Watami is buying the operator of the Subway sandwich chain in Japan as it seeks to branch out from its portfolio of izakaya-style restaurants and take on fast food rival McDonald¡¯s Holdings Japan.
The Tokyo-based company, which already runs a slew of popular franchises including TGI Fridays in Japan, signed a 10-year master franchise contract with Subway International, it said in an exchange filing Friday. It didn¡¯t disclose a price for the acquisition but said it would fund the deal using bank loans.
Shares in Watami jumped 5.1%, their biggest intraday rise in more than two-and-a-half months, before closing up 3.9%.
The Subway franchise has historically struggled to gain footing in the Japanese market, with just 178 locations compared to nearly 3,000 for McDonald¡¯s.
Watami plans to grow the number of Subway stores to a similar scale over the next two decades, a company spokesperson quoted founder and CEO Miki Watanabe as saying in a news conference. It also looks to combine the companies¡¯ strengths, including by developing Subway menu items using organic vegetables grown at Watami farms.
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