Elizabeth Warren needs to define sandwich
Timothy P. Carney
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Every senator has solemnly sworn to defend the Constitution of the United States against all enemies, foreign and domestic, and Sen. Elizabeth Warren (D-MA) understands that this includes the specter of “a sandwich shop monopoly.”
Subway is being purchased by Roark Capital, a private equity firm. The problem: Roark also owns Jimmy John’s, McAlister’s Deli, and Schlotzky’s, which are also national sandwich chains. Warren warns that this purchase “could lead to higher food prices for consumers.” For that reason, Warren is happy to sic the U.S. government on these sandwich moguls, cheering on the Federal Trade Commission’s investigation of the merger.
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In a way, this is simply part of Warren’s yearslong economically absurd schtick blaming Biden-era inflation on corporate greed. At the same time, Warren’s new sandwich campaign is a perfect demonstration of how arbitrary the federal government’s antitrust enforcement can be — and arbitrary government power is an invitation for cronyism, abuse of power, and scapegoating.
To establish whether someone has a monopoly, you need to establish what industry that business is in. In other words, you don’t know if something is anti-competitive until you know exactly against whom the relevant players are competing.
Subway is the largest sandwich chain in America, according to QSR magazine, a trade publication for the “quick-service restaurant industry.” Going by QSR’s rankings, two other Roark holdings (Arby’s and Jimmy John’s) are also in the top four quick-service sandwich chains in terms of annual sales. No. 2 is Panera.
Consolidating three of the top four players in an industry under one owner sure sounds a bit monopolistic when you put it that way. But if your consumption habits and tastes are like mine, your brow may already be a bit furrowed.
Is Panera really in the same category as Jimmy John’s and Subway? I mostly go to Panera for coffee and writing. I’m more likely to get a salad there than a sandwich. Subway is for carryout, and Panera is for sitting with my laptop or my children.
And Arby’s? Isn’t that more a peer of McDonald’s and Burger King? What makes a quick-service sandwich business a sandwich business? Does it make sense to worry about a sandwich shop monopoly at all?
Consider that Chick-fil-A enjoyed $16 billion in sales in 2021, which is equal to Subway-plus-Arby’s-plus Jimmy John’s. Chick-fil-A sells chicken sandwiches. Popeye’s and KFC recently went to war with Chick-fil-A precisely over chicken sandwiches, and both of those chains are larger than either Arby’s or Jimmy John’s.
And while we’re at it, are burritos and tacos really different in kind from sandwiches? What about Taco Bell’s crunchwraps? Do those not compete with Subway subs?
Non-sandwiches, of course, compete with sandwiches. QSR noted that sandwich joints are losing market to burger chains, pizza places, and wing outlets. Why? Subway and Jimmy John’s suffer from “a relative lack of drive-thrus,” QSR reports.
Speaking of drive-thrus, do you know who else is bigger than Arby’s or Jimmy John’s?
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Sonic, which, you may recall, was founded was a hot dog joint.
Before claiming that a new sandwich shop monopoly exists, Warren and the FTC need to define a sandwich — and whether that includes a processed meat tube between two pieces of bread.