Burger King vs Subway

The predecessor to Burger King was founded on July 23, 1953 in Jacksonville, Florida by Keith Cramer and his stepfather Matthew Burns — who had visited the McDonald brothers' original restaurant in San Bernardino, California and wanted to replicate the concept. Their key differentiator was the Insta-Broiler, a mechanical flame-broiling device that cooked burger patties over a gas flame rather than frying them. The result was a distinctive smoky flavour that everything from $0.18 hamburgers to modern Whoppers has retained. Financial difficulties hit by 1954, and two Miami-based franchisees — James McLamore and David Edgerton — purchased the company and renamed it Burger King. They introduced the Whopper in 1957 for $0.37 and expanded to 250 locations before selling to Pillsbury in 1967.

Burger King became a case study in ownership instability. Pillsbury acquired it in 1967 for $18 million. Grand Metropolitan bought Pillsbury in 1989 for $5.7 billion (inheriting Burger King). Grand Metropolitan merged with Guinness in 1997 to form Diageo (the spirits company) — which found itself owning a fast food chain. Diageo sold Burger King to a TPG Capital, Bain Capital, and Goldman Sachs consortium for $1.5 billion in 2002, who took it public. 3G Capital of Brazil — the same firm that built AB InBev and would later buy Heinz — acquired a majority stake for $3.26 billion in 2010. Each ownership change promised a revitalisation that McDonald's continued to render moot.

3G Capital engineered a merger between Burger King and Tim Hortons — the iconic Canadian coffee and doughnut chain — in 2014, creating Restaurant Brands International (RBI) in a deal valued at $11.4 billion. Warren Buffett's Berkshire Hathaway provided $3 billion in financing. The deal was structured as a tax inversion, moving the combined company's legal domicile to Canada. RBI subsequently added Popeyes Louisiana Kitchen (2017, $1.8 billion) and Firehouse Subs (2021, $1 billion), creating a portfolio of four franchise-heavy quick-service brands.

Under 3G Capital's ownership, Burger King invested in a "Reclaim the Flame" strategy: a $400 million plan to renovate restaurants, upgrade technology, and strengthen franchisee economics. The Whopper — introduced in 1957 — remained the brand's most recognisable product globally, available in nearly 100 countries. Burger King's willingness to innovate around the Whopper (plant-based Impossible Whopper in 2019, regional variations globally) gave it brand flexibility that McDonald's Big Mac could not easily match.

Restaurant Brands International generated system-wide sales across its four brands exceeding $40 billion in 2024. Burger King alone operated 19,666 restaurants globally, with over 90% franchised. In 2024, RBI completed the $1 billion acquisition of Carrols Restaurant Group — Burger King's largest US franchisee — specifically to execute a remodelling programme across 600 locations and then sell them back to new franchisees. US systemwide Burger King sales reached approximately $11 billion. The chain that had been owned by a spirits company, a leveraged buyout firm, and Brazilian private equity had become the anchor of one of the world's largest fast food holding companies.

Fred DeLuca was 17 years old in 1965, working minimum wage at a hardware store in Bridgeport, Connecticut, trying to figure out how to pay for college. He asked a family friend — Dr. Peter Buck, a nuclear physicist — for advice. Buck didn't offer tuition money. He offered $1,000 to open a submarine sandwich shop together. They shook hands. On August 28, 1965, they opened Pete's Super Submarines in Bridgeport, selling 312 sandwiches the first day. The first location failed. DeLuca's biggest regret was choosing a bad spot. The third location, in a high-visibility position, worked. The name changed to Subway in 1968.

By 1974, DeLuca and Buck had opened 16 Connecticut locations. They began franchising — a decision that launched extraordinary growth. The Subway model was built for replication: low startup costs ($15,000-$30,000 vs. hundreds of thousands for McDonald's), simple operations, a customisable assembly-line sandwich that required no cooking equipment beyond a toaster oven, and aggressive international expansion. DeLuca was known for pushing franchisees to open additional stores near their existing ones — sometimes across the street — creating a density that no competitor matched.

In 2002, Subway became the largest fast-food chain in the United States by number of outlets, surpassing McDonald's. At its peak, Subway operated nearly 44,000 locations across more than 100 countries — more restaurants than any chain in history. The growth was built on a simple value proposition for franchisees: lower investment, lower risk, and a brand that had become synonymous with "healthy fast food" through years of effective marketing, including the famous "Jared" campaign featuring a customer who claimed to have lost 245 pounds eating at Subway.

Fred DeLuca was diagnosed with leukaemia in 2013 and died on September 14, 2015, at age 67 — just weeks after Subway's 50th anniversary. Control passed to his sister Suzanne Greco, then to John Chidsey, the first non-family CEO, in 2019. Net store count had been falling since 2015 — approximately 7,000 locations closed between 2015 and 2023, primarily due to poor unit economics for franchisees in a market where Chipotle, Jersey Mike's, and delivery platforms were taking customers. The Jared scandal (his conviction for child sex offences in 2015) had damaged the brand's marketing legacy.

Subway was sold to Roark Capital Group — a private equity firm specialising in franchise brands (also owning Dunkin', Arby's, Jimmy John's, Sonic, Buffalo Wild Wings) — for $9.6 billion in a deal completed in April 2024, ending 60 years of DeLuca family ownership. Subway operated approximately 37,000 restaurants globally and generated about $9.5 billion in US systemwide sales in 2024. The "Fresh Forward 2.0" restaurant redesign was unveiled in late 2024, with a global rollout planned for 2025. The 17-year-old who had borrowed $1,000 to pay for college had built a restaurant system now owned by private equity.