Fred DeLuca, who co-founded the Subway sandwich chain to finance his college studies and saw it grow to overtake McDonald’s in size, died Sept. 14. He was 67.
The Milford, Conn.-based company confirmed the death but did not say where he died. In 2013, the company said Mr. DeLuca was receiving treatment for leukemia. In June, Suzanne Greco, his sister, took over as president while Mr. DeLuca remained chief executive.
Along with Peter Buck, Mr. DeLuca opened the company’s first restaurant in Bridgeport, Conn., in 1965 and expanded it to include about 42,000 outlets worldwide over the next five decades.
As a 17-year-old high school graduate, he went into the sandwich business with Buck, a family friend and nuclear physicist, after asking him for a $1,000 loan. Buck came up with the idea to help Mr. DeLuca pay his way through college.
Mr. DeLuca and his partner turned the privately owned brand, initially called Pete’s Super Submarines, into a franchise in 1974 and took the business nationwide with its BMT sandwich, named after the Brooklyn-Manhattan Transit Corporation, and the “Snak” sub sandwich, later known as the “6-inch.”
The company’s first international franchise was granted in 1984 in Bahrain. In 2002, Subway overtook McDonald’s in number of restaurants in the United States, the Wall Street Journal reported.
In 1998, Fortune magazine raised questions about the company’s expansion, noting the legal disputes that erupted between the company and dissatisfied franchisees. Many Subway shop owners said they felt misled by aggressive sales agents who overpromised financial windfalls and were less than forthcoming about the terms of the contract.
Franchise owners owed 8 percent of gross sales to the company, according to Fortune, making it the “highest royalty in the food franchise industry.”
“I really feel terrific that so many people have done so well,” Mr. DeLuca told Fortune.“But there are risks. People can lose money. It bothers me that people lose money, but I don’t lose sleep over it. This is America.”
This year, Forbes magazine pegged DeLuca’s net worth at $3.5 billion, making him the 259th-richest individual in the United States.
Subway, which is owned by the holding company Doctor’s Associates Inc., became known as a healthier fast-food alternative to McDonald’s and other chains such as Kentucky Fried Chicken and Burger King.
“They were ahead of the curve with the health positioning, they have a halo in the mind of the consumer, and they have a franchising model that’s been very aggressive,” David Henkes, a vice president at Chicago-based research firm Technomic Inc., said in a 2010 interview in QSR magazine.
In 1997, the company launched a marketing endeavor that advertised “seven subs under six grams of fat,” and major publications began profiling the apparent weight-loss success of Jared Fogle, an Indiana college student who claimed to have lost 245 pounds with his own Subway diet for almost a year.
“Jared the Subway Guy” began popping up in hundreds of commercials, public appearances and speaking engagements for the chain, hawking its meals as less fattening than other fast-food options.
The company said this summer that it had cut ties with Fogle, who agreed to plead guilty to charges that he paid for sex acts with minors and received child pornography.
Other challenges for Subway in recent years have included the rise of the toasted subs chain Quiznos, which went through a rapid expansion followed by massive store closures in the Great Recession.
Some analysts said Subway has overextended with its more than 27,000 U.S. locations. Last year, average sales at established U.S. locations fell 3 percent, according to Technomic.
Frederick DeLuca was born in October 1947 in Brooklyn. He grew up in the Bronx and lived in public-housing projects before the family moved to Schenectady, N.Y., when he was 10. His completed high school in Bridgeport and graduated from the University of Bridgeport in 1971.
While working in the local hardware store to save money for college, Mr. DeLuca approached Buck at a barbecue for a loan.
“I thought, ‘He’s doing well. I’m going to ask him if he has any good ideas for college,’ kind of really hoping he’s going to reach in his pocket and pull out a big stack of $100 bills and just give them to me,” Mr. DeLuca said in an interview with CNBC.
Buck pitched the idea of Subway stores to Mr. DeLuca after recalling the Italian sandwich shop, called Amato’s, that he and his father had visited on Sunday evenings when Buck was a child. Mr. DeLuca and Buck drove to Maine to study Amato’s sandwiches before opening their first store weeks later.
Mr. DeLuca, who had homes in Florida and Connecticut, married his high school sweetheart, Elisabeth, and had a son, John. A complete list of survivors was not immediately available.
“I set a mandatory retirement age for myself, of 100,” he told the Toronto Globe and Mail in 2013. “There’s a lot of people, and I find it interesting, they actually look forward to the day that they will retire. That’s dreadful to me. What would I do when I wake up every day forever, without a purpose?”