Subway’s dual HQ strategy still rare for CT, other companies

PHOTOS | CONTRIBUTED Sandwich chain Subway is one of the few companies in Connecticut to establish a dual headquarters. In March, it debuted its new Miami headquarters.

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By Harriet Jones, Hartford Business Journal Contributor

Sandwich chain Subway recently reinvested in its home state of Connecticut, cutting the ribbon on a new headquarters building in Shelton, a few miles north of its original Milford home.

The building becomes one of two headquarters Subway will maintain — the second was established earlier this year in Miami.

The company says Shelton will be home to business functions including human resources, finance and legal, while Miami hosts the brand’s consumer-facing operations, as well as staff from the Latin America regional office.

The franchising giant joins a select list of companies that have decided to split their executive functions between two sites.

The most high-profile name on that list is Amazon, which had economic development professionals scrambling all over the country, including in Connecticut, when it announced a competition for the site of its second headquarters in 2017.

Virginia eventually won the race for what was dubbed HQ2, and phase one of the development opened in Arlington earlier this year.

Mohammad Elahee

“It is not that common,” said Mohammad Elahee, of establishing dual headquarters, “but I think it will become more common in the future.”

Elahee is a professor of international business at Quinnipiac University. He believes the accelerated changes in remote-working technology during the pandemic have made a dispersed headquarters much more achievable.

“Even though history has not always been kind to companies with two headquarters, I think in the future, companies can seamlessly operate with two or even more than two headquarters,” he said.

One company that moved in the opposite direction is consumer packaged-goods maker Unilever, which consolidated its headquarters to the United Kingdom in 2020, after almost 100 years of being split between Rotterdam and London.

Elahee said past difficulties included the expense of maintaining two sites, and the threat that they might find themselves out of step.

“The biggest challenge was when a firm would have two headquarters in two different places, the organizational culture in each headquarters would evolve differently, and that would create division,” he said. “If something goes wrong, one headquarters would blame the other headquarters.”

But improved connectivity can solve that issue, and Elahee now expects companies that go with a dual structure to realize a few different advantages, particularly in a highly politicized environment where states like Florida take issue with big corporations like Disney.

“Maybe many firms don’t want to keep all their eggs in one basket,” said Elahee. “If something goes wrong in one place, they can easily relocate to another.”

It could also, he said, facilitate companies playing one state off another to generate more tax breaks.

Talent considerations

Keith Pennington

Access to particular segments of the global marketplace is another siting factor, along with the geographical availability of skilled executive employees, said Keith Pennington, an assistant professor of management and entrepreneurship at UConn’s School of Business.

“If you want to look a little bit further from the C-suite, but still in upper management, that’s a really distinct type of talent pool to draw from,” he said.

It can tend to create particular places where headquarters thrive.

“Look at Minneapolis, for an example of a cluster of a lot of corporate headquarters,” said Pennington. “They’re all in different fields, but their upper managers job hop from one place to the next within Minneapolis. There’s this surplus pool of good upper management that could work at all different kinds of companies.”

PHOTOS | CONTRIBUTED

Subway unveiled its newly relocated Connecticut headquarters in Shelton in October.

Some companies end up with dual headquarters as a result of a merger — that’s the case with New England’s biggest utility company, Eversource.

It was created from a merger of Hartford-based Northeast Utilities and NSTAR, headquartered in Boston. When the deal went through in 2010, the new company surprised business commentators by maintaining both sites as equal headquarters.

Jim Hunt

“Place matters,” said Jim Hunt, Eversource’s corporate secretary and executive vice president for corporate relations.

At the time of the merger, he said, both companies had a strong affinity with their home states and felt it was important to maintain a significant corporate presence in each.

The company considers itself an important anchor for the city of Hartford from its headquarters at 56 Prospect St.

“If you think about what a corporate presence means to a community, having foot traffic, the secondary impacts of the economy from helping the local shops,” Hunt said. “I get my hair cut next to 56 (Prospect), and I get my shoe shine right there as well. We are very mindful and invested in our communities.”

Hunt said Eversource doesn’t formally segregate functions between the two sites.

“We’re a very hands-on leadership team. We go to where the work is,” he said. “I'll be in Hartford or Berlin on one day, and Boston or even Manchester, New Hampshire, in another.

“We do expect our executive team to be visible in all parts of the company,” he added.

Corporate headquarters can also have gray areas. For example, Travelers Cos. is technically headquartered in New York City, but the insurer has its largest presence in Hartford, where it employs over 7,000 people and hosts some senior executives.

New ground rules

John Bourdeaux

John Bourdeaux, the CEO of AdvanceCT, a nonprofit working with state government to attract and retain companies in Connecticut, said the thinking about corporate structure and siting is in a historic state of flux.

“What does it mean to be headquartered somewhere?” he asks.

“In our post-COVID world — if we are post COVID — I'm not sure we know yet what the new ground rules for business are,” he said. “I think that there's a lot of exploration that's going on, and a lot of discernment among company leaders.”

He points to recent reporting by the Wall Street Journal that revealed the CEO of Boeing rarely visits the company’s Virginia headquarters, preferring instead to work from his homes in either New Hampshire or South Carolina.

The aerospace giant recently opened an office location in Connecticut to accommodate two executives who live near New Canaan, their CFO Brian West and Treasurer David Whitehouse.

“Ten, 15 years ago, having a headquarters meant there was a row of offices with mahogany doors and mahogany desks,” said Bourdeaux. “Today, it may mean something a little different. I think a lot of times we're harkening back to a notion that may be outdated — and the notion may not be updated yet either. I think that's still evolving.”

That state of flux makes it more complex for an organization like AdvanceCT to understand what a company needs and how they conceptualize their structure. But to Bourdeaux, it also represents an opportunity.

“I think that we're just having to be more flexible in our thinking, … from a recruitment standpoint,” he said.

The recent announcement that South Korea’s Hanwha Aerospace is moving a divisional headquarters to Connecticut is an example of where the state can win, said Bourdeaux.

Hanwha already had a significant presence here because of the state’s strength in components manufacturing. The division move will also build on a budding relationship that the company is developing with Central Connecticut State University.

Several other companies in Connecticut this year have also made headquarters-related news.

Telecommunications giant Frontier announced in September it will relocate its headquarters from Norwalk to Dallas. Frontier said it will maintain a presence in Connecticut, but chose Dallas because of the Texas city’s central location and because it’s “business friendly.”

In January, Danish toy maker LEGO Group said it planned to relocate its North American headquarters and about 740 jobs from Enfield to Boston by 2026 in search of a wider talent pool.

In that same month, Campbell Soup Co. announced it was relocating the Norwalk headquarters of its Pepperidge Farm subsidiary to New Jersey.

As for Subway, Bourdeaux suspects that alongside its storied history in the state, what led them to reinvest in Connecticut was talent.

“What they have here are employees that they trust, and employees who have made them successful,” he said. “And in 2023, retaining employees that have made you successful is a very strong strategic move.”

“You undervalue it at your own risk,” Bourdeaux said.

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