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The death of subway co-founder Peter Buck raises concerns about sandwich chains

The death of the nuclear physicist who co-founded Subway cast doubt on the future of the global sandwich chain after a series of controversies.

The death of a nuclear physicist who co-founded a subway restaurant cast doubt on the future of the fast-food giant.

Peter Buck, who provided Fred DeLuca with a $ 1000 ($ A1394) loan to start a sandwich shop in Bridgeport, Connecticut in 1965, launched a global fast food empire that made him a millionaire. .. Said.

Lesser known is the fact that Subway may hold informal talks earlier this year and sell it to Brazil-based Burger King owner Restaurant Brands International. New York post..

These negotiations were confused, according to sources, and last week’s Restaurant Brands move instead subway’s small US-based sandwich rival, Firehouse Sub, for $ 1.1 billion (A $ 1.53 billion). ) Reached the climax with the move to purchase.

According to insiders, negotiations with Subway collapsed not only between Restaurant Brands and Subway, but also between Mr. Buck and Elizabeth, the widow of co-founder DeLuca, due to price discrepancies. ..

According to sources close to the situation, each has dominated 50% of the chain since DeLuca’s death in 2015, one of which (it’s unclear which one held up at a higher price than the others).

A Restaurant Brands spokesman said the company bought Firehouse Subs partly because of its “big growth potential.”

Regarding the subway, “I will not comment on market speculation or rumors,” the company said. The subway refused to comment specifically when asked about negotiations with Restaurant Brands. Instead, he said it remained focused on turnaround.

“The subway isn’t for sale,” a spokeswoman for the company said in a statement. “Sales have been steadily gaining momentum since the beginning of 2021, accelerating with the launch of Subway’s Eat Fresh Refresh campaign this summer.

“We expect to exceed our 2021 sales forecast by more than US $ 1 billion (A $ 1.4 billion).”

Some deal makers are skeptical, pointing out that Subway hired John Chidsey as the first permanent CEO two years ago. Chidsey’s most notable achievements may have been his mission as CEO of Burger King, who culminated in the chain sold to Restaurant Brands in 2010, they say.

Since holding the bridle on the subway, Chidsey has squeezed franchisees in cash, raised fees and tightened leasing restrictions. This is usually a move that may precede the sale. But now, dealmakers say the ideas of Mr. Buck and Mr. Deluca’s heirs remain a mystery.

“This throws a wrench into the sale,” a source said last week on Mr. Buck’s death, saying Elizabeth Buck is now a widow. “Now the stock may be bound by a probate.”

DeLuca, who ran the company for more than half a century, had few plans to develop successors. His sister, Suzanne Greco, took up the post of CEO after his death, but resigned in 2018 after a rocky tenure. DeLuca’s son, Jonathan, is a board member but has no operational role in the company.

The same goes for Christopher, son of Mr. Buck, who runs the media’s non-profit retro report.

“No one knows what his intentions are,” a close-to-situ dealmaker added to Mr. Buck. “It sounds like a subway sales process, but it’s on hold indefinitely.”

Subway’s sales outlook looks dim as the restaurant brand disappears. Roke Capital’s Inspired brand, which owns Sonic and Buffalo Wild Wings, was the other most logical buyer, but in 2019 it acquired Subway rival Jimmy Johns.

Taco Bell and KFC owner Yam may still be outside, but conventional knowledge is that buying a subway will lower its share price, sources said.

Currently, the most likely buyers are private equity firms like TPG Capital, which are likely to be cheaper than major fast food operators, said a trading maker familiar with the situation.

“I think it’s private equity,” said a source close to the situation. “And I don’t think sponsors will pay a lot.”

Sources briefed on the mega-franchise business have approximately 22,000 locations nationwide, from $ 834 million (A $ 116.2 million) in 2019 to US $ 634 million (A $ 844 million) last year. It states that it has created a loyalty fee. Sales are $ 1 billion (A $ 11 billion) and $ 10 billion (A $ 14 billion).

This is far from the $ 50 billion (A $ 70 billion) valuation that Subway personally focused on in preparation for an initial public offering in 2012, sources said.

It was also before former spokesman Jared Fogle was convicted of child pornography and sex crimes in 2015.

Subway, on the other hand, has since been accused of having a bad reputation for food, including the accusation that bread contains the chemicals found in yoga mats. Processed chicken is reported to contain sawdust. And this year, a lawsuit alleging that it was selling fake tuna.

The 2014 subway changed the bread recipe after flapping the yoga mat, but has consistently protected chicken and tuna.

In May 2012, Subway stated that it has over 25,000 US restaurants and is growing rapidly. Currently, that number is less than 22,000 and many franchisees lose money, so there are over 1000 net closings per year in the last few years.

Outside the United States, Australia was the first overseas market, reaching 1,000 stores and opening the first subway in Perth in 1988.

According to insiders, waiting for Subway to start a formal selling process or to list its shares has potential positives.

The 56-year-old chain recently started creating audited treasury for the first time. Under DeLuca, sources say the chain has more than 100 related entities that are difficult to fully understand.

This article was originally New York post Reproduced with permission

Initially published as follows The death of the subway co-founder raises concerns about sandwich chains

The death of subway co-founder Peter Buck raises concerns about sandwich chains

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