A requirement for restructuring Subway is a strategy to attract large investor groups to acquire multiple Subway franchise stores.  Despite promotional efforts and a few breakthroughs, most large investment groups with experience in franchise operations are rejecting initiatives.  This is based on the apparent sales of $500,000 or lower per store.  This is less than half the revenue generated by competitors including Jersey Mike’s and Firehouse Subs.  In advance of an intended sale of the entire business, privately-held Subway has revamped menus and initiated a promotional campaign using mainstream television and also social media.  This has increased sales by 10 to 12 percent over the short term but with a questionable increase in benefit for franchisees.

Subway has closed numerous locations over the past five years and has contended with franchisee complaints over low sales and shrinking margins attributed in part to over-selling franchises, lack of corporate support and innovation.

At the present time, large-scale operators of franchise restaurants favor Yum! Brands, Burger King, and Wendy’s and see little prospect in acquiring Subway stores. This calls into question the frequently quoted valuation of $10 billion for the business. If franchise restaurant operators  will not sign deals, private equity firms will also be disinclined to commit billions to an acquisition. Subway has yet to evolve from its roots operating a model relying on numerous individual franchisees running low-tech, labor-intensive stores catering principally to the lunch mealtime offering limited low-margin menus.