Photo/Illutration Watami Co. Chairman and President Miki Watanabe, right, displays a sign after reaching an agreement on Oct. 25 with John Chidsey, CEO of U.S. sandwich chain Subway. (Ken Miyazaki)

Restaurant chain operator Watami Co. announced it has acquired the Japanese arm of U.S. sandwich chain Subway.

Subway currently operates 178 outlets in Japan, but Watami plans to expand that number to 3,000 over the next 25 years.

Subway has a reputation for healthy sandwiches packed with tasty fillings and lots of salad.

The  acquisition, announced Oct. 25, will be a major shift for the Watami group, which is known for its “izakaya” Japanese-style pubs and “yakiniku” grilled beef restaurants.

Watami signed a contract with the U.S. operator of Subway for exclusive rights to open outlets in Japan. No figure for the acquisition was released.

“It has been 40 years since we started the Watami brand and while we are popular among the older generation, we wanted to change the brand to one favored by young people,” Miki Watanabe, the Watami chairman and president, said at a news conference.

Watami operates its own organic farm so produce grown there would be used in the Subway sandwiches.

Watanabe also said he was eyeing McDonald’s, which operates about 2,900 outlets in Japan.

“We want to set up an adversarial choice for consumers at lunch between hamburgers or sandwiches,” Watanabe said.

Globally, Subway operates about 37,000 outlets, approaching the 40,000 or so operated by McDonald’s.

In 1991, Suntory Holdings Ltd. acquired the Japanese rights to Subway and expanded the network to more than 400 outlets, but sold off its interest in 2018.

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