Reliance Retail likely to acquire Subway Inc India for Rs 1,860 crore to take on Domino’s, McDonald’s
Subway has been looking to streamline its India business by collaborating with local partners to do away with the current regional master franchisees and individual networks.
Billionaire Mukesh Ambani-controlled Reliance Industries (RIL) is reportedly in discussion with quick-service restaurant (QSR) brand Subway Inc to acquire its India franchise for $200-250 million (about Rs 1,488-1,860 crore).
Under the leadership of chief executive John Chidsey, Subway Inc is going through a total restructuring process. Accordingly, the food chain is looking to cut its expenditures and workforce as its sales have reportedly deteriorated in recent times.
Subway has been pursuing tie-ups with a single dominant local player in India in order to discontinue its present system of regional master franchises and individual networks.
Subway, a unit of closely held Doctor’s Associates Inc., doesn’t own a single store in India but collects 8% of revenue from each franchisee. In India, it has approximately 6% market of Rs 18,800 crore organized QSR market while Domino’s, the market leader, controls a 21% share, followed by McDonald’s with 11%.
As of now, the fast-food restaurant company acquires a master franchise of development agents. These agents are not the direct owners of these stores but are in charge of their operations.
If the deal goes through, Reliance Retail will get an intensive network of over 600 Subway stores across India, taking on tough competition from other quick-service restaurants including Domino’s Pizza, Burger King, Starbucks, and McDonald’s among others.
Reliance Retail reported Rs 962 net profit for the first quarter (Q1) of FY22, a jump of 123 percent year-on-year (YoY) as compared to Rs 431 crore reported in the corresponding period of the previous fiscal.
The company also acquired a 20.97 percent equity stake in the local search engine Just Dial on July 20. It had bought 1,30,61,163 equity shares in Just Dial (or 20.97 percent of the total paid-up equity) at Rs 1,020 per share on the BSE, the bulk deals data showed.
