Mukesh Ambani's Reliance Retail is reportedly eyeing Subway India's franchise in an almost finalised deal that is estimated to be around $200-$250 million, sources familiar with the development confirmed to The Economic Times.
If through, the move will mark Reliance Group's entry into the food and beverages sector, particularly quick service restaurants. The conglomerate's interest in the sector comes as competitors have either gone public or are in the process of launching IPOs, such as Burger King.
Despite two decades in the country, Subway has not been able to make its mark in the market as compared to quick service franchises like KFC, Dominos and McDonalds. According to media reports, Subway has closed 12 per cent of its outlets in the last five years, the chain's troubles preceding the Covid-19 pandemic. In 2019, Subway US shut as many as 1,000 outlets.
Subway outlets function in a way different from McDonald's or Dominos, i.e. through individual franchise outlet owners. Other quick service outlets let a master franchise run several outlets across the country. The model has seemingly not worked for Subway. The lack of a master franchise has led to a lack of operational structure among the operators.
Reliance Retail is aggressively expanding its position through acquisitions and investments, their recent expansions include companies ranging from Just Dial to Zivame. As for the Subway deal, if successful, will mark the giant's entry into an already competitive market. Subway's future may look different under Reliance.
Watch latest videos by DH here: