The private equity firm, which has agreed to spend nearly $10 billion to acquire Subway, faces major challenges reviving the ailing brand amid declining foot traffic, according to an industry expert.
The family-run sandwich maker, which accepted a $9.6 billion bid from Roark Capital last week, has seen its overall visitor footfall in its US decline over the past four years, according to exclusive data from Placer.ai shared with The Post -Franchise stores by 21.6%.
Subway’s decline comes as competitor Jersey Mike’s surged 39.1% over the same period from May 2019 to May 2023, the data showed.
The trend doesn’t bode well for Subway’s new owner, according to Andrew Pudzer, the former CEO of CKE Restaurants, whose fast-food brands include Carl’s Jr. and Hardee’s.
“You never want traffic to drop significantly,” said Pudzer, who helped sell CKE to Roark in 2013 and remained the company’s chief executive until 2017.
“If you’re going to grow your business, you can’t keep losing significant traffic.”
Two other major subchains, Jimmy John’s and Firehouse Subs, also saw traffic drop during this period, albeit at significantly lower rates than Subway, the data shows. Jimmy John’s was down 8.8% and Firehouse Subs was down 13.2%.
Subway’s foot traffic began to increase slightly over the past year, increasing 0.08% from May 1, 2022 to May 1, 2023, but still lagged well behind gains from Jersey Mike’s (13.7%) and Jimmy John’s ( 2.4%) back range, according to Placer.ai.
Firehouse Subs lost 4.2% over the period.
Subway, one of the nation’s largest fast-food chains with more than 20,000 franchised locations in the United States, reported positive same-store sales this year, up 9.3% year over year in North America.
“We’re pleased with the continued progress of our transformational journey, which has refreshed our ingredients, improved our menu, helped increase our franchisees’ profitability and resulted in 10 consecutive quarters of positive sales,” a Subway spokeswoman told Monday The Post.
Roark Capital — an Atlanta-based private equity firm and backer of restaurant conglomerate Inspire Brands — agreed last week to buy Subway for $9 billion plus $600 million more if Subway meets certain performance targets. The deal still has to be approved by antitrust authorities.
Pudzer reckons Roark will look into renaming the ailing chain’s “Eat Fresh” slogan.
When Roark bought Arby’s from Nelson Peltz in 2011, the company was in serious trouble and a chain few want to visit, Pudzer noted.
The Roark team came up with great new products and the now ubiquitous We Got the Meats advertising campaign.
“Subway needs a new slogan,” Pudzer said.
The chain has suffered several PR nightmares over the past decade — starting with spokesman Jared Fogle’s 2015 conviction of child pornography possession.
More recently, there have been allegations of selling fake tuna and chicken, and backlash after soccer star Megan Rapinoe promoted the brand and then knelt during the national anthem.
“I think Subway has had great success for many years because the target audience felt comfortable going there,” Pudzer told The Post.
“They kind of lost touch with their target audience. People feel like it’s not a place for them anymore. They have to figure out how to make their customers comfortable being there.”