In late October, just a couple of weeks before he would sign an $8 billion deal selling Jersey Mike’s to the private-equity firm Blackstone, Peter Cancro took a plane trip from Dana Point, California, to Toronto.
The sandwich chain was about to open a location there, its second in the city and part of what the company hopes is an extended and fruitful foray into international markets. Cancro was there at 8 p.m. the night before it opened. He wouldn’t even be there for the opening itself.
He showed eight workers the proper way to make subs. He showed them the slicers, how to check the weight and the thickness of the meat. He then showed them the proper way to “sprinkle” sandwiches with oil and vinegar.
Why on earth would Cancro do this? He was about to complete his 50th year owning Jersey Mike’s. And he was about to finalize a sale agreement that would effectively be the biggest professional move since he bought a New Jersey sub shop as a high schooler in 1975. What’s he doing at a Toronto restaurant, and not even the first, showing a bunch of people how to weigh sliced turkey?
“That’s everything for us, isn’t it?” Cancro said Thursday, in his first interview since the Blackstone deal was announced. “It’s also that whole training thing. You’re three feet away from the customer. It’s got to be genuine.”
Peter Cancro is not going away after the sale is complete. He remains a key figure in the sandwich chain he guided for five decades, toiling away for much of that before the company finally took off over the past 15 years or so to become one of the industry’s most valuable properties. He is keeping a stake in that chain and clearly cares about where it's headed.
He was there at the company’s holiday party this week, joking with employees. In January and February, he’ll tour stores across the country, holding town hall meetings with managers and assistant managers, as he routinely does, talking with each of them to encourage them to ultimately become owners.
“We’ve got a tremendous infrastructure around the country with great owners that are looking to expand, because we’ve got a great business model,” Cancro said. “So yeah, I want to stick around and continue to grow it.”
At the same time, however, Cancro will celebrate his 50th year of ownership in March. And he’s been heavily involved that entire time.
“Maybe it was time,” he said. “It’s 50 years this March, and running, running, running. And everything in place is going very well and, you know, I kind-of like this company, Blackstone, the people, what they represent. And I thought maybe it’s a good time, you know, to help with expansion internationally and everything else.”
“They were the first ones ever to be interested in our company.” -Peter Cancro
Cancro has been pondering a move since 2016. That year, Roark Capital acquired Jersey Mike’s rival Jimmy John’s. And Cancro saw the presentation used to convince Roark to make that investment.
“When I saw the Jimmy John’s book, I said, ‘Wow, you know, I think we’re doing pretty well, right?” Cancro said. “That was the first time we ever realized, like, maybe we have something here.”
Jersey Mike’s then started talking with financial institutions to learn about the process, without the intent to sell, he said. The company talked with private-equity firms and explored what an initial public offering might look like. Cancro acknowledged the attraction of an IPO, to provide stock for workers, much like Starbucks does with its “Bean Stock” program.
But, he added, “Of course, you know, [there are] a lot of negatives.”
Yet Cancro suggested the discussions were largely informational. None of the deals went far. “Looking, watching, listening, a lot of meetings,” he said. “You’d get up from the table, and it was a great group, good, nice people, and that was it. Nothing went further.”
The quick-service chain continued to grow, however, and by that point had been on a roll. The brand had stagnated between 2006 and 2008, with system sales growing less than 10% annually most of those years. In 2007, the company hired Domino’s Pizza executive Hoyt Jones to be company president and brought in area developers to guide growth, and it took off after that.
System sales have grown an average of 22.5% per year since 2009, according to data from Restaurant Business sister company Technomic.
System sales quadrupled from 2016 to 2023 and are on pace to top $4 billion this year. In other words, any private-equity firm that received a call from Peter Cancro in 2016 might have missed an opportunity to invest in a brand when it was (relatively) cheap.
Then the pandemic happened, and Cancro was no longer interested in any such thing. “We sort of dug in and did a lot of things that turned out to be right,” he said.
Indeed, sales have more than doubled since the pandemic, due to a combination of strong average unit volume growth and new locations. Jersey Mike’s is now the second-largest sandwich chain in the country behind Subway. And it has surged past Jimmy John’s.
In 2018, Jimmy John’s generated twice the sales of Jersey Mike’s. Last year, Jersey Mike’s generated $3.6 billion in system sales to Jimmy John’s $2.5 billion, according to Technomic.
And then Blackstone came knocking.
The private-equity firm had acquired Tropical Smoothie Café for $2 billion and was looking for other retail brands to acquire. A broker representing the company contacted Jersey Mike’s, asking for a meeting.
“They were the first ones ever to be interested in our company,” Cancro said.
“I just became comfortable with the idea,” he added. “You know what? Maybe it’s time.”
The deal is not expected to close until January. But news of the sale generated considerable publicity. And much of the reaction from the chain’s consumers was not positive. Many people feared that the new owners would ruin a brand they had come to love.
“I had no idea how beloved I was,” Cancro said. “I was like, ‘Wow.’”
But it’s not an illegitimate concern. Any buyer can potentially ruin a successful company by changing too much of its culture. And much of what’s driven Jersey Mike’s success in recent years is rooted in its culture and the way the brand does things, which can be different from many other restaurant chains, especially franchises.
Many of these strategies may not go over well with certain executives or private-equity investors that are often intent on generating profits.
There is the Day of Giving, a key element in Jersey Mike’s branding and marketing strategy, in which local stores donate 100% of the day’s sales to their chosen charities. The event this year generated a record $25 million for those charities, according to the company.
Don’t expect that, or any other of Jersey Mike’s charitable works, to go away. “They get our giving,” Cancro said of Blackstone. “They see it. They get it. They understand it.”
That’s not the only thing Jersey Mike’s does that might create some tension down the line. Over the years, the company has funded remodels of franchisee-owned stores. The most recent version, involving 1,800 stores, cost the company $175 million. But Cancro argued that Jersey Mike’s was able to get that project done faster by paying for it themselves, and the result generated stronger per-store revenues that came back to the company in the form of higher royalties. Most brands—maybe all other brands—leave it to the franchisees entirely.
Earlier this year, Cancro grew frustrated by some service problems he saw at some franchisee-owned stores, such as shutting down the grill early or not having all employees in uniform. So the company hired secret shoppers who visited stores several times.
Franchisees that failed the test were then told they could not develop any more locations. And if they paid franchise fees for that right, the funds were sent back. That amounted to more than 10% of the fees paid for still-yet-developed locations, 140 fees in all.
Cancro said that Blackstone gets that, too. “They’ve watched private equity destroy, I mean, how many brands, because they do a financial play, they’re not really concerned with people,” he said. “But the good ones now are concerned with the people. They get it. They’ve seen enough failures.”
“The depth of our company, our people, it’s just so great that whoever you put at the top of the company, it’s OK, because they’re all moving. They’re all grown.” -Cancro
The decision to keep franchisees from developing locations they paid for, and return the money, is another symbol of the brand’s culture. Those operators are receiving extra training, and once the issues are corrected and they have someone ready to step into new stores, they’re allowed to develop again.
But Cancro believes operations are vital for the chain’s success over the long-term. He is conscious of the issues that afflicted some of the brand’s competitors, notably Quiznos—which went from 5,000 to fewer than 150 restaurants—and Blimpie, which has all but disappeared. And he sees what has happened at Subway, which has closed about 7,000 locations since 2015.
“Why? They didn’t commit to the people,” Cancro said. “They didn’t follow the basics.” The decision to give back the franchise fees, he said, was a commitment to the brand’s principles, that the grill is open all day, and that meat is sliced properly. In short, Jersey Mike’s put its money where its mouth is.
Yet if Cancro is aware of what happened with his competitors, he is almost certainly aware of one of the afflictions of the much larger Subway, which struggled for much of the past decade in part because the brand had a leadership vacuum following the death of its founder and longtime CEO Fred DeLuca in 2015.
What is Cancro’s plan for succession? Ultimately, the decision to sell is a sign that the company’s longtime leader is moving onto the next phase of his career. Though he will remain with the chain, its new owner, Blackstone, will surely want to know that that the ingredients that created the brand it just paid $8 billion for will continue well into the future.
Cancro, however, believes the infrastructure is in place to succeed no matter who is at the top.
“The whole company right now has department heads, construction, training, operations, area directors,” he said. “The brand is so established, so strong right now.”
“The brand is in a strong enough position,” he added. “The depth of our company, our people, it’s just so great that whoever you put at the top of the company, it’s OK, because they’re all moving. They’re all grown.”
Still, whenever the day comes that Cancro does step away, one piece of advice to whoever does take over: Learn how to slice some turkey.