Subway Sales Rose 12.1% In First Quarter As Stores Remodeled

The sandwich chain Subway said on Monday that its global comparable sales were 12.1% higher in the first quarter and that guest visits rose, driven in part by restaurant renovations.

The privately held company is looking to boost store-level profits as it explores a possible sale, hoping to show potential private equity buyers that it can be a money maker.

Major publicly traded restaurant chains including McDonald's Corp and Chipotle Mexican Grill Inc begin reporting quarterly earnings this week.

Most are expected to post positive comparable sales compared to last year, but investors will be watching for signs that prolonged inflation has started to take a toll on consumer spending.

Subway had been closing locations in recent years amid a host of problems including outdated decor and operations, overexpansion, and $5 foot-long deals that eroded franchisees' profits.

In 2021, the chain launched a menu overhaul and splashy marketing campaign as it embarked on a turnaround plan.

In February, the company said it is exploring a sale that could value it at as much as $10 billion, as it faces competition from growing rivals including Jimmy John's, Firehouse Subs, Jersey Mike's Subs and Potbelly Corp.

As part of its reboot, Subway is moving away from its traditional reliance on franchisees who only own one or two locations each. Instead, it is consolidating more locations with fewer large, well-capitalized franchisees.

Last week, it announced agreements with two new multi-unit operators and three existing ones that allowed it to consolidate or transfer more than 230 U.S. restaurants so far in 2023.

It is also trying to drive more customers to its app, with digital-only promotions leading to a "recent surge of guests" using the app, the company said. The chain, which has nearly 37,000 locations globally, also plans to build thousands of new shops internationally.