Sandwich chain Subway’s sales climb as turnaround takes hold ahead of potential sale

Subway said its same-store sales climbed 9.2% in 2022, signaling the sandwich chain’s turnaround is taking hold as it reportedly explores a sale.

The company is not required to disclose its financial results because it’s privately owned. However, Subway has recently shared periodic sales updates as it has undertaken a turnaround. Those announcements could entice potential buyers to step forward.

The Wall Street Journal reported in January that Subway hired advisors to explore a sale that could value the chain at more than $10 billion. In a statement to CNBC, Subway said it doesn’t comment on ownership structure and business plans because it’s a privately held company.

CEO John Chidsey said in a statement Thursday that the chain has set two years of record sales and is “getting its swagger back.” Subway has seen eight consecutive quarters of sales growth, and digital sales have more than tripled since 2019, the company said in a release. Its North American locations’ same-store sales jumped 7.8% in 2022, breaking decade-old average weekly sales records, according to Subway.

The trend reverses years of sales declines for the once-ubiquitous sandwich chain, which was at one time the largest U.S. restaurant company by number of locations. Its U.S. footprint fell to 21,147 outlets in 2021, down 22% from its peak of 27,103 in 2015, according to franchise disclosure documents.

Even before the death of co-founder Fred DeLuca and the high-profile trial of former spokesman Jared Fogle, both in 2015, Subway struggled to keep up with new fast-casual competitors like Chipotle and cannibalized its own sales by opening too many locations. As sales slid, ugly fights with franchisees played out in courts and splashed across headlines.

Chidsey took the reins in late 2019, becoming the first permanent leader of Subway who wasn’t related to a founder. In the summer of 2021, the chain announced it was overhauling its menu, upgrading its ingredients and boosting ad spending to lure back customers.

Its attempted comeback coincides with a tough environment for the broader restaurant industry. After the lifting of pandemic lockdowns, eateries have had to cope with a shortage of willing workers, supply chain snarls and climbing ingredient costs. Many have raised prices in response.

Subway didn’t disclose Thursday how much price hikes have contributed to its recent sales growth but told CNBC that its price increases are “in line with” those by other fast-food chains.

Looking ahead to 2023, Subway plans to improve franchisee profitability and remodel 3,600 North American locations. Outside of its home market, the company has commitments from master franchisees to open 5,300 new locations.

The company will also soon be half-owned by a charity — on Tuesday, Subway co-founder Peter Buck’s foundation announced that he left his 50% ownership of the sandwich chain to the organization. Buck died in November 2021.

It’s unclear whether that will have an impact on a potential sale.