Marwaha Group Inc. in Anaheim bought 500 Subway sandwich shops in six counties in the Houston market.
The acquisition was set to close this week.
The deal brings its total to 1,250 locations, all in Texas and California.
The company owns and runs 160 of those, with the rest franchised out to other operators, Co-Chief Executive Raghu Marwaha said.
The group doesn’t own or operate any Subways in Orange County, but its headquarters have been in Anaheim since it started in 1995.
“We have been here since the beginning,” Raghu Marwaha said.
Raghu’s brother Rohit Marwaha is also co-chief executive. Their sister Rinku Marwaha-Sodhi is chief financial officer, and the siblings’ father, Ravi Marwaha, is president.
All are owners.
Marwaha also has “exclusive rights to develop” the San Diego market for Irvine-based Yogurtland Franchising Inc., owns a Denny’s restaurant in Los Angeles, and has begun to buy branded hotels in San Diego County.
“We had other Denny’s but sold them,” Raghu said.
The Business Journal pegs Marwaha Group’s annual revenue at more than $100 million.
Its deal with Yogurtland is to franchise at least 10 locations, with three open and a fourth under construction.
Subway Focus
Subway is far and away Marwaha Group’s largest venture—and where it got its start.
Raghu said he and Rohit worked as “sandwich artists”—Subway’s term for its workers—in a Gardena location in 1994. They bought their first franchise in Hawthorne a year later.
Marwaha Group is a “development agent” for the chain, so it can run its own restaurants and franchise locations to others.
Milford, Conn.-based Doctor’s Associates Inc. owns Subway, which has 45,000 locations in 111 countries.
All are franchised.
U.S. locations—27,000 restaurants, or 60% of the total—had systemwide sales of $11.9 billion, according to QSR, a fast-food industry journal.
The franchise fee for a single location is $15,000, and it costs about $200,000 to open one, according to Entrepreneur magazine, in Irvine.
Franchisees average nearly $500,000 in annual revenue and typically pay 12.5% of revenue in royalty and marketing fees.
Hotels
Marwaha Group has recently branched into hotels, making two acquisitions.
It considered investing in shopping centers but opted for hotels as another service-based effort similar to restaurants.
“We know how to run actual businesses,” Raghu said. “We want to leverage our organization and apply it to real estate.”
An affiliate of the entity in January paid $12.4 million for a 78-room Best Western Plus hotel in La Mesa. Another affiliate bought the 94-room TownePlace Suites hotel last month in Vista for $15 million.
Each hotel sold for about $159,000 per room.
Atlas Hospitality Group in Irvine brokered the first deal; Pasadena-based Titan Hospitality handled the second.
Ragu said Marwaha plans to run hotels in-house through its MG Hospitality unit. It’s naming a director for the unit so the family can maintain its focus on the restaurant business, Raghu said.
It wants “institutional grade” hotel brands that it would own and operate under the Marriott, Hilton, IHG and Hyatt corporate umbrellas.
“We don’t want to manage anything we don’t own,” he said. “We’re focused on (hotel) assets we control entirely.”
Jobs
Marwaha Group is on Woodland Drive in Anaheim.
“We’ve always lived (in Orange County),” Raghu said. “So we maintained the headquarters near our home.”
The company has a Corona office on Green River Drive about 5 miles from the 91/241 interchange. That office oversees Subway locations in Riverside, San Bernardino and Imperial counties.
Another office in the San Fernando Valley of Los Angeles runs the Ventura, Santa Barbara, Inyo and Kern County sites; a San Diego office oversees that area, along with its Yogurtland work.
“This helps our people focus on their territories,” Raghu said.
Marwaha Group has a franchisee support center in India called SubSource for back-office functions.
Now it adds Houston to the mix.
The company has about 1,700 employees, based on industry averages, not counting the 1,000 Subway franchises it oversees, which would employ another 13,000.
