Key Takeaways
- When Roark took over, Subway's problems were structural, not cosmetic.
- Menu Overhaul and Simplification
- Same-store sales growth has turned positive under Roark's stewardship.
- Subway's brand perception problem runs deep.
- Roark Capital's approach to restaurant turnarounds follows a recognizable pattern: acquire distressed or undervalued brands, invest in operations and technology, rationalize the footprint, improve unit economics, and eventually exit at a higher valuation.
Subway's Turnaround Under Roark Capital: What's Actually Changed Since the Acquisition
For years, Subway was the punchline of the QSR industry. Once the largest restaurant chain in the world by unit count, it had spent the better part of a decade in slow-motion decline - closing thousands of locations, watching same-store sales stagnate, and failing to keep pace with competitors who were eating its lunch (sometimes literally, with better sandwiches).
Then, in 2023, Roark Capital Group acquired the chain for a reported $9.55 billion. Roark - the Atlanta-based private equity firm that also controls Arby's, Buffalo Wild Wings, Sonic, Jimmy John's, and Dunkin' through its Inspire Brands portfolio and other holdings - suddenly owned the world's largest restaurant chain and the world's most obvious turnaround project.
Two-plus years in, the results are mixed but trending positive. Here's what's actually happened.
The Inheritance#
When Roark took over, Subway's problems were structural, not cosmetic.
The chain had roughly 37,000 locations worldwide at its peak, a number that had already contracted to around 37,000 U.S. and international units combined at the time of the sale. Franchisees were frustrated. The menu had become a muddled sprawl of options that slowed throughput and confused customers. Store-level economics were weak - many franchisees reported annual revenues well below the figures needed to make the economics work after rent, labor, food costs, and royalties.
The brand's image was stuck in the early 2000s. The $5 Footlong era had trained customers to expect Subway at a price point the business couldn't sustain. Competitors like Jersey Mike's, Jimmy John's, Firehouse Subs, and even Wawa and Sheetz had chipped away at Subway's core proposition of fresh, customizable sandwiches - often with better ingredients and more modern store designs.
Subway under the founding Deluca family and subsequent family trust management had been resistant to dramatic change. Roark arrived with a different mandate.
What Roark Has Done#
Menu Overhaul and Simplification
Roark's team continued the "Subway Series" menu restructuring that began just before the acquisition, which introduced curated sandwich combinations rather than relying entirely on the traditional "tell us what you want on it" build-your-own model. The idea was to speed up the ordering process, reduce decision fatigue, and improve consistency.
Post-acquisition, the chain has continued refining this approach - rationalizing ingredients, improving bread quality, and introducing premium proteins. The goal is to move Subway's perception from "cheap sub shop" to "quality sandwich destination," a repositioning that mirrors what Domino's achieved in pizza over the past decade.
Aggressive Remodeling Program
Subway launched a large-scale remodeling initiative, pushing franchisees to update interiors to a newer, cleaner design template. The updated stores feature more modern finishes, digital menu boards, and improved kitchen layouts. Roark reportedly committed substantial capital to support these upgrades, though franchisees still bear a significant portion of the cost - a point of ongoing tension.
Technology and Digital Investment
Digital ordering infrastructure has received significant investment. Subway's app and loyalty program have been overhauled, with the chain pushing hard on digital order mix - the percentage of total sales coming through digital channels. Higher digital mix typically correlates with higher average ticket sizes and better labor efficiency, since digital orders reduce counter bottlenecks.
Franchisee Economics Restructuring
Perhaps the most consequential change has been Roark's approach to franchisee profitability. The firm has worked to close underperforming locations - accepting a smaller footprint in exchange for healthier per-unit economics. The chain has continued to reduce its U.S. unit count, a painful but necessary process.
Roark has also adjusted the royalty and fee structure in some markets and invested in supply chain renegotiation to improve franchisee margins on food costs. The details are largely confidential given Subway's private status, but franchisee sentiment - while still mixed - has generally improved from the nadirs of the late 2010s.
International Expansion
While the U.S. footprint has contracted, Subway has pushed international growth, particularly in markets across Asia and the Middle East where the brand still carries significant appeal and market penetration remains low relative to opportunity.
What's Working#
Same-store sales growth has turned positive under Roark's stewardship. The exact figures aren't public - Subway is now doubly private, owned by a private equity firm - but industry sources and franchisee reports suggest the chain has posted consistent comparable sales gains since the acquisition.
Customer perception metrics have improved. Third-party brand tracking surveys show Subway's quality scores ticking upward, though they still lag behind premium competitors like Jersey Mike's and Firehouse Subs.
The digital push appears to be working. Subway has reported significant growth in digital sales mix, and its loyalty program membership has grown substantially.
What's Still Broken#
Subway's brand perception problem runs deep. Years of positioning as the cheapest option, combined with the Jared Fogle scandal and a general sense of declining quality, created a brand deficit that menu tweaks and store remodels can't fix overnight. Rebuilding brand equity is a multi-year project.
Franchisee relations remain strained in some markets. The remodeling costs are substantial, and some franchisees - particularly multi-unit operators with older stores - face difficult decisions about whether to reinvest or exit. Roark's track record with other brands suggests it's comfortable with franchisee churn if it leads to a stronger operator base, but the human cost is real.
The competitive landscape has also shifted dramatically. Jersey Mike's, which went through its own private equity deal with Blackstone, is expanding aggressively. Jimmy John's (which Roark also controls through Inspire Brands) occupies adjacent territory. The premium sandwich segment is more crowded than ever.
And then there's the fundamental question: can Subway justify higher prices? The chain's value proposition was always about affordability and ubiquity. Moving upmarket means competing with chains that have deeper credibility in the premium space.
The Roark Playbook#
Roark Capital's approach to restaurant turnarounds follows a recognizable pattern: acquire distressed or undervalued brands, invest in operations and technology, rationalize the footprint, improve unit economics, and eventually exit at a higher valuation. The firm did this successfully with Arby's, which was widely considered a dying brand before Roark's intervention.
Subway is a larger and more complex challenge than Arby's was, but the playbook is similar. The key question isn't whether Roark can improve Subway - it clearly already has. The question is whether the improvement can be sustained and scaled enough to justify the purchase price and generate Roark's target returns.
The Road Ahead#
Subway under Roark is a better-run company than Subway under the family trust. That's a low bar, but clearing it matters. The menu is sharper, the stores are cleaner, the technology is better, and the strategic direction is coherent for the first time in years.
But turnarounds in QSR are slow. Domino's took nearly a decade to go from industry joke to industry leader. Subway's hole is at least as deep, and it's operating in a more competitive segment.
The next two years will tell us whether this is a genuine renaissance or just a well-executed stabilization before an exit. Roark doesn't hold brands forever. The clock is always ticking.#
Related Reading#
QSR Pro Staff
The QSR Pro editorial team covers the quick service restaurant industry with in-depth analysis, data-driven reporting, and operator-first perspective.
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