How to Invest in Subway Stock: A Guide for Investors

subway

Have you ever considered investing in the fast-food industry but don’t know where to start? Subway, the multinational fast-food giant, has a unique business model and offers intriguing investment opportunities. In this blog post, we will explore Subway’s business model and why it remains a privately held company. Additionally, we will discuss alternative investment options in the fast-food sector, such as Restaurant Brands International, McDonald’s Corporation, and Chipotle Mexican Grill.

Key Takeaways

  • Subway is a privately held company with an impressive global presence, preventing investors from investing in Subway stock.

  • Alternative investment options are available to gain exposure to the fast food sector such as Restaurant Brands International (RBI), McDonald’s Corporation and Chipotle Mexican Grill.

  • Investing in restaurant ETFs can provide diversification of portfolio, including potential profits from performance of entire restaurant sector.

Understanding Subway’s Business Model

subways business model

Subway, known for its submarine sandwiches, operates a unique business model focused on independently owned and operated restaurants. These restaurants pay a percentage of their revenue to Subway IP Inc., the parent company. With over 44,000 franchises in more than 100 countries, Subway is one of the world’s largest fast-food chains. However, Subway is a privately held company, implying that there’s no publicly available stock price.

Subway’s global presence is impressive, with a vast network of franchises that cater to different dietary needs and preferences. The company ensures food safety by adhering to its “Gold Standard” policies for the preparation and inspection of food and produce. Subway’s corporate headquarters, also known as Subway IP Inc., is located in Milford, Connecticut.

A distinguishing characteristic of Subway’s business model is its absence from any stock exchange due to its privately held status. Therefore, Subway stocks are unavailable for purchase. The decision to remain private allows Subway greater control over its operations and financial information.

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The Reality of Subway Stock

Being a privately held company, Subway lacks a stock price or symbol, and its shares aren’t publicly traded. This decision to remain a private company was made by Subway’s management to maintain greater control over the company and its operations. As a privately owned company, Subway also benefits from keeping most of its operations secret, providing a competitive advantage and preventing the disclosure of its financial performance to potential franchisees.

While you cannot buy subway stock on the stock market, there are alternative investment options available within the fast-food sector. These options include investing in restaurant industry-tracking ETFs and establishing a Subway franchise. Each alternative comes with its own set of advantages and disadvantages, which should be carefully considered before making an investment decision.

Even though Subway stock isn’t available for purchase, by exploring alternative investment options in the fast-food sector, investors can still gain exposure to this thriving industry and potentially reap the rewards of a successful investment.

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Subway’s Revenue

YearRevenue (USD Billions)
2023$16.1
2022$15.7
2021$9.4
2020$7.5
2019$10.2

Investing in a Subway Franchise: Pros and Cons

Investing in a Subway franchise requires an initial cash payment, typically around $15,000, and additional investments for establishing and running the store. This investment opportunity allows investors to own and operate their own Subway store, as each franchise is individually owned and operated. However, potential risks and challenges, including conflicts with the parent company, accompany investment in a Subway franchise.

Franchisees are required to pay 12.5% of their franchise’s earnings in royalties each week, which can be a significant financial commitment. Additionally, like any investment, there are no guarantees of success with a Subway franchise. Potential investors need to thoroughly weigh the pros and cons of investing in a Subway franchise before reaching a decision.

Despite the potential challenges, investing in a Subway franchise can be a rewarding opportunity for those willing to put in the time, effort, and financial resources. With proper planning and management, a Subway franchise can become a successful and profitable addition to an investor’s portfolio.

Alternative Investment Options in the Fast Food Sector

For investors looking for exposure to the fast-food sector without investing in a Subway franchise, there are alternative options to consider. Some of these alternatives include investing in well-established and successful fast food restaurants like Restaurant Brands International, McDonald’s Corporation, and Chipotle Mexican Grill.

Each of these alternatives will be detailed in the subsequent sections.

Restaurant Brands International (RBI)

Restaurant Brands International (RBI) is a diversified company with a long track record of success, owning popular fast-food chains like Burger King, Tim Hortons, and Popeye’s. By operating through Tim Hortons, Burger King, and Popeyes segments, RBI provides a balanced portfolio for investors. In fact, at the end of 2019, Warren Buffet held a stock portfolio valued at more than US$468 million in RBI, demonstrating its potential as a viable investment option.

RBI’s successful fast-food chains offer a range of menu items and cater to various tastes, making it an attractive investment option for those looking to diversify their portfolio. With a quick service approach, a current yield of 3.51%, and analysts predicting a 12-month price target of $79.58, RBI presents promising growth potential for investors.

Investors can reap the benefits of RBI’s diversified portfolio in the fast-food sector, gaining exposure to popular brands. This can be an attractive alternative for those looking to invest in the fast-food industry without focusing solely on Subway.

McDonald’s Corporation

McDonald’s Corporation is another popular fast-food chain with high revenues and an extensive international presence. Here are some key facts about McDonald’s:

  • It operates over 40,000 restaurants in 118 countries and territories worldwide.

  • In 2022, McDonald’s had a worldwide brand value of $196.5 billion.

  • It is considered a highly valuable company in the fast-food sector.

Between 2020 and 2021, McDonald’s revenues increased by 20.9%, indicating strong growth and potential for future success.

An investment in McDonald’s Corporation offers the following benefits:

  • Exposure to a widely recognized and one of the world’s largest fast-food chains with robust brand value

  • Substantial growth potential, especially in North America

  • An attractive alternative investment option in the fast-food sector.

Chipotle Mexican Grill

Chipotle Mexican Grill is a fast-casual restaurant chain specializing in Mexican-style cuisine, with over 3,200 locations worldwide. The chain has demonstrated impressive growth in recent years, with sales increasing by 37.69% from 2020 to 2022.

Analysts have rated Chipotle Mexican Grill, a publicly traded company, as a buy, citing its impressive financial performance and the possibility of further expansion.

Reasons to invest in Chipotle include:

  • Chipotle’s unique fast-casual dining experience, which emphasizes high-quality ingredients and customizable options sets it apart from other fast-food chains

  • Presents an attractive investment opportunity for those looking to diversify their portfolio.

Investors can gain exposure to a thriving and innovative fast-casual dining experience by investing in Chipotle Mexican Grill, which has shown substantial growth potential and remarkable financial performance. This can be an appealing alternative investment option for those interested in quick service restaurants and the fast-food sector.

Diversifying Your Portfolio with Restaurant ETFs

Restaurant-tracking ETF investments can offer exposure to the wider restaurant industry, encompassing fast-food companies like Subway. These ETFs offer investors an opportunity to diversify their portfolios by gaining exposure to a variety of companies in the restaurant industry, reducing the risk associated with investing in individual stocks.

Some popular restaurant ETFs include the Invesco Dynamic Leisure and Entertainment ETF (PEJ), Invesco Dynamic Food & Beverage ETF (PBJ), and AdvisorShares Restaurant ETF (EATZ). Investors can leverage the entire restaurant sector’s performance and potentially gain exposure to companies like Subway through these ETFs.

The Future Outlook for Subway and the Fast Food Industry

The fast-food industry is constantly evolving, with new trends and potential opportunities emerging regularly. Investors should keep an eye on these trends, as they may present new investment opportunities in companies like Subway or other fast-food chains. For example, Subway’s possible future IPO or growth in the digital sales space could provide new avenues for investment in the fast-food sector.

Subway is currently showing signs of growth, with the following positive developments contributing to a potential increase in subway stock price:

  • Same-store sales increased by 9.3% in the first quarter of 2023

  • The company is actively pursuing larger franchisees

  • It is revising its ownership model

  • Introducing menu updates

  • Focusing on strategic new location openings

However, it is important to note that Subway’s market share has seen a decline in recent years.

The future outlook for Subway and the fast-food industry is a combination of both challenges and opportunities. By staying informed and carefully considering investment options, investors can potentially capitalize on these opportunities and achieve success in the fast-food sector.

Summary

In this blog post, we have explored Subway’s unique business model and its status as a privately held company, which prevents investors from directly purchasing Subway stock. However, we have also discussed alternative investment options in the fast-food sector, such as investing in Restaurant Brands International, McDonald’s Corporation, Chipotle Mexican Grill, or restaurant-tracking ETFs.

By considering these alternative investment options, investors can gain exposure to the thriving fast-food sector and potentially benefit from the growth and success of established companies like Subway, without directly investing in Subway stock. The future outlook for Subway and the fast-food industry is filled with both challenges and opportunities, and staying informed can help investors make well-informed decisions that may lead to success.

Frequently Asked Questions

Does Subway have stock?

Subway is not on the stock market, as it is a privately owned company. That means one cannot buy stock in Subway at the moment. Each franchise is individually owned and operated.

What is Chick-Fil-A stock?

Chick-fil-A is a private, family-owned company and does not offer stock options to the public, meaning it is not publicly traded and has no ticker symbol or stock price. Therefore, investors cannot buy Chick-fil-A stock on the equity market.

Who will acquire Subway?

Subway has announced that it will be acquired by affiliates of Roark Capital.

What are some alternative investment options in the fast-food sector?

Investors looking to diversify their portfolios in the fast-food sector can consider Restaurant Brands International, McDonald’s Corporation, Chipotle Mexican Grill, or restaurant-tracking ETFs.

How much does it cost to open a Subway franchise?

Opening a Subway franchise costs approximately $15,000 in initial franchise fees, with additional investments necessary for startup and running costs.

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