In late August, private equity firm Roark Capital announced plans to purchase fast-food giant Subway.  The Federal Trade Commission quickly jumped in, announcing a federal antitrust probe into Roark on the basis of a potential sandwich shop monopoly.  Roark Capital already owns Jimmy John’s, Arby’s, McAlister’s Deli, and Schlotzky’s, so the addition of Subway would put them in a dangerous position of “market power” according to the sandwich trust busters.

Senator Elizabeth Warren, a well-known antitrust advocate and ever keen on burnishing her anti-big business credentials, was quick to raise the alarm. In a post on X, Warren warned, “We don’t need another private equity deal that could lead to higher food prices for consumers.  The FTC is right to investigate whether the purchase of Subway by the same firm that owns Jimmy John’s and McAlister’s Deli creates a sandwich shop monopoly.”

Is this really fair?  Would the acquisition of Subway really give Roark a monopoly? On the surface, Roark’s newly-formed sandwich empire might plausibly fit this definition, given that Subway and Jimmy John’s are two of the nation’s largest brands in the fast-food sandwich restaurants category. According to market research firm IBIS World, for the “sandwich and sub store franchises” category, Subway and Jimmy John’s have 38% and 9% market share, respectively (I’m excluding Arby’s as they are not mainly a sub sandwich restaurant). The other sandwich joints owned by Roark are very small, but let’s assume that all together Roark would own more than 50% of the “sandwich and sub store” business post-merger—not quite a monopoly, even with the loosest definition. 

The larger problem with antitrust worrywarts, however, is a failure to understand what markets are for and the nature of competition. Why do any of us buy a sub sandwich, anyway? Is it because we need a sandwich right now, or because we’re hungry and a sandwich sounds good? Food businesses exist to feed us, and those which do so with great food at good prices will succeed. Those that don’t will fail, regardless of past market share tallies. The open market is full of great fast food options, from burgers to pizzas to tacos to subs. If subs are overpriced, we can easily switch over to other food options. Even if we’re insistent on a deli sandwich, there will still be multiple options even if the big bad “sandwich monopoly” comes to own every franchised-deli shop in the land.

I live in a college town of about 10,000 people in northwestern Michigan, and when discussing the specter of the sandwich monopoly recently in an economics class, we were able to identify nearly a dozen alternatives specifically for sub sandwiches—even excluding Subway and Jimmy John’s—within our very small town. If we expanded our list to all fast food purveyors we’d add at least another dozen options, and we’re still not even including the prepared foods offered by gas stations and grocery stores. We live in a wonderful world of open, competitive markets, and perhaps nowhere is this more evident than food service, where entry costs are low and lots of people have the knowledge and ambition to make a go with small business entrepreneurship. 

So, even if Roark Capital achieved 100% ownership of “sandwich shops” and tried to raise prices to exploit hungry consumers, they will not succeed. Customers will reliably abandon Roark’s shops in favor of more affordable food offerings of similar quality. But even if some entity monopolized all restaurants and was able to successfully raise prices, the fact that the knowledge and skills required to make and sell good food are widely dispersed among the people, and the costs of opening a small food place are relatively low, no “monopoly” in food could last. As economists understand, it’s not just the presence of current businesses that makes for competition, but the potential  for new enterprises to arise that makes for a robustly competitive marketplace. 

Overall, the fundamentals of competition in a free market certainly prevail in case of Roark Capital and the not-to-be-feared sandwich monopoly.  The universe of market competition in general, and specifically in the case of food service in the United States today, is vast and hearty. There is nothing to be feared when an investment firm adds a third or fourth franchise to its holdings.  So, next time you hear Elizabeth Warren or any other proponents of antitrust legislation exclaim that the federal government needs to step in to ensure a free market, remember that we’re already living in a world of vast and deep competition, both within and especially outside of narrow industry categories. Nobody’s going to pull off a sandwich monopoly, and even if it happened, it wouldn’t last long enough to be worthwhile. Rest easy, and enjoy your next meal courtesy of the competitive market economy.


Brendan Cairney is a student at Ferris State University studying Economics and Finance.