FRANCHISE OF THE WEEK

Jersey Mike’s

Fast Facts

Background

• HQ: Manasquan, NJ
• Founded in 1956, franchising since 1987
• Jersey Mike’s is a restaurant franchise that specializes in sub sandwiches and cheesesteaks.

Location Trends

Franchise Fees

• Royalty: 6.5%
• Brand Fund: 1%
• Franchise Fee: $18,500

Financial Overview

• The below table discloses information on 1,524 traditional location franchisees that were open from January 1, 2022 through December 31, 2022

The Wolf’s Take 🍟

Jersey Mike’s has been on a meteoric rise the last handful of years. 

Every stat imaginable, from revenue per location (~70% increase), to unit growth (2nd most locations opened in 2023 among all restaurants), to even brand recognition (possibly thanks – in part – to their partnership with Danny Devito 😂), is compounding in a positive direction.

Unlike the cookie and fried chicken sector, there is no war amongst competitors here – Jersey Mike’s is the undisputed #1 sandwich brand in America. 

And this goes beyond the numbers – which – they have best in class unit economics for a sandwich franchise. Subway can’t even come close, Jimmy John’s has long standing impact from covid, as they targeted locations near office buildings – which people haven’t returned to fully yet and possibly ever.

Firehouse Subs is a respectable #2 but doesn’t have the AUV’s of Jersey Mike’s. 

Their journey to this point is nothing short of incredible..

You Can’t Mention Jersey Mike’s Without Saying Peter Cancro

The original Jersey Mike’s opened in 1956, in Point Pleasant NJ (as an NJ native – there is nothing I love more than a Jersey Shore business!!). 

Peter Cancro, the franchise founder and CEO, was just 14 years old when he first got a job at the sandwich shop in 1968.

This shop was a local gold mine. In today’s dollars, it was generating $100,000 per WEEK in revenue, and Cancro got a front row seat at what it takes to run a peak volume sub shop.

But in 1971, as a high school senior, he discovered the owner was looking to sell the business. Peter decided he wanted to buy it and skip college – so he started going DOOR-TO-DOOR to raise money to acquire the biz from his boss.

That level of ambition and self-belief as a 17 year old is incredibly impressive!

He ended up raising $125k (roughly ~$890k in today’s dollars), the majority of which came from his former football coach, and was able to acquire the business. 

Peter Cancro has been leading Jersey Mike’s ever since, which now boasts 2,400+ locations.

Focusing on Franchisee Success

I spoke to a few franchisees to get their insight on the brand. One is a 10+ unit owner. Aside from his ~15% profit margins that he enjoys on the ~$1.3M revenue per store, he had this to say about being apart of Jersey Mikes:

As far as JMS’ rise to success, I think it all stems from the global respect and admiration of Peter Cancro and the home office. They have assembled a great team with a priority on operations and hospitality. 

One of the foundations of the brand is philanthropy, which is what you will see as we are currently in March, the annual month of giving where we focus on raising money for local charities. Even outside of the month of giving, there are several events throughout the year that are focused on giving back to non-profits and our communities (feeding america, etc). 

Even the grand opening process for a Jersey Mike’s is centered around partnership with local charities. A lot of the money raised comes from both the franchisees and the franchisors. 

In Covid the brand really shined, and it was mostly because of the generosity of the franchisor. On top of slashed royalties/marketing funds, Peter personally injected thousands of dollars into franchisees accounts and told them to use it to give subs out to the community (essential workers, hospitals, etc). 

It’s rare to hear a franchisee of a system so large, to have such a warm endorsement for their franchisor. From both the outsider perspective and hearing that inside insight, it seems to largely come down to Cancro’s leadership.

It’s important to consider the implications of a big brand franchisor – what is the cap table? Who truly owns the company? Most aren’t 100% owned by the original CEO like Jersey Mike’s is with Cancro.

Jersey Mike’s isn’t a corporation run by a bunch of suits who bow down to shareholders, it’s run by the former kid, who bought his local sandwich shop for the love of the game. 

And as for how consumers feel about Jersey Mike’s, one of the franchisees I spoke with made an interesting anecdotal comment – 

Whenever I tell people I’m a part of Jersey Mike’s, I hear “OHHH I LOVE Jersey Mike’s (or my Kids LOVE Jersey Mike’s), we eat there like 3 times a week”

I dont hear that often about any other brand. Even folks that eat at Subway 3x a week, they are reluctant to admit it. 

The sentiment struck me as very accurate. And while it’s hard to quantify this, building a brand that drives that kind of positive emotion + endorsement from customers is a great north star for any franchisor and franchisee.

If you’re looking for an established restaurant brand to try and break into – Jersey Mike’s is a winner. And while acquiring units from an existing owner will be incredibly tough to do right now (I doubt many are looking to sell!), it’s a brand that should be on your radar.

Kudos to Jersey Mike’s success. 

And Long live the Jersey Shore!!!

IYKYK

Resources

• Jersey Mike’s Franchise Website
• Jersey Mike’s opening 300 locations in Canada

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FROM THE POD

Steve Hitzemann – StretchLab

Ever wonder about the stretch facilities that have been popping up?

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• How units can get to 15-20% EBITDA margins
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• Why the operations are very simple with StretchLab (hint: just 2 membership options)

Check out our conversation here!