Craving Subway Stock? Why You Can't Invest (But Maybe Can Still Eat Fresh)

Written By Ben Broadwater

Posted February 20, 2024

For many, Subway evokes memories of customizable sandwiches and childhood foot longs. But for investors, the question of “Subway stock” might leave them feeling hangry for information. Here’s what you need to know:

subway stock

Can I Buy Subway Stock?

Unfortunately, Subway is not publicly traded, meaning there’s no stock symbol or ticker to search for. As a privately held company, ownership remains within the hands of its parent company, Doctor’s Associates Inc. So, directly buying shares of Subway isn’t an option.

Who Owns Subway Then?

Doctor’s Associates Inc., founded by Fred DeLuca and Peter Buck in 1974, remains the sole owner of Subway. In 2023, however, the company was acquired by Roark Capital Group, the private equity firm behind Dunkin’ Brands and Arby’s.

Understanding Subway’s Business Model

Subway operates a franchise business model, which means that the majority of its restaurants are owned and operated by franchisees. This model allows Subway to expand rapidly while sharing the investment and operational responsibilities with its franchise partners. Franchisees benefit from the established brand name, standardized processes, and marketing support provided by Subway’s corporate team. This partnership structure also allows Subway to have a widespread presence globally, catering to diverse consumer preferences and local market demands.

Furthermore, Subway’s franchise model fosters entrepreneurship by offering individuals the opportunity to own and manage their own business under a recognized brand. Franchisees receive training and ongoing support from Subway, enabling them to navigate the challenges of running a successful restaurant while leveraging the brand’s reputation and customer loyalty.

Revenue Streams and Profit Margins

Subway generates revenue primarily through sales of its sandwiches, salads, and other menu items. The company also earns income from franchise fees, royalties, and advertising contributions from its franchisees. Subway’s ability to maintain healthy profit margins largely depends on its ability to control food and labor costs while providing quality products and service. By continuously innovating its menu offerings and optimizing operational efficiency, Subway aims to drive revenue growth and enhance profitability.

Moreover, Subway’s focus on customer experience and brand consistency plays a crucial role in sustaining customer loyalty and attracting new patrons. The company invests in market research and consumer insights to understand evolving trends and preferences, allowing Subway to tailor its menu and promotional strategies to meet changing consumer demands effectively.

Why Didn’t Subway Go Public?

Several factors could contribute to Subway’s decision to stay private. These include:

  • Management control: Private ownership allows Dr. DeLuca’s family and leadership to maintain greater control over strategic decisions without pressure from public shareholders.
  • Flexibility: Operating privately can offer more flexibility in terms of financial reporting and internal restructuring.
  • Tax implications: As a private company, Subway avoids the scrutiny and potential tax burdens associated with public disclosure.

Competitor Cravings: Publicly Traded Fast-Food Options

In the fast-food industry, Subway faces stiff competition from other major players such as McDonald’s, Burger King, and Wendy’s. It is crucial to analyze how Subway distinguishes itself from its competitors and whether it can maintain a competitive edge in the market. By emphasizing customization, fresh ingredients, and healthier options, Subway positions itself as a unique player in the quick-service restaurant segment, appealing to health-conscious consumers and those seeking personalized meal choices.

While Subway stock isn’t publicly traded, here are some tickers to consider:

subway stock competitors - chart

  • McDonald’s (MCD): The burger giant offers diverse menu options and global reach.
  • Yum! Brands (YUM): Owns popular chains like KFC, Taco Bell, and Pizza Hut, providing exposure to various fast-food segments.
  • Restaurant Brands International (QSR): Operates Burger King, Popeyes, and Tim Hortons, offering another basket of fast-food brands.

Alternative Ways To “Invest” In Subway?

While direct Subway stock ownership isn’t possible, here are some indirect ways to get involved:

  • Owning a Subway franchise: This requires significant capital and business acumen, but offers potential for individual entrepreneurial success.
  • Investing in companies that supply Subway: Look for firms that provide ingredients, equipment, or other services to the chain.
  • Following Subway’s performance: Stay informed about the company’s financial health, growth plans, and brand initiatives to make informed investment decisions in related sectors.

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Subway’s Financial Landscape: A Bite-Sized Look

Subway’s financial situation comes with a twist, as it’s privately held and doesn’t disclose detailed financial information publicly. However, we can piece together some general insights:

Revenue and Profitability:

  • Estimates suggest average gross revenue per Subway store hovers around $420,000 annually.
  • Franchisee profit margins vary, but a breakdown might look like:
      • Food: 33%
      • Labor: 22%
      • Rent: 9%
      • Subway fees: 12.5%
      • Utilities/Misc: 8.5%
      • Profit: 15% (average)
  • Overall company profitability remains undisclosed.

Recent Developments:

  • Subway faces challenges like increased competition, changing consumer preferences, and pandemic-related disruptions.
  • In 2023, the company went through a significant change with its acquisition by Roark Capital Group.
  • The new ownership is reportedly keen on revitalizing the brand and boosting sales.

Financial Future:

Subway’s future financial performance hinges on several factors, including:

  • Success of its turnaround efforts under Roark Capital.
  • Ability to adapt to evolving market trends and consumer demands.
  • Overall health of the fast-food industry.

Final Thoughts on Investing in Subway Stock

Remember, the fast-food industry is dynamic and competitive. Carefully research any investment opportunities before making any financial decisions.

So, while you can’t directly invest in Subway stock, understanding its ownership structure and exploring alternative options might whet your appetite for informed financial decisions. Now, if you’ll excuse me, I’m starting to crave a six-inch Italian B.M.T… on wheat, of course.

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