The world’s leading quick-service restaurant brand, Subway, could be up for sale. A Wall Street Journal report highlighted that Subway engaged advisers to explore a potential sale. The report highlighted that a deal could bring in more than $10 billion for the sandwich chain operator.
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Subway is amidst a multi-year transformation journey to accelerate sales and drive efficiency. The restaurant brands’ transformation plan is working well, with revenues recording an improvement.
Last year in October, Subway said it witnessed positive growth in the U.S. market in the past 18 months. The improvement in its U.S. restaurant same-store sales was led by new product introductions and development in the digital channel.
The company launched the Eat Fresh Refresh and Subway Series, which resonated well with consumers and have been a significant sales driver. The company also highlighted that it is consistently outperforming its record average unit volume (AUV) per week registered in 2012, which is encouraging. As Subway’s transformation plan seems to be working well, a deal might not happen.
With about 21,000 locations in the domestic market, Subway is the biggest restaurant brand in the U.S. In comparison, McDonald’s (NYSE:MCD) has approximately 13,500 U.S. restaurants.
In a note to investors, Robert W. Baird analyst David Tarantino said that consumer demand bounced back in the first week of January for restaurant brands. Tarantino has a Buy recommendation on MCD stock.
Is MCD a Buy or Sell?
Including Tarantino, MCD stock has received 18 Buy recommendations. Meanwhile, three analysts have a Hold. Overall, MCD stock has a Strong Buy consensus rating on TipRanks. Meanwhile, MCD’s price target of $287.27 implies 6.87% upside potential. Furthermore, MCD stock has a maximum Smart Score of “Perfect 10.”
