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Reliance Retail likely to acquire Subway Inc India for Rs 1,860 crore to take on food chains

Reliance Industries (RIL), controlled by billionaire Mukesh Ambani, is reportedly in talks with quick-service restaurant (QSR) brand Subway Inc to buy its India franchise for $200-250 million (about Rs 1,488-1,860 crore).

Subway Inc is undergoing a complete restructuring under the leadership of chief executive John Chidsey. Accordingly, the food chain is looking to cut its expenditures and workforce as its sales have reportedly deteriorated in recent times.

Subway has been looking for a single dominant local player in India to partner with in order to phase out its current regional master franchise and individual network system. Subway, a division of Doctor’s Associates Inc., does not own a single store in India, but each franchisee pays the company 8% of revenue.

In India, it controls about 6% of the Rs 18,800 crore organised QSR market, while the market leader, Domino’s, has a 21 percent share, followed by McDonald’s with 11 percent.

The fast-food restaurant chain is currently acquiring a master franchise of development agents. These agents are not the owners of the stores, but they are in charge of running them.

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.

On July 20, the company also bought a 20.97 percent stake in the local search engine Just Dial. According to the bulk deals data, it purchased 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.

 

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