Subway's $10 Billion Price Tag Is Tough to Swallow

At a time when the value of an increasing number US companies are exceeding the once unthinkable $1 trillion mark, it feels odd to ask whether businesses can be too big to be profitable. And yet that’s the very question sandwich chain Subway Restaurants Inc. is asking itself right now — and it may not like the answer.

Although its distinctive green and yellow signs have become a fixture of American fast casual dining, the closely-held Milford, Conn.-based franchise has yet to find a buyer six months after putting itself up for sale, asking $10 billion. It’s not so much the price tag that’s the issue — McDonald’s Corp. has a stock market value of about $213 billion — but rather Subway’s growth-at-any-cost business model. From a few hundred restaurants in the 1970s, it now has nearly 37,000 around the world. At one point a decade ago it even surpassed McDonald’s as the world’s largest chain of restaurant franchises. Under a be everywhere and anywhere strategy, it seems like the company thought any venue was ripe for one of its sandwich shops, from schools to laundromats and even churches.