same time, Subway closed more than 600 domestic stores in 2024 and slipped below 20,000 U.S. locations for the first time in roughly 20 years. The chain once operated more than 27,000 American outlets. It peaked as the largest fast food chain in the world by unit count. That title is long gone.

Roark Capital, which completed its $9.6 billion acquisition of Subway in April 2024, is fine with both stories. The contraction is not an accident or a failure to retain franchisees. It is the strategy.

What Roark Bought

To understand where Subway is going, you have to understand what Roark actually acquired.

Subway had grown its unit count for decades by making it extraordinarily easy to open a franchise. The business model was capital-light to the point of recklessness. Development fees were low, build-out costs were manageable, and the chain aggressively pursued nontraditional locations: gas stations, convenience stores, hospital lobbies, airport terminals, college campuses. The logic was pure density. More doors meant more sales and more royalty revenue at the franchisor level.

The problem is that at some point, density becomes cannibalization. When three Subways operate within half a mile of each other, none of them performs particularly well. Unit economics erode. Franchisees who signed leases on thin projections find themselves underwater. The system carries underperforming stores that dilute brand perception and drag down aggregate same-store sales figures.

By the time Roark was circling the company, Subway had been closing U.S. locations every year since 2016. The pandemic accelerated the attrition. Dr. John Chidsey, who took over as CEO in 2019, began the cleanup work before the Roark deal was announced. Chidsey pushed out underperforming operators, worked to consolidate franchisees into multi-unit ownership structures, and launched the Subway Series menu overhaul in 2022.

Roark's bid, originally reported in the range of $8 to $9 billion before closing at approximately $9.6 billion, put a private equity valuation on a turnaround story that was already in progress.

The Roark Playbook

Roark Capital is not a passive investor. The Atlanta-based firm built its portfolio specifically around franchise-based businesses, and it approaches acquisitions with a defined set of operating levers.

Through its Inspire Brands subsidiary, Roark already controls Arby's, Sonic, Buffalo Wild Wings, Jimmy John's, and Dunkin'. That portfolio gives it real operational expertise in quick service, from supply chain negotiation to loyalty technology to franchisee support systems. When Roark looks at a distressed franchise system, it is not guessing at what the fixes should be. It has playbooks from prior turnarounds.

The consistent themes across Roark-owned brands: tighten unit economics, invest in digital infrastructure, streamline the menu, and upgrade physical assets. At Sonic, Roark invested in drive-in technology and loyalty programs after the 2018 acquisition. At Arby's, it pushed menu innovation and pushed out low-volume locations. At Dunkin', acquired through Inspire in 2020, it accelerated the remodel program and doubled down on beverages as a higher-margin daypart.

Subway presents a larger and more complex version of the same problem set. The brand is globally recognized. The underlying product is not structurally broken. But the unit economics for a meaningful share of the system are marginal, the physical footprint is oversaturated in key markets, and the brand had drifted in consumer perception.

Shrinking to Grow: The Logic of Planned Contraction

The concept of shrinking a restaurant chain intentionally to improve financial performance runs against the instincts of most operators, who tend to associate growth with health. But the math makes the case clearly.

Consider what happens when an underperforming store closes. If that unit was generating below-average volume, its closure has two effects. It removes a royalty-paying location from the count, which hurts top-line systemwide sales. But it also stops cannibalizing nearby locations. The surviving stores in the same trade area capture incremental traffic. Their average unit volumes rise. Their same-store sales improve.

If the closed unit was doing $500,000 in annual sales while nearby units were doing $700,000 each, and those nearby units capture even a portion of the lost volume after closure, the arithmetic on per-unit economics moves in the right direction. Better unit economics make the franchise more attractive to multi-unit operators with access to capital. That supports new development in genuinely underserved markets.

This is not a theoretical exercise. Subway's same-store sales performance in 2023, including 10.1% comps among the top 75% of the system, is consistent with a base that has been partially pruned. The weakest units, the ones dragging down the average, were disproportionately the ones that closed in 2022 and 2023. The remaining system looks healthier precisely because it is smaller.

McDonald's executed a version of this during its mid-2010s restructuring. Starbucks closed roughly 900 underperforming U.S. stores in 2008 and 2009 under Howard Schultz's return. In both cases, the immediate unit count decline was painful to report but necessary for the system's long-term performance. Subway is following a similar script, at a larger scale.

What This Means for Franchisees

The franchisee picture is complicated, and Roark knows it.

On one side are the operators who benefited from the pruning. Multi-unit franchisees who own clusters of stores in strong trade areas have seen their average volumes improve as marginal competition within the system has been removed. The top-quartile same-store sales performance, above 10% comps, tells that story. These operators are in a fundamentally better position than they were three years ago.

On the other side are the franchisees who were operating those underperforming units. Losing a location to planned system contraction is not the same as a voluntary exit. For a small operator who sank personal capital into one or two stores, having corporate engineering your closure, through lease non-renewal support, buyout programs, or financial pressure, is a materially different experience from how Subway was sold to them.

There is also ongoing tension about investment requirements. Roark's repositioning strategy includes store remodels and technology upgrades, including the Subway app and loyalty program expansion. These upgrades cost money. Franchisees who are already running on thin margins and who have watched the system shed thousands of locations over the past decade are not uniformly enthusiastic about capital reinvestment mandates.

Industry observers have noted that franchise recruitment has become a more serious priority under Roark. The chain needs to replace closed units with new opens in better-positioned locations, ideally operated by well-capitalized multi-unit franchisees. Convincing qualified operators to bet on Subway when the system just contracted through its historical floor requires a compelling unit economics story. The improving comps are part of that pitch. But the pitch needs to hold up to franchisee-level financial due diligence, and that requires AUV (average unit volume) growth to be sustained, not just posted for two or three good quarters.

The $9.6 Billion Bet

Private equity acquisitions in the restaurant space operate on time horizons that look different from what public company shareholders typically expect. Roark is not reporting quarterly earnings to analysts. It does not face the same pressure to produce sequential same-store sales improvement that would apply to a publicly traded restaurant chain.

That insulation from short-term reporting pressure is, in one sense, exactly what Subway needed. A restructuring of this scale, closing hundreds of locations, retooling franchisee economics, investing in remodels and technology, while managing a global system across 100-plus countries, cannot be executed on a 90-day cycle. The first two to three years of Roark's ownership are a foundation phase, not a results phase.

The $9.6 billion acquisition price is a large number for a chain in active contraction. Roark is implicitly betting that the brand value embedded in global consumer recognition, combined with the operational improvements it can drive, will ultimately yield a return through either a public offering, a strategic sale, or continued dividend-like distributions from a stable franchise royalty stream.

Comparable franchise system deals offer some benchmarks. Burger King sold to 3G Capital in 2010 for roughly $4 billion, went public again in 2012 through a Canadian income trust structure, and eventually became Restaurant Brands International. Dunkin' Brands went private under Inspire Brands at roughly $11.3 billion in 2020. Popeyes was taken private for approximately $1.8 billion in 2017. All three deal structures eventually generated returns for their buyers through operating improvement and multiple expansion.

Subway's scale is different, as the largest sandwich chain in the world by unit count, but the mechanism is familiar. Buy a distressed or undervalued franchise system. Fix the unit economics. Stabilize the franchisee base. Harvest the royalty stream.

The International Picture

One piece of the Subway story that gets less attention in U.S.-focused coverage is the global footprint. Subway operates in more than 100 countries. International unit counts have held relatively stable even as U.S. locations have contracted, and several international markets offer genuine expansion runway.

Europe, the Middle East, and Asia represent markets where per-capita fast food penetration remains lower than in the U.S., and where Subway's positioning as a customizable, relatively affordable option has performed well. Roark's international strategy appears to focus on supporting existing master franchise operators in high-performing markets while identifying underperforming international markets for similar restructuring to what is underway domestically.

The global comps data is consistent with that approach. A 6.4% systemwide same-store sales gain in 2023, while simultaneously closing U.S. locations, implies that international markets are pulling their weight. Strong international performance gives Roark more flexibility in the domestic restructuring because it maintains overall system size and royalty base even as U.S. unit count shrinks.

Is Shrinking Working?

The honest answer, as of early 2026, is: probably yes, but it is too early to declare the turnaround complete.

The same-store sales trajectory is genuinely positive. Twelve straight quarters of comparable sales growth is not noise. The top-quartile performance among the 17,000-unit cohort is strong enough to suggest that the system's best operators, operating in the best locations, are running a meaningfully healthier business than they were in 2020 or 2021.

The store count decline below 20,000, while a symbolic threshold that generates uncomfortable headlines, is consistent with what the unit economics analysis implied was necessary. A system that peaked at 27,000-plus locations in U.S. markets where fast food competition has intensified significantly over the past decade was never going to sustain that count at healthy per-unit volumes.

The outstanding questions are whether the comps trajectory can hold as the base laps increasingly strong prior-year comparisons, whether Roark can recruit the franchisee talent needed to open new units in genuinely underserved markets, and whether the remodel and technology investment cycle will produce the per-visit revenue improvement that justifies the capital ask to existing franchisees.

For operators watching from outside the Subway system, the more important question is what this turnaround model signals about the future of other oversaturated franchise systems. Several major QSR chains are facing similar dynamics: too many locations, too much internal cannibalization, franchisees with thin margins who are reluctant to invest, and brands that need repositioning for a more competitive consumer environment.

Roark's willingness to engineer contraction at Subway, accepting the short-term headline risk of a shrinking unit count in exchange for better per-unit economics, represents a meaningful shift in how private equity thinks about franchise system health. Unit count is not the metric. Average unit volume, franchisee profitability, and system cohesion are the metrics.

Subway at 19,000 U.S. locations running healthy economics is a better business than Subway at 27,000 locations running marginal ones. The market is learning to read that distinction. Franchisees in other systems should be asking whether their own chains are in the same position, and whether their own operators have the same discipline to execute the fix.