Subway CEO Is Retiring: Could This Mark a Turning Point for the Chain's Future?

In a Nov. 26 press release, Subway announced that CEO John Chidsey would be retiring from the company at the end of the year.

As of Jan. 1, 2025, Carrie Walsh, former CMO and current president of Europe, Middle East, and Africa, will be taking the reigns of the sandwich-maker's business as interim CEO.

"It has been a privilege to lead Subway through a period of exciting change, and I am so proud of what the team has achieved together," said Chidsey in the press release.

"I've worked closely with Carrie over the past five years, and I've witnessed firsthand her deep understanding of what it takes for a global brand to grow and evolve. Combined with her steadfast commitment to Subway and its franchisees, I'm confident Carrie is the right leader to shepherd Subway through this transition as we continue to enhance our position as a leading global restaurant brand," he added.

Chidsey's Role as Subway's Third CEO Was Somewhat Controversial

When Chidsey took the helm as Subway CEO in 2019, as Restaurant Business detailed, he did so during a period of great turmoil for the company. The combined influences of the imprisonment of longtime brand spokesman Jared Fogle and the death of founder and CEO Fred DeLuca in 2015 left the company reeling at the time.

In a blitz of action that included a slashing of corporate staff and the relocation of much of the chain's operations to Miami, where Chidsey resided, a series of significant changes for the brand emerged.

The company actively refocused on international operations and expansion, and it heavily reworked the menu and its ingredients to attract new customers and boost guest satisfaction. Several locations were also remodeled to align with the brand renewal.

And the changes worked, as Restaurant Business reported. Closures slowed, and the decline in average unit volumes also relented. International development agreements paid dividends, driving growth in that segment.

However, operators were less than pleased with the focus on discounts and the renegotiation of franchise agreements. Given that essentially all of Subway's 37,000 global locations are owned and operated by franchisees, these complaints were not insignificant.

Subway Continues To Face Uncertainty as Chidsey Exits

Will a replacement to Chidsey's leadership prove effective enough to stem the brand's continued struggles in a crowded quick-service restaurant marketplace? The answer remains unclear.

Despite having been acquired for $9.6 billion by Roark Capital in 2023, Subway has yet to exhibit signs of significantly improving its standing in the interim. Macroeconomic issues such as general inflation and cautious consumers persist in the post-pandemic era, and restaurants are particularly feeling the sting, as Quartz outlined.

In a "money talks" move that offered an unofficial observation of relative valuation, private equity firm Blackstone recently bought a majority ownership position in Jersey Mike's — a major competitor. That play cost Blackstone $8 billion, as opposed to Roark's $9.6 billion buy of Subway's entire business.

However, Jersey Mike's only operates a fraction of locations (over 3,000 open or in development, according to CNBC, versus Subway's 37,000) and possesses far less international reach. Who got the better buy?

Can the Sub Chain Handle Declining Earnings: If So, for How Long?

In August, Subway called an urgent meeting with its North American franchisees. The topics of discussion, as outlined by The New York Post: deep declines in traffic and sales and equally significant (and controversial) continued discounting. Franchisees described losing a great deal of sales revenue due to discounting, especially with overall volume not being comparable to previous eras.

However, other pressures could be mounting as well. The New York Post stated at the time, "Subway, which owns none of its restaurants and makes its money through 8% royalty fees it collects from franchisees, now faces interest payments on debt following its sale to Roark and can’t afford to have declining earnings, sources said."

Whether Walsh or the future CEO can further steady the ship is yet to be seen. The necessary steps to do so also remain unclear, with friction between franchisees and corporate still evident.