Jersey Mike's is being sold to Blackstone, the private-equity firm said on Tuesday.
Blackstone is set to acquire a majority stake in the fast-casual sandwich chain. The deal, for a reported valuation of $8 billion, came the morning after media reports said a deal was set to be announced this week.
“We believe we are still in the early innings of Jersey Mike’s growth story and that Blackstone is the right partner to help us reach even greater heights,” Peter Cancro, CEO and owner of the chain, said in a statement. Cancro will maintain a “significant equity stake” in the company and will continue to lead the business, according to Blackstone.
The deal is the latest sale involving a franchise restaurant brand, which have been fetching large sums in acquisitions despite concerns about financing and weak industry sales. And Blackstone is a major buyer. The firm previously acquired Tropical Smoothie Café for $2 billion. It is also a major investor in the drive-thru coffee chain 7 Brew.
Like Tropical Smoothie, Jersey Mike’s has thrived in recent years with a combination of unit growth and strong per-unit sales. The country’s second-largest sandwich chain, Jersey Mike’s system sales have grown an average of 24% the past five years, according to data from Restaurant Business sister company Technomic.
By comparison, the average sales growth over that period for fast-casual sandwich chains like Portillo’s, Jimmy John’s and Firehouse Subs is 5.2%.
Unit volumes over the past five years have increased 62%. A typical Jersey Mike’s location generates $1.3 million in annual sales, well over twice the volumes of a Subway—which was sold for $9.6 billion to Roark Capital last year.
The results earned owner Peter Cancro the Restaurant Business Restaurant Leader of the Year award earlier this year.
“Jersey Mike’s has grown for more than a half century by maintaining an unrelenting focus on quality,” Peter Wallace, senior managing director with Blackstone, said in a statement. “Our capital and resources will help support key investments in growth and technology for the benefit of Jersey Mike’s customers and exceptional franchisees.”
Cancro founded the chain nearly 50 years ago, after buying the sub shop he worked at as a 17-year-old. But he’s been pondering the future of the company he founded. Last year, Restaurant Business first reported that he was assessing his options, including possibly buying another concept or selling the company.
And at the Restaurant Leadership Conference in April, Cancro noted that the chain was “always for sale.” That followed a question on reports that the company had been in talks with Blackstone over an $8 billion deal.
UPDATE: This story has been updated following the announced deal.
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