After grocery, ed-tech, music, e-pharmacy, payments, fashion and furniture, Mukesh Ambani seems to be keen on taking a big bite of the quick service restaurant (QSR) business.
is in talks with the world’s largest single brand restaurant chain, Subway Inc, to buy its India franchise for $200-250 million (Rs 1,488-1,860 crore), said people in the know. The Connecticut, US-headquartered sandwich maker does business in India through several regional master franchisees. Globally, the company is undergoing a restructuring under chief executive John Chidsey to move headquarters, slash costs and global headcount amid plummeting sales, warring franchisees and growing speculation of a world-wide takeover.
When ET sought its comment, Subway said: “It is not our practice to comment on current or potential franchisees.” Reliance Industries did not respond to an email seeking comment.
The talks, if successful, will provide RIL retail unit a network of 600-odd Subway stores across India and help further diversify its omni-channel initiatives to more segments. Reliance Retail’s entry would also intensify competition in India’s organised QSR market where other players include global brands like Domino’s Pizza, Burger King, Pizza Hut, Starbucks, and their local partners such as the Tata Group and the JubilantGroup.
Feelers have also gone out to private equity players that have significant food and beverage exposure in their portfolio to acquire Subway’s local franchisee operations, said the people.
In 2017, several Indian franchises of Subway had tried to join hands and create a platform and were in talks with financial investors like TA Associates and ChrysCapital for a buy-in. But those talks did not fructify.
The global chain, which sells the popular “$5 footlongs” sandwiches, has been looking to streamline and expand its India outpost through a partnership with a single dominant local player as against the current model of regional master franchisees and their individual networks.
Delhi-based Chetan Arora, Sachin Arora, Gulprit Gulri, Manpreet Gulri, Rishi Bajoria and Rahul Bhalla are among the major development agents of Subway in India. Subway appoints master franchise or ‘development agents’, who either directly run clusters of stores or sub-franchise stores to smaller partners.
promoter Amit Burman’s Lite Bite Foods is one such partner.
Subway is owned and operated by Doctor’s Associates. The company doesn’t own a single location, but collects 8% of revenue from each franchisee. In India, it controls an about 6% share of India’s Rs 18,800 crore organised QSR market while Domino’s, the market leader, has a 21% share, followed by McDonald’s with 11%.
