By Hilary Russ
NEW YORK (Reuters) - Subway reached an agreement with a master franchisee to open nearly 4,000 new sandwich shops across mainland China over the next 20 years, it said on Tuesday.
International expansion is a key growth strategy for the privately owned U.S.-based chain, which is in the midst of a turnaround plan that also relies on remodeled restaurants, updated menus and a splashy marketing campaign.
While it seeks to expand overseas, the company has been closing thousands of U.S. locations amid a host of problems including over-expansion and discounts that eroded franchisees' profits.
Even so, Subway's global comparable sales rose 12.1% in the first quarter.
Other companies are also beefing up their presence in China, including Starbucks (NASDAQ:SBUX), which plans to open 3,000 new stores there by 2025.
Subway's deal with master franchisee Shanghai Fu-Rui-Shi Corporate Development Co Ltd (FRS) is the largest such agreement in Subway's history. FRS is funded by a consortium of private investors including Asia Investment Capital.
FRS will get exclusive rights to manage and develop all Subway locations in China. The 4,000 new restaurants would be a seven-fold increase in Subway's current footprint there.
"China is a key market with significant long-term growth opportunity, and we look forward to bringing the Subway experience to even more guests in the region," Subway Chief Executive John Chidsey said in a statement.