Subway is one of the most well-known fast-food corporations in the United States right now, but is Subway stock available for purchase? Continue reading to find out.
The cheap franchise fees charged by the corporation have contributed to the company's spectacular expansion. Especially when compared to the larger restaurant chains, the average square footage per shop in most of the locations is much smaller.
Before deciding whether or not you should invest in Subway stock, it's crucial to understand what the company is and how it got to be as prominent as it is today.
Subway - What is it?
With over 41,000 locations worldwide, Subway is a compelling investment for investors. The company's rapid growth is attributed to its low franchise fees. Additionally, the majority of locations have a smaller average square footage per store, particularly in comparison to the largest restaurant chains. These are the primary reasons for the company's fast growth.
As a result, the company has historically been the fastest-growing franchise. Subway employs over 400,000 people worldwide and serves thousands upon thousands of people daily. It earned more than $16 billion in revenue in 2019.
Subway's history
Established in 1965 as "Pete's Super Submarines ."Fred DeLuca founded the company at the age of seventeen, with assistance from his mother and Peter Buck, who financed the venture under his own name. The company was not renamed Subway until 1968. In 1974, Peter decided to franchise the concept due to the popularity of its sandwiches.
The company did not begin its meteoric rise until the twenty-first century. Due to the low cost of opening a Subway franchise in comparison to other restaurant chains, it becomes an attractive option for entrepreneurs seeking an established brand. Subway has consistently ranked among the best global franchises for several years and has been named the fastest-growing franchise in several instances.
Doctor's Associates, Inc. is Subway's parent company. The name has nothing to do with what they do, but it is the company founded by Fred DeLuca to serve as Subway's holding company. Fred DeLuca owned Doctor's Associates, Inc. until his death in 2015.
Since then, John DeLuca, his son, has inherited the company. Subway owns nearly half of all locations, and additionally, the company collects royalties from its franchisees.
How Did Subway Become So Popular?
Subway is a highly popular fast food restaurant chain that serves fresh sandwiches and meals to customers.
The brand's overwhelming popularity stems from the innovative menu design and high-quality atmosphere in each of its restaurant chains.
Without a doubt, millions of investors would rush to buy Subway stock if the company ever went public.
Regrettably, it does not appear likely that this will happen anytime soon.
Despite its overwhelming popularity, Subway continues to innovate in order to stay ahead of the competition.
How Much revenue Does Subway Make?
Subway recently reported net revenue of $689 million.
This is nearly 30% less than the previous year but is most likely due to store closures.
Subway currently operates slightly more than 22,000 retail locations in the United States.
Why Is Subway So Valuable?
Subway is valuable because of its cost-effective ingredients and business model, which enables individuals to open franchises even if the restaurant owners currently own only individual Subway restaurants.
The business model enables the Subway Group to retain complete ownership of all intellectual property and information while allowing for growth through acquisitions.
Additionally, the typical Subway restaurant is a small space-saving structure that fits almost anywhere, making it an ideal fit for shopping plazas, malls, and even Walmart supercenters, as has been done in the past.
Subway is owned by Doctor's Associates, a private company, and they are not listed on a major stock exchange. As a result, while you cannot buy Subway stock, you can invest in other restaurant chains.
There are only two scenarios in which a Subway stock IPO could occur. One of them is if the business is unable to raise capital through debt, forcing the current owner to seek capital through financial markets. This appears improbable given the company's structure and the growth it has experienced in the past. This possibility, however, should not be ruled out entirely, at least in the medium to long term.
Additionally, the owner may find himself in financial difficulty and seek capital. This would almost certainly compel the company to go public, resulting in a Subway stock IPO. However, this appears to be a highly improbable possibility. To accomplish this, the company would have to undergo a different level of scrutiny, and its financial information would have to be made public by law.
Although both scenarios are extremely improbable, they are not impossible. Another factor could influence the company's decision to go public. If the company were to run into financial difficulties, this could also be found in a Subway stock IPO. Although revenue has decreased in recent years, Subway has implemented some significant changes that appear to be working.
Subway is one of the world's largest food chains, with an impressive track record of profitability and revenue growth. On the other hand, Subway is a privately held company, and this indicates that the stock is not publicly traded. In short, there is no Subway stock price, as the company is not publicly traded.
Subway's parent company is Doctor's Associates, and all profits go to them. Because their name is not listed on any major stock exchange, there is no way to purchase a Subway stock price.
As a result, due to the fact that Subway is a privately held and operated business, there is no specific Subway stock symbol, and the company has issued no stock. As a result, Subway managers wield significantly more authority over the company.
Publicly traded companies are required to file financial reports with the SEC on a regular basis. Prospective investors and franchisees will then be able to see how much money the business is making.
By contrast, privately-held businesses such as Doctor's Associates are not required by the public to disclose their financial operations. This provides them with an inherent competitive advantage in the market.
Subway does not have a stock price or ticker symbol on any exchange, as it is a privately held company that has never issued stock. By not issuing stock, Subway management maintains greater control over the business. Publicly traded companies are required by law to have elected boards of directors, and the board of directors is elected by stockholders, which can erode management's control.
Federal law requires publicly traded companies in the United States to disclose massive amounts of information to the public. For example, the Securities and Exchange Commission (SEC) of the United States requires publicly traded companies to disclose financial information.
If an American company is publicly traded, its financial statements are made available on the SEC website. This enables investors and prospective franchisees to determine the profitability of a business.
Privately held businesses can keep the majority of their operations secret, providing a competitive advantage to fast-food restaurants. Subway is not required to disclose the company's revenue to prospective franchisees.
Will Subway Ever Go Public?
Subway entering the public stock market is improbable at the moment (though not impossible).
Subway is currently a wholly private company, with all shares and stocks held by Doctor's Associates Inc., a corporation composed of members of the foundation's family and other representatives.
However, the possibility of Subway going public is not ruled out in the future. Subway has been experiencing financial difficulties recently, as 2020 has proven to be a less profitable year.
Additionally, there was a rumor in April 2021 that Subway would be sold and made public, though Elisabeth DeLuca denied the rumor and shut it down (the widow of the co-founder, Fred DeLuca).
Despite these recent events, Subway has consistently refused to be acquired by larger corporations or other larger overseers.
Indeed, Subway implemented an anti-takeover safeguard to avert a takeover.
The Future for Subway
Subway recently made some significant menu changes in an attempt to reintroduce old customers who the brand believes have dwindled in recent years.
The Italian and Multigrain Bread has been modified, as have the Black Forest Ham and Oven-Roasted Turkey.
Subway has already implemented several menu changes.
On July 13, customers were invited to come in for a complimentary sandwich in celebration of the new menu changes.
This menu change was the first step in a multi-year effort by Subway to expand its menu and attract new customers.
Subway is unlikely to close anytime soon. The brand will continue to exist for decades, and new generations of customers will enjoy its menu.
While it is improbable that they will ever go public, recent marketing efforts and menu changes may continue until Subway discovers what works for their brand.
Subway's future is likely to be prosperous, but there will almost certainly be some bumps along the way.
While it appears unlikely that investors will ever be able to invest directly in Subway's stock, there are numerous viable alternatives currently available on the stock exchange.
Risks And Rewards Of Buying Subway Stock
While you will never be able to purchase a share of Subway or Doctor's Associates, you might consider investing in other restaurants or fast-food chains. We will invest these details in greater detail later, but when making an investment decision, it is helpful to keep the following risks and rewards in mind:
Consider buying an entire Subway franchise, which costs around $15,000. However, in the event of declining revenue, selling the restaurant can be a significant issue.
Investing in an alternative such as Restaurant Brands International (NYSE: QSR) will undoubtedly have a beneficial effect. They own and operate over 17,800 Burger King restaurants and over 3,100 Popeye's fried chicken restaurants worldwide. Bear in mind, however, that their revenues decreased during the Coronavirus pandemic.
If the stock begins to lose value, you may be able to sell it immediately. It is simpler to buy or sell a stock than buying or selling an entire franchise.
The risk associated with investing in Subway would occur only if you chose to buy a franchise. Given the company's recent stock, buying in a larger alternative such as Restaurants Brands International or Starbucks Corporation may be a safer bet.
The Danger From Fast Food
Fast food is a difficult but popular sector to invest in due to the fact that the majority of fast-food operators are privately held.
According to Reuters, Dunkin Donuts, which owns Baskin-Robbins, was acquired by Inspire Brands Inc in October 2020. Inspire is a privately held holding company that also owns the Sonic Drive-In restaurant chain and is the direct competitor to Subway, Arby's. Arby's is one of the most popular sandwich restaurants in the United States.
I believe that fast-food chains go private because they are unable to generate enough revenue to sustain the stock. Investors should be fast food because it is a volatile business that can quickly lose money.
While chain restaurants such as Subway and Shake Shack may be good places to eat, they can be poor investments.
Companies Similar to Subway you can Invest in
1. Starbucks Corporation (NASDAQ: SBUX)
While Starbucks is not a direct competitor of Subway, it is a competitor nonetheless and a successful one.
Starbucks is another well-known food industry brand that competes with Subway by offering healthy dining options to patrons who come to drink coffee.
Starbucks cafes are numerous, and the company has grown enormously since its 1971 inception as a single coffee shop.
When you examine Starbucks' stock market performance since 2018, you'll notice that its stock price has nearly doubled as the company has grown.
Starbucks' enormous popularity stems from the way it treats its employees. The company has gained traction in recent years due to its willingness to speak out on social issues before other businesses.
2. Yum! Brands (NYSE: YUM)
Yum! Brands, Inc. is a restaurant chain that specializes in quick-service restaurants that serve primarily Chinese and Mexican cuisine. Additionally, they are the owners of KFC, Pizza Hut, and Taco Bell. The company operated 36,714 restaurants in 118 countries and territories as of December 31, 2016. The company's headquarters are located in Louisville, Kentucky, at 1441 Gardiner Lane, adjacent to Louisville International Airport. David Novak and Roger Eaton founded the company in 1978.
Additionally, Yum! owns several non-fast food brands, including East Dawning and Little Sheep Hot Pot. Yum! Brands have grown to be one of the most popular brands on the market today, with locations spanning Asia and North America. This company operates over 36,000 restaurants worldwide, offering quick service and casual dining options. KFC operates nearly 18,000 restaurants in more than 120 countries. Over 1.5 million people visit KFC for breakfast, lunch, or dinner each day.
The company is valued at more than 40.81 billion dollars on the open market. With the stock trading at approximately $139.19 (+0.88 percent), the company has enjoyed six consecutive years of growth, resulting in an impressive 10% average annual return.
Yum! Brands, Inc. (NYSE: YUM) earned $5.65 billion in the fiscal year 2017 on a gain of $904 million. Shares increased 43% last year and 54% over the last five years. That is due to the fact that Yum! It performed well in China, despite Covid-19 and the country's economic slowdown earlier this year.
Yum! Marcas is an excellent investment for anyone seeking exposure to the restaurant industry. The company has a strong presence in emerging and developed markets, with exposure to all three of the restaurant industry's key segments, which continue to grow at a rapid pace.
3. Darden Restaurants, Inc. (NYSE: DRI)
Darden may be the answer if investing in the food industry appeals to you, but you want to invest in a restaurant chain that is not exclusively focused on fast food.
Darden Restaurants, Inc. is the parent company of two upscale restaurant concepts: Eddie V's Prime Seafood and The Capital Grille.
Apart from these two restaurants, the company also owns six casual dining restaurants.
These casual restaurants include Olive Garden, Bahama Breeze, Longhorn Steakhouse, Seasons 52, Cheddar's Scratch Kitchen, and Yard House.
Despite the expected decline in the stock price in 2020 as a result of the pandemic lockdown, Darden Restaurants' stock price has been steadily increasing since 2018 and would be an excellent substitute for Subway.
Conclusion
Subway is not publicly traded or quoted on any stock exchange, as it is a private corporation that has not issued shares; the company generates revenue by selling franchises and charging franchisees royalties. Individuals may acquire subway locations, as each franchise is independently owned and operated.
In recent years, the battle for US dollars to eat out has intensified. The growth of restaurant businesses resulted in a fast increase in the number of establishments, which began to erode traffic to existing locations. The restaurant juggernauts described above continue to provide investors with strong returns and are among the best stocks to purchase right now.
FAQs
When is the Subway IPO?
Subway has not filed for an initial public offering, and it is unknown whether it will do so in the future.
Why is Subway Not Publicly Traded?
Without the assistance of outside funding, the company's success is assured.
Subway retains complete control over its direction and decisions by remaining privately owned.
How can I buy Subway stocks?
There is currently no direct way to purchase Subway stock. Alternatively, you can buy stock in a company such as Starbucks or McDonald's and invest in it.
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