At the end of 2023, Subway had 20,576 open locations running across the United States.
How many of those locations did corporate Subway actually own and operate?
Zero. A whopping zero.
Now look at McDonald's. McDonald's had 13,451 US locations. But guess how many corporate locations they owned directly?
They owned 691 stores.
Does the fact that Subway owns zero stores mean you should never buy one? Not by itself. But it reveals a massive difference in how these companies treat risk.
Serial entrepreneur Tariq Johnson understands this risk firsthand. Between the ages of 18 and 27, he launched nine failed businesses. In 2015, he bought his first franchise. Since then, his last three companies have all generated over seven figures in sales.
"One of my missions is to help decrease the high failure rate of small business owners that I experienced, and really just help business owners win."
— Tariq Johnson
Before you put your savings into a restaurant, look closely at the numbers. Here are five big reasons you should avoid buying a Subway franchise.
1. Private Equity Now Controls the Brand
In 1965, 17-year-old Fred DeLuca and his friend Peter Buck started a shop called Pete's Super Submarines. They changed the name to Subway in 1972 and sold their first franchise in 1974. At its peak, the brand exploded across the globe with over 37,000 global locations.
Subway remained family-owned for nearly 60 years. But in 2023, private equity giant Roark Capital bought the chain for over $9 billion.
When a private equity firm spends $9 billion on a business, their main goal is simple. They want a big return on investment for their firm.
Corporate decisions start focusing on maximizing parent company profits. They stop focusing on the success of individual store owners.
Corporate Ownership Protects Franchise Owners
Because Subway owns zero stores, corporate leaders do not feel the pain of their own policies.
Compare that to McDonald's:
- McDonald's tests new programs in its 691 corporate stores. They take on the risk before forcing updates on franchisees.
- Subway forces franchisees to absorb all test risks. Corporate executives do not lose money if a menu idea flops in the field.
Industry reporting from Restaurant Dive shows that Roark Capital also manages other fast-casual sub chains. Managing multiple competing sub brands inside one private equity portfolio can easily lead to conflicting priorities.
2. Subway Is Closing Stores at an Alarming Rate
Subway's store footprint has shrunk rapidly over the past few years.
Take a look at the closure numbers from 2021 to 2023:
- 2021: 1,043 stores closed
- 2022: 571 stores closed
- 2023: 443 stores closed
That adds up to 2,057 total closed stores in just three years. Subway lost nearly 10% of its entire US footprint during this window.
By comparison, McDonald's closed only 2% of its store locations over the exact same period.
Behind Every Closure Is a Real Human Story
Every closed location represents an owner who lost their investment.
"Guys, that adds up to 2,057 stores that closed. That sucks. Those are real people, real everyday people who owned those stores."
— Tariq Johnson
External factors affect every business differently. Johnson saw this happen directly during the 2021 restrictions:
- His franchise location in California saw sales jump by almost 40%.
- His beachside store in Florida lost walk-in traffic and suffered major sales drops.
Even with economic shifts, Subway's closure rate was five times higher than McDonald's on a percentage basis.
3. Subway Hides Store Profit Data from Buyers
Every franchisor must file an official Franchise Disclosure Document (FDD).
Section 19 of the FDD allows companies to show how much money their average stores make. If a company lists store earnings there, sales reps can talk openly about profits with buyers.
Subway leaves Section 19 completely blank. They refuse to disclose average store earnings.
"If you're in the business of helping people start a business and you're selling an opportunity that actually works, wouldn't you be excited to share the performance of those stores? I guess not if they aren't doing well."
— Tariq Johnson
When a franchisor hides sales metrics, you must ask why. Proven franchise models proudly share their financial earnings to attract strong business partners.
4. Thin Margins Can Turn Your Loan into a Trap
Restaurants operate on notoriously thin profit margins. Data from Franchise Business Review indicates that average fast-food profit margins sit between 5% and 11%.
Opening a new Subway costs between $238,000 and $536,000 in initial startup capital.
Look at what happens under a standard business model:
- Estimated store sales: $420,000 per year
- Estimated 10% profit margin: $42,000 per year
- SBA loan payments ($400,000 loan): $60,000 per year ($5,000 a month)
- Net result: You lose $18,000 every single year.
Financial data compiled by Crestmont Capital shows that restaurant SBA loans carry a high 12% to 15% default rate. Paper-thin margins leave zero room for error when debt payments come due.
5. Modern Competitors Serve a Better Product
Subway built its massive brand around the famous $5 Footlong campaign. However, that discount strategy anchored customer expectations to cheap food.
When consumers decide to spend $12 on a sub today, they often skip Subway. They head to modern competitors like Jersey Mike's, Jimmy John's, or Firehouse Subs instead.
Retail tracking from Restaurant Business Online shows that Subway lost significant sandwich market share over the last decade. Over that same timeframe, competitors like Jersey Mike's added hundreds of new locations and doubled their average store sales.
Subway has attempted major store rebrands and menu refreshes. Yet newer chains continue to win over customers who want higher quality food.
Look Beyond Famous Brand Names
Big brand recognition does not guarantee a profitable business.
Many low-cost franchise options cost under $500,000 to open while generating far higher personal income. Always review the Franchise Disclosure Document carefully before risking your capital.
Frequently Asked Questions
How many corporate locations does Subway own?
Subway corporate owns zero locations directly. All Subway restaurants operate as independent franchise locations.
Why is zero corporate store ownership a risk for Subway franchisees?
Corporate ownership forces a brand to share risk with franchisees. Because Subway corporate owns zero stores, franchisees absorb all financial risks for unproven marketing campaigns and operational shifts.
Who owns Subway today?
Private equity firm Roark Capital bought Subway in 2023 for over $9 billion.
How many US Subway stores closed between 2021 and 2023?
Subway closed 2,057 total US store locations between 2021 and 2023. That represented roughly 10% of their total US store footprint.
How much does it cost to start a Subway franchise?
Opening a new Subway franchise location costs between $238,000 and $536,000 in startup expenses according to official FDD estimates.
Does Subway disclose average franchisee profits in their FDD?
No. Subway leaves Section 19 of its Franchise Disclosure Document blank, meaning they do not disclose store earnings or profit numbers to prospective buyers.
