Subway Says Co-Founder, CEO Fred DeLuca Has Died

DeLuca’s sister, Suzanne Greco, had recently been named president in charge of daily operations

Subway co-founder and Chief Executive Fred DeLuca, who, over the course of five decades, built the sandwich chain into the world’s biggest restaurant company by number of outlets, died Monday evening at the age of 67, the company said.

The company didn’t disclose the cause of death, but Mr. DeLuca had been undergoing treatment for leukemia since 2013. He had recently named his sister, Suzanne Greco, as president, in charge of daily operations. Subway wouldn’t say whether she would assume the role of CEO.

The news marks the latest challenge for the sandwich giant, which is incorporated as Doctor’s Associates Inc. Last month, Subway’s longtime pitchman, Jared Fogle agreed to plead guilty to child-sex charges following a multiyear federal investigation. Subway hadcut ties with Mr. Fogle in July, after authorities raided his home as part of the probe.

Mr. DeLuca co-founded Subway in 1965 when he was just 17 years old. With a $1,000 loan from his friend Peter Buck, a doctor, Mr. DeLuca opened his first sandwich shop, called Pete’s Super Submarines, in Bridgeport, Conn. Initially, his plans were to raise money from the shop to help pay for his education to become a doctor.

Instead, Mr. DeLuca became a sandwich magnate. The partners set a goal of opening 32 stores in a decade. In 1974, when Messrs. DeLuca and Buck had 16 sandwich outlets throughout Connecticut, they realized they wouldn’t meet their goal unless they franchised the brand. Mr. DeLuca, a pioneer in restaurant franchising, turned Subway into a global empire with more than 44,000 locations. Forbes this year estimated his net worth at $3.5 billion.

“He was an extremely ambitious businessman, a bright and analytical thinker and was even a member of Mensa,” Subway said Tuesday.

The chain has struggled recently, in part a victim of its own success. With more than 27,000 shops in the U.S. crammed into locations that include laundromats and car dealerships, the restaurants have begun to cannibalize each other, franchisees say.

Sales at Subway’s U.S. restaurants dropped last year for the first time in more than a decade, falling 3.3% to $11.9 billion. Subway was the only major sandwich chain besides Quiznos, owned by QCE Finance LLC, to suffer a sales decline in 2014, according to restaurant research firm Technomic Inc. Competition in the sandwich category has intensified, with newer entrants—such as Jimmy John’s Franchise LLC and Jersey Mike’s Franchise Systems Inc.—selling sandwiches with freshly baked bread and freshly sliced meat.

The investigation of Mr. Fogle added to Subway’s woes. The company last month said it was unaware of any problems with its longtime spokesman before the federal raid. Subway last week said it completed an internal investigation showing that it had in the past received a “serious” complaint about Mr. Fogle but that the complaint didn’t imply any criminal sexual activity.

Subway recently hired a new ad agency to revamp its marketing strategy. The 50-year-old company said Mr. Fogle’s legal problems had nothing to do with the agency review or the need for a new marketing plan. Rather, Subway said the change was part of a companywide “brand revitalization process” intended to reverse its sales slump. Subway said it would reduce its reliance on pitchmen and instead put more emphasis on the company’s products.

Mr. DeLuca leaves behind his wife, sister, son and members of his extended family.

Source: WSJ