After nearly 50 years of operating a single restaurant brand he also owns, Jersey Mike’s CEO-proprietor Peter Cancro is assessing his options.
The addition of a second concept has already progressed beyond the possibility stage, to a probability. Jersey Mike’s is very close to starting or buying a small operation—“maybe four units, around that size”—that would provide the sub sandwich brand’s franchisees with a new growth option, Cancro said in an interview during a meeting of the chain’s area directors.
“I’ve been thinking about a second concept for probably a decade,” said Cancro, who bought Jersey Mike’s at age 17, back when it consisted of a single store in south Jersey. He’s owned and run the brand ever since.
A change in ownership is still in the possibility stage, Cancro indicated. He’s noticed that competitors have been valued at jaw-dropping levels in the marketplace. Jimmy John’s, for instance, was acquired by Inspire Brands for $2.3 billion, and the lifetime south Jersey resident says his numbers are better than the metrics for the “freaky-fast” delivery specialist. A typical Jersey Mike’s takes in more than $1.3 million in annual sales, with plenty of units topping $2 million. Same-store sales are increasing at an 11% rate.
He spoke as arch-rival Subway was fielding acquisition bids believed to be in the $8 billion to nearly $10 billion range.
Weeks earlier, the Cava fast-casual chain had gone public, garnering $2.5 billion.
Heading abroad
A done deal is Jersey Mike’s expansion outside of the United States. The 2,500-unit chain hired Jan Risi, the former head of Subway’s purchasing cooperative, in part to set up supply lines abroad.
The scene is set for Jersey Mike’s to enter the U.K. and grow beyond what’s currently a small Canadian presence, with Australia also a target. The plan, said Cancro, is to essentially duplicate the Jersey Mike’s concept in English-speaking nations initially, with a few tweaks here and there to accommodate local preferences.
But it’s not as if his current holding has maxed out domestically. Jersey Mike’s has opened about 160 units so far this year, en route to about 300 additions for all of 2023. Next year, the number will ratchet up as the chain strives to expand every year by 15%.
There are also more sales and profits to be generated from opened stores, as the area directors’ meeting constantly stressed. Much of the two-day event was focused on adjusting store operations for the better, from how much fresh-sliced meat goes on a sandwich, to how red and ripe the tomato slices should look on the production line. The concept’s credo is the 7 Principles, a roster of operational imperatives that range from how cold cuts should be caught as they come off the slicer, to the soft drink coolers and chip racks being kept as fully stocked as possible.
“Focusing on the fundamentals is what we’re all about,” said Jersey Mike’s President Hoyt Jones.
A guiding orientation is that Jersey Mike’s subs are priced and marketed as premium options in the sandwich market, which mandates that the product and experience stand out—the chain’s slogan is “A sub above.” That positioning entails carefully maintaining the human part of the customer interaction.
“My loyalty to Jersey Mike’s goes well beyond making money.”
Staff members are encouraged not to be robots. Although the teammate at the slicing station may use a scale to spot-check how much meat and cheese is put on a sub, most of the build is done according to the maker’s judgment. Ditto for how much of “The Juice”—a mix of red-wine vinegar and spices—is sprinkled on the sandwich from a shaker bottle.
Technology is being embraced by the chain, but in part to spare the staff from time-sucking functions, like taking phone orders, so they can be more interactive and personable.
“With Jersey Mike’s, there’s more of a human factor than there is in most QSR brands,” said Texas Area Director Dalton Stewart, a 21-year veteran of the chain. “These things make what we do harder. But they’re things you don’t want to lose because they’re what make us successful. There are a lot of things I wouldn’t want to see go away.”
Training as a cultural preservative
Jersey Mike’s executives also stressed that recruitment and training are as much of a core function for stores as making subs. The aim is preserving a very palpable culture that is readily attributed to Cancro.
A big part of that culture is an emphasis on charitable acts. Early in the chain’s evolution, the young grandson of a franchisee named Ron Longo died of cancer. The tragedy drew the attention of Cancro, and the chain was mobilized for what would become the annual Day of Giving, a 24-hour stretch where every dime of revenue, be it from a corporate store or a franchised unit, is donated to about 200 charities in total.
“My loyalty to Jersey Mike’s goes well beyond making money,” says Longo, a 24-year veteran of the brand.
Participation in the Day of Giving isn’t mandatory, but every unit has opted to join each and every year, notes Cancro. Typically, the Day of Giving is a store’s busiest day of the year, which he attributes to buy-in and appreciation from customers.
Last year, Jersey Mike’s contribution from the event was about $23 million.
The signature event led to the chain declaring March to be the Month of Giving, an idea posed by Stewart and readily embraced by the home office. (A Cancro-ism is always referring to the franchisor’s central building as “the home office,” with its family intonations, rather than the more corporate-sounding “headquarters.” Cancro is based out of the home office, but doesn’t have a desk there, preferring to float.)
Ask anyone in the system why that emphasis on giving back is such an integral part of the concept and its culture, and they’ll likely invoke Cancro. “It’s what Peter taught us,” said Stewart.
Everyone at the area directors’ meeting seemed to have a personal experience they could offer up as proof.
One of the operational supervisors recounted how he brought Cancro to witness a swim program developed for severely disabled individuals. The chain owner ended up donating $1 million.
During the area developers’ meeting, a motivational speech was given by Rutgers University football coach Greg Schiano. At its conclusion, Cancro took the stage to thank his fellow Jersey-ite, asking in the process what charities Schiano supports. The coach named two. Cancro pledged that Jersey Mike’s would donate $100,000 to each of them. He later confirmed that the promise and the promised amounts—nearly a quarter of a million dollars—were something he decided on the spot to provide.
That kind of unilateral decision would be tougher to make if Jersey Mike’s were to become a public company or have another principal owner. It’s something that Cancro has clearly considered, though he doubts that he’d be hamstrung. If anything, he said, public companies are being increasingly pressured to contribute more to their communities and promote social well-being.
Besides, he said, he might not still be the CEO of Jersey Mike’s if there was some change in ownership, a comment that suggests he might focus on the brand’s considerable social works through a related foundation or some other structure. It’s not unusual for a founder to shift to chairman and focus on different functions in those situations.
That might be a concerning development for the rest of the Jersey Mike’s system. They note how involved Cancro remains in the chain’s day-to-day operation. During the height of the pandemic, for instance, when procurement was a major challenge for the industry, he decided to increase how much meat went on three of Jersey Mike’s sandwiches.
He's so focused on freshness cues, others noted, that he pushed for shifting the procurement of lettuce, tomato and onions to the home office instead of expecting franchisees to find and negotiate the price of outstanding-looking produce.
One of the factors for Jersey Mike’s segment-leading success during the pandemic was Cancro’s decision right beforehand to have the home office pay to renovate every store and put the whole chain on the same POS system, a move that diverted $300 million from his own pocket. By picking up the tab, the systemwide re-do was completed in 18 months.
Units saw about a 15% upswing in sales on average. For units in some markets, including Los Angeles, the jump was around 30%. Cancro cites the upgrades as a key reason for average unit volumes rising from $850,000 to the current $1.3 million in just a few years.
Giving away stores
Cancro is also helping outstanding unit managers become owners by assuming many of the upfront fees and financial responsibilities that come with opening a store. The initiative has been systemized into a program that will turn 20 operators into owners this year.
It’s all a reflection, the members of his team say, of Cancro having begun at the bottom. The son of an auto mechanic, he was working at the original Jersey Mike’s in Point Pleasant, N.J., smack in the middle of Springsteen territory, when he overheard the shop’s owner remark that he was going to sell the operation. The 17-year-old high schooler was scheduled to play football for a powerhouse college the next year, but, with the encouragement of his mother, he decided to buy his employer instead.
Having no capital or inkling of how to get any, Cancro turned to his high school football coach for advice. The coach, Rod Smith, was also the town’s banker, and he offered to fund the deal.
Jersey Mike’s franchise-giveaway program for outstanding unit managers is called the Coach Rod Smith Ownership Program, a tribute to how the coach and banker helped Cancro become an owner.
Thus began what was a highly personal stewardship of the brand. Several of Jersey Mike’s senior executives started as hourlies in the original store. For a host of others, as well as franchisees, their exposure to the brand started with an interaction with Cancro.
Jay Yates, for instance, had opened a tanning salon in South Carolina and decided he wanted to switch into the food business. But no one would give him a shot with a fast-food franchise. “I had no money, and they all wanted to see my financials,” he said. “I had no financials.”
Somehow, he learned about Jersey Mike’s and managed to contact Cancro, expecting another turndown. Instead, the brand’s owner offered to make the 700-mile drive to Greenville, S.C., and hopped in his car—a station wagon, which afforded Cancro space to sleep when he couldn’t afford a hotel room. “He never asked to see any financials,” said Yates, who is now area director of Charleston and other choice markets along the Atlantic seaboard.
Stewart was eating his way through the mom-and-pop delis of eastern Pennsylvania and northern New Jersey when he sampled one from what he thought was a one-off called Jersey Mike’s. He liked the sandwich well enough to reach out to Cancro with what he thought was a moonshot plan to open units throughout Texas. Never mind that he had no foodservice experience. Cancro was impressed with the young man, who today oversees 89 stores and runs 13 franchised units in the Lone Star State.
The highly personal approach worked, the beneficiaries agree, because Cancro had an uncanny ability to spot talent, a trait he says he picked up from his sports coaches in grade and high school.
Jersey Mike’s Regional VP of Operations Chad Tirpack was bartending at a hotel when he noticed one patron scrutinizing him. The observer approached, introduced himself as Peter Cancro and commented, “I like the way you move back there,” Tirpack recounts.
Angel Velazquez, a second-generation Mexican immigrant, was working for Ecolab when he decided to approach the operator of Jersey Mike’s stores in Northern California. They started developing units in partnership, but the partnership dissolved. Velazquez, the junior and less-capitalized partner, figured the good ride was over. Cancro told the young man not to worry and to keep opening and grooming stores.
Today, Velazquez oversees more than 100 units in California as an area developer. “My father was a gardener from Mexico, a landscaper, and I was pushing a lawnmower at age 5,” he says, “and look at the life Peter gave me.”
When a freak accident left his brother a quadriplegic, Velazquez bought his sibling a Mercedes van outfitted bumper to bumper with technology that would allow the young man to drive. It was a life-changing gift, but a very major investment.
Velazquez’s first phone conversation after the wheels were delivered was with his brother. The second was with Cancro. Velazquez phoned to thank him for making possible a life where he could do something like that for his family.
Retirement? Don’t bet on it.
Many of the area directors and other chain executives attending the recent meeting were asked how they’d feel if Cancro were to retire. To a person, they gave the same answer: There’s no way it’ll ever happen. The most that would change would be a shift in Peter’s duties, they speculated. Besides, look at the staff he’s developed and stamped with his thinking and approach to the business.
Indeed, Cancro didn’t even figure into the program of the meeting until the last night’s celebratory dinner. He acknowledged that he wanted to send the message that Jersey Mike’s has a solid management team of operators who were thoroughly steeped in The Juice.
(Attendees were also taken aback by the question of whether they’d be playing golf at some point during the get-together, which is usually as routine as wearing name badges during any restaurant gathering. “This is a working conference,” as one participant tartly remarked.)
Cancro, age 66, was himself asked by the lone reporter in attendance if he was kicking back a little, maybe with retirement in mind. He might as well have been asked if he preferred the subs sold by Subway or Firehouse.
“No, no way,” he said with finality.
He was also chided about possibly slowing down at the slicers where the cold cuts going on a Jersey Mike’s sandwich are sliced in front of the customer. Speed at the station, a signature of the brand, is a major source of pride for veterans of the system.
Would he risk a slicing race against younger speedsters in their Jersey Mike’s aprons?
“Any place, any time, anywhere,” he said, completely deadpan.
Correction: A second mention of Jersey Mike’s AUVs was incorrect. The number has been corrected to $1.3 million.
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