Quite a few Subway eating places have closed their doorways after their proprietor filed for chapter, the newest wave of retailer closures to affect a big franchisee of a serious fast-food chain this 12 months.
Associates of MTF Subs, which collectively function dozens of Subway eating places throughout 4 states, have rejected the leases for six areas, court docket data reviewed by Quick Firm present.
Further shops might additionally shut, because the franchisee has been within the strategy of evaluating the rest of its retailer footprint. A chapter decide lately gave the franchisee till August to determine if it can reject further retailer leases.
The six shuttered eating places, positioned in Maine and Virginia, had been all nonetheless listed on Subway’s retailer locator instrument as of Monday, albeit with no working hours. As of this week, a lot of the areas are additionally marked “briefly closed” on Google Maps.
It was not instantly clear what’s going to occur to the areas. Based on an April court docket submitting, MTF stated it anticipated to avoid wasting greater than $10,000 a month on lease prices because of the closures.
Quick Firm has reached out to Subway, MTF Subs, and its authorized counsel for remark.
The closures come after MTF Subs, via its enterprise associates, sought Chapter 11 safety in January, citing monetary issues because of service provider money advances that had proved tough to pay again.
Joint chapter circumstances had been filed within the Jap District of Pennsylvania, with restricted legal responsibility corporations MTF Enterprises and MTF Holdings listed as lead debtors.
Three months after its chapter petition, MTF instructed the court docket that it had recognized numerous its Subway areas whose lease prices couldn’t justify continued operations. It stated it notified the landlords of its intention to reject these leases and promised to vacate the shops by April 30.
Why did this franchisee go bankrupt?
MTF Subs has been within the Subway franchise enterprise since 2017.
Based on its web site, founder Michael Fay labored as a “sandwich artist” on the fast-food chain in highschool. He cherished the meals a lot that he determined to buy his personal location in Pennsylvania. He then steadily amassed small empire of Subway eating places in Pennsylvania, Maine, Virginia, and New Hampshire.
In chapter filings, MTF stated its monetary issues had been largely the results of service provider money advances, or MCAs, a kind of money injection that enables retailers to obtain cash up entrance and pay it again via a share of future gross sales. MTF says the day by day and weekly attracts from these advances grew to become a “money drain” on the enterprise.
One lender ultimately sought assortment of a whole lot of 1000’s of {dollars} instantly from funds providers suppliers, together with Stripe, American Specific, and Sq., court docket paperwork present.
This isn’t the primary time that service provider money advances have contributed to a restaurant franchisee’s chapter. Final 12 months, the proprietor of twenty-two Del Taco eating places cited 10 separate MCAs—to the tune of greater than $2.7 million—as one of many causes for its Chapter 11 submitting, as reported by Restaurant Enterprise.
Numerous different giant quick meals franchisees have sought Chapter 11 safety this 12 months, together with the homeowners of Popeyes Louisiana Kitchen, Carl’s Jr., and Applebee’s eating places.
Restaurant homeowners generally cite declining foot visitors and better working prices as being among the many causes for his or her monetary misery.
Which Subway eating places have closed?
In April, MTF stated it deliberate to reject the leases of six of its Subway areas, three in Maine and three in Virginia. It stated it anticipated to vacate the shops by April 30. The areas are as follows:
- 989 Wiscasset Rd, ME-27, Boothbay, ME 04537
- 6 Allen Ave, Portland, ME 04103
- 16 South Road, Blue Hill, ME, 04614
- 5251 John Tyler Hwy., Williamsburg, VA 23185
- 1430 Richmond Rd., Williamsburg, VA 32185
- 6448 Maddox Blvd, Chincoteague, VA 23336
As of this week, most of those areas had been marked as “briefly closed” on Google. The addresses are nonetheless seen on Subway’s retailer locator instrument, however with out working hours. Quick Firm has requested sandwich chain and the franchisee for extra particulars.
It’s unclear what number of jobs had been impacted by these closures or if further shops are additionally on the chopping block.
MTF initially had till Might 21 to determine which leases it will reject as a part of its restructuring. However it requested the chapter court docket for extra time and was granted an extension till August 19. It instructed the court docket that it was nonetheless within the strategy of evaluating its footprint.
Is Subway in bother?
Subway is the most important quick meals chain in the US by variety of areas, however its nationwide footprint has been declining quickly.
As reported by Restaurant Dive, which cited Subway’s franchise disclosure doc, the chain saw a net decline of 729 shops final 12 months, brining its whole U.S. unit rely to 18,773.
Subway was acquired in 2024 by personal fairness agency Roark Capital, which owns or backs an unlimited portfolio of restaurant manufacturers that features Dave’s Scorching Rooster, the mother or father firm of Arby’s and Dunkin’, and the mother or father firm of Hardee’s and Carl’s Jr., to call a couple of.
On the time of the acquisition, Subway claimed it had “three distinctive years” of gross sales development, and that its international retailer rely was rising for the primary time since 2016. It says it has greater than 35,000 areas world wide, however as a privately held firm, it doesn’t recurrently report monetary outcomes.
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