Hello! There’s some game-changing news to discuss today…

3 Numbers

$9.55 billion

The purchase price that Roark Capital reportedly will pay for Subway (including debt and subject to an earn-out provision).

58

Years that Subway was family owned. The first shop (called “Pete's Super Submarines”) was opened in 1965 by 17-year-old Fred DeLuca and family friend Peter Buck. The name was (wisely) changed three years later.

37,000

Subway locations. The chain is down 6,000 U.S. locations since Fred DeLuca’s passing in 2015, but major international growth could be on the horizon — Subway has signed 15 deals with international franchisees over the last two years, totaling 9,000 stores in commitments.

We have a winner

Roark Capital and Subway announced yesterday that they’ve struck a deal, which — if the reports of a $9.55 billion number are accurate — would be the third-largest acquisition in restaurant history. Roark beat out roughly 10 other suitors for the prize of owning the world’s largest sandwich chain.

Saying this deal was complex would be an understatement. While Subway has overhauled its menu, aggressively invested in marketing, and can boast its highest average unit volumes in a decade, it has struggled over the past few years. That, coupled with a challenging macroeconomic environment, made valuing the company a difficult task.

But the challenges that Roark inherits are balanced by massive opportunity. Subway is a huge system with a globally known brand and a goal of adding tens of thousands of international locations. If Roark can apply its franchising and digital ordering playbook, plus make progress in boosting franchisee profitability, then it can supercharge the brand’s reinvigoration.

Some other interesting nuggets:

• Here are all the brands Roark either now owns or has significant investments in: Arby's, Auntie Anne's, Baskin-Robbins, Buffalo Wild Wings, Carvel, Carl’s Jr/Hardee's, Cheesecake Factory, Culver's, Dunkin’, Flower Child, Jamba Juice, Jim 'n Nick's BBQ, McAlister's Deli, Miller's Ale House, Moe's, Nothing Bundt Cakes, Schlotzsky's, and Seattle’s Best. Oh, and Jimmy John’s.

• About Jimmy John’s — the Subway competitor sits under Roark’s Inspire Brands umbrella. Subway will reportedly be a stand-alone asset.  

• Reuters reported that a key aspect in Roark winning the sale was the $600 million earnout provision that will be paid to the founders’ families if cash flow milestones are hit after the deal closes.

• Subway said yesterday that the majority of the sale proceeds will go to foundations started by the founders.

Name That Chain!

You get three hints to guess this week’s mystery chain:

• The first location was in New Orleans. For many years it was the only upscale restaurant in the city to have an all-female waitstaff.

• The company was founded by a single mom with the goal of getting money to send her teenage sons to college.

• At one time, this chain’s slogan was “If it doesn’t sizzle, send it back.”

WHAT IS THIS MYSTERY CHAIN? (The answer lies at the bottom of the email.)

Quick Hits

• Do you feel Luckin? Well do ya?… Luckin Coffee made international headlines in early 2020 when short-seller Muddy Waters kicked off a process that resulted in an uncovering of fraudulent accounting practices, a huge SEC penalty, removal from the Nasdaq, and a bankruptcy filing. After Chinese PE firm Centurium Capital injected $240 million into the brand in 2021, Luckin is very much back.The company earned $855 million in this year’s second quarter, while opening, uh, 1,485 net new stores in the 3-month period. It now has nearly 11,000 shops and should pass Dunkin’ (13,000 units) in the next 6-8 months.

• It’s Fall LTO Szn… Wendy’s unveiled its Loaded Nacho Cheeseburger, featuring a jalapeño cheddar bun, melted cheese, roasted poblano pepper queso, spicy corn and tortilla strips (deep breath), spicy chipotle sauce, lettuce and tomato. The brand is also launching queso fries. Tex Mex is taking over the world, folks.

• Bloomin’ Onion sauce should probably remain untouched… Activist investor Starboard Value — which took big stakes in Darden and Papa John’s in 2014 and 2019, respectively, helping revamp both companies — has now set its eyes on Bloomin’ Brands, buying up 9.9% of the Outback owner. According to CNBC, Starboard believes Bloomin’ is undervalued. Investors certainly respect the Starboard track record: Bloomin’ shares jumped 9% on the news.

• I, for one, welcome our delivery robot overlords… Fresh on the heels of robotics delivery company Serve’s reverse merger announcement, competitor Starship announced that it now has 2,000 sidewalk rovers in operation. The company also said it will be on 50 college campuses this fall.  

• In closing and revamping news… Fatz Cafe closed all 18 of its locations this week, while 10-unit salad chain Green District filed for Chapter 11. Meanwhile this week, Veggie Grill closed 12 of its 29 locations and O’Charley’s shuttered 18 of its 91 stores, both citing the need to reset post-pandemic.

• Checker’s/Rally’s has added Spanish-language capabilities to their AI voice drive-thru technology, which is now active in 350 locations.

• Punch Bowl Social founder Robert Thompson’s new pickleball concept, Camp Pickle, announced it has raised $200 million to fund its growth. The first location is expected to open next year.

• Starbucks’ Pumpkin Spice Latte returned to menus yesterday. (Fall is a state of mind, I suppose.)

• Finally, a very important update on the Mexico-based restaurant “In-I-Nout” — they’ve changed their name.

#Content Recs

• A very enthusiastic review of Taco Bell’s new(ish) Grilled Cheese Dipping Taco.

• A new academic study has found that casual dining chains are the most socioeconomically diverse places in the country. In other words, there’s more cross-class mixing at Olive Garden and Applebee’s than schools, parks, or other civic spaces.

• You heard it here first: the next great trend in restaurant design will be meals delivered by model trains.

And finally…

Just when I begin to question my decision to join TikTok for the purposes of mining newsletter content, it brings me something that I can’t turn away from. Today, that something is an account called Lazy Pot Noodle (TikTok account here; YouTube account here).

Details on the creator are pretty scant — all I know is that he (I think) is a college student who cooks complex, gourmet meals on a plug-in electric pot, all while sitting on what must be the world’s most crumb-filled dorm bed.

The meals look truly impressive. He makes a steak sandwich, seared with an honest-to-God blowtorch; a state fair-quality funnel cake; some tasty-looking birria tacos.

But the true must-watch has to be this lobster mac and cheese. I won’t spoil what happens. But suffice it to say, this guy is either going to have a Netflix show in 6 months or be arrested. There’s no in between.

Trivia answer: Ruth’s Chris Steak House