Sen. Elizabeth Warren, D-Mass., recently set off an internet food fight when she declared her support for the Federal Trade Commission’s investigation into whether a private equity firm’s purchase of sandwich chain Subway should be allowed to go ahead. “We do not need another private equity deal that could lead to higher food prices for consumers,” she wrote on X.
Right-wingers found Warren’s recipe less than appetizing. They accused her of everything from ignorance of economics to tasking government bureaucrats with settling the definition of a sandwich.
If you have multiple separate brands, “but they’re all owned by the same private equity firm, it’s not really any choice at all.”
But Warren is quite right. If completed, the $10 billion deal will hand control of 40,000 sandwich shops across the United States — more than twice the footprint of either McDonald’s or Starbucks — to private equity firm Roark Capital. If this deal follows other cases of corporate concentration, it will likely be bad for workers, bad for franchise owners, bad for food suppliers and bad for your wallet.
Roark (yes, the name is a nod to Howard Roark from Ayn Rand’s “The Fountainhead”) already owns sandwich chains Jimmy John’s, McAlister’s Deli and Schlotzsky’s, which Subway’s agreement with franchisees lists as competitors, as well as Arby’s, another fast-food chain. If you have multiple separate brands, “but they’re all owned by the same private equity firm, it’s not really any choice at all,” Brian Callaci, the chief economist at the Open Markets Institute, told me. “It’s an illusion of choice.”
Monopolies and oligopolies (where a market is controlled by a small number of producers) give companies the power to push through price increases because customers have fewer options. More than a few observers believe the inflation of the past few years was accelerated by food and agricultural giants — aka “greedflation.” As Time magazine…
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