Subway Sold! New Owner Faces Road Blocks With Liz Warren and Consumers Crying Foul

Senator Elizabeth Warren suspects that there could be higher prices on the horizon — stretching the wallets of consumers more than before.

“We do not need another private equity deal that could lead to higher food prices for consumers,” she posted on X. This quote alone prompted discourse on-platform, as many commiserate about the rising prices of food.

This could have major effects on consumers, as these locations serve hundreds of thousands of people per day. The value of the acquisition is currently sitting at $10 billion.

This would include the corporate employees, the line workers making the sandwiches, middle-level managers, franchise owners, food suppliers, tech suppliers, and, of course, you as the consumer. While steps could be taken to mitigate effects, effects would be felt at all levels.

Roark is known for their other notable investments, such as Jimmy John’s, Arby’s, Schlotzky’s and McAlister’s Deli brands.

An oligopoly, by definition, occurs when there is little to no competition in an area of the free market, due to repeated acquisitions by the same company or entity.

For example: The Sherman Act doesn’t allow businesses to enter into horizontal agreements that limit free market trading to their own advantage.

Assuming oligopolies were to form across industries, the American consumer would be compromised — and they’d be blocked from the benefits of a free market system.

People go on to say that consumers can simply “make their own” if prices rise as a result of this acquisition.

“The reality is that for many Americans wanting a quick, affordable lunch, their nearest option is a…sandwich shop…it’s out of touch to say working people can go…somewhere else when executives jack up prices,” she noted.

In the instance presented, Roark Capital owning multiple “Sandwich shops” could theoretically drive up the cost of sandwiches without any relevant competitor to provide an alternative to consumers. But how legitimate is the concern really?

Among their businesses are Sonic, Shlotzkys, McCallisters, Jimmie Johns, Carls Jr, Culvers, Arby’s and Buffalo Wild Wings. These aren’t all Sandwich shops per se, but Roark has a strong portfolio in this area.

Then again, the danger is how they can corner the market in some areas, setting precedents that could lead to their unfair advantage in the space. But the FTC is still doing their due diligence. Why?

Laws in place help provide an impartial official, but also prevent collaboration from companies to force certain advantageous outcomes that hurt consumers.

Don Cohen, advocate for big business, notes that “corporations and their enablers have been using these arguments for over (100) years.” Hundreds of people have commented under #Subway-related threads, sounding off on their opinion.

In many cases it boils down to an individual determination on the lesser of two evils. The case against Monopolies is that they hurt innovation and that competition drives quality.

In order to determine which of the aforementioned businesses owned by Roark qualify to form a sandwich shop monopoly, the discussion of ‘what is a sandwich’ comes into full view.

Subway has signed many international franchisee deals in the last 3-5 years and expects to continue to add more with this move to Roark.  As far as how Subway is run, things shouldn’t change much. Of course the big concern remains how it all could impact pricing.

By August of 1965 they had a shop in Bridgeport Connecticut and by 1974 they had 16. By now college tuition was a goal they’d blown past, Pete’s Super Submarines was now Subway, and they had their sites set on the horizon.

Essentially a parent company or business grants the rights to a smaller business owner to operate the business using the marketing, tools, recipes, and ingredients in the case of this market. The split in revenue varies, and frequently the arrangement is a win-win though not without it’s share of pitfalls.

This is far from a final conclusion but it does imply that Roark is in fact becoming quite dominant in the marketplace and there is some cause for concern and further investigation.

Capital funding participants and other stakeholders likely will not hear of an outcome until midway into 2024. Ultimately, the Federal Trade Committee works to regulate businesses in favor of the consumer and the American Public.