Subway co-founder and long-time CEO Fred DeLuca became famous for his rags-to-riches story of building the brand into the largest restaurant chain in the world by location.
But, behind the scenes, insiders say DeLuca’s behavior could spark concerns.
In 2000, for example, a shirtless calendar of Subway executives was distributed among insiders at the company. DeLuca was the January model, posing in a darkened office. He is shirtless, holding a glass of what appears to be champagne in one hand and a blue notebook labeled “executive order” in the other.
Other months of the calendar feature the chain’s chief development officer Don Fertman shirtless in a conference room and Dick Pilchen — Subway’s first employee turned marketing guru — posing in the shower.
Read more: Subway cofounder Fred DeLuca ruled the company like a demigod and pursued wives of franchisees. How one man sent the world’s biggest fast-food chain into a tailspin.
A former employee who shared the calendar with Insider said the incident highlighted a lack of professionalism shown by DeLuca and others in the Milford, Connecticut headquarters.
Multiple former employees said that Subway had a “big family” atmosphere with DeLuca at the helm from 1965 until his death in 2015. Some embraced the social atmosphere, meeting significant others on the job and attending parties thrown by Subway. Others felt uncomfortable, with the ex-employee who shared the calendar saying it could feel like a “bizarre,” insular high school.
Insiders said DeLuca engaged in other practices that they believed were inappropriate for a CEO. Two sources told Insider that DeLuca would pursue franchisees’ wives at conventions. According to one long-time franchisee, the practice infuriated some, but DeLuca got away with it because many at Subway saw him as a “demigod.”
“He always felt that he could go and he could approach any woman,” at Subway conventions “because he was responsible for their husband’s success in stores,” a business associate said.
Claims of DeLuca’s extramarital affairs extended beyond Subway. In 2017, DeLuca’s former banker Fran Saavedra said in a deposition she was romantically involved with DeLuca in addition to managing his money.
One long-term girlfriend, Cindy Mattson, filed a lawsuit against DeLuca’s estate after his death, claiming he had adopted a child with her, without signing the formal adoption papers. Mattson claimed that DeLuca promised to support her and her son — named Luca — with $20 million, according to court documents obtained by Insider. DeLuca’s wife, Elisabeth DeLuca, denied the claims. Mattson later filed a document saying she had received full payment or otherwise settled or compromised on the claim. (Mattson did not respond to Insider’s requests for comment).
When he died in 2015, DeLuca was still married to Elisabeth, who then inherited his half of the company. In the years since, the chain has closed thousands of locations, as sales slump and franchisees battle against the corporate office.
According to employees and franchisees who spoke with Insider, Subway’s current problems are inextricable from the strategies DeLuca employed to build the chain — and the CEO’s failure to plan for his succession.
Insider has spoken with more than 20 recent Subway staffers and DeLuca employees, business partners, and friends in recent months to better understand the impact of the co-founder’s complicated legacy on the chain.