Jersey Mike’s Subs is embarking on a systemwide renovation that’s expected to cost $75,000 per store, which the franchisor has agreed to pick up across the 1,700-unit quick-service sandwich chain for a total projected outlay of $150 million.
The rehab is expected to generate a 10% per-store pop in sales, which would translate into an increase in the franchisor’s royalties. But the benefit underscored by Jersey Mike’s CEO, founder and principal owner Peter Cancro is the impact on development. The return on the home office’s investment should enable franchisees to open more stores. “We added 181 stores last year,” Cancro said in a rare interview. “This year, it might be 225.”
The program is one of two initiatives Jersey Mike’s is undertaking in 2020 under what Cancro describes as the brand’s founding policy of giving—to franchisees, to employees and to the communities those parties serve. (He corrects visitors who call it “giving back,” explaining that it’s not a quid pro quo.) Headquarters is also undertaking a program that aims to give 25 restaurants to store managers who yearn to be an owner but don't have the needed financing.
The first recipients are fellow managers Holley Hood, 22 years of age, and Hayden Straus, 25, a couple who are looking to open their gifted restaurant in Wisconsin. Cancro himself is helping the two find a site by driving around the state with them, and he intends to sign their lease, loan guarantees or any other papers that are required for them to get the store open and in operation.
“We handle the books, we teach and train, we handle everything,” the CEO says.
Current employers of the restaurant recipients are even compensated to cover any sales fallout from the loss of the employees turned owners.
The development would otherwise cost the couple about $375,000 to build.
Two other recipients have been selected already. “We hope to get the number [of recipients] up to 100 a year,” says Cancro.
Why set up young people with a restaurant of their own? “Because someone did for me,” says Cancro.
The Coach Rod Smith Award is named after Cancro’s Pop Warner football coach and lifelong mentor, whose day job was running a local bank. Back in 1975, Smith guaranteed a $125,000 loan for 17-year-old Cancro to buy Mike’s, a 1,200-square-foot sub shop where the teen had worked for three years. The high-volume sandwich outlet was located near the Jersey Shore, in the heart of Springsteen country, and summertime visitors would buy big to-go orders before leaving for other areas of the country at the end of season. Cancro added “Jersey” before the name to play off the geographic connection.
The concept has changed little since then, he says. The renovation will encompass innovations such as tablet ordering devices and customer-facing kiosks where patrons can spec their subs.
Other changes in the works are the addition of bowls and, in a nod to consumers hunting for plant-based options, a new grilled portobello sandwich.
“This is a new beginning—this kind of relaunches the company like nothing else,” the New Jersey native says of the franchisor-funded rehab. “Instead of waiting three, four, five years, we know we can do it right away. We’ll shut down on a Monday night and reopen on a Friday. Owners were in tears when we announced it.”
Both of the new programs will make growth a major part of Jersey Mike’s future, Cancro stresses. The chain already has agreements signed to add another 800 units. “By the time we get to the 2,000-unit mark, we’re probably looking at $2 billion in systemwide sales,” says Cancro.
All but about 75 of the units currently open are franchised. The chain has 450 franchisees, about 200 of which have only one store.
Giving has been a core component of Jersey Mike’s operation since Cancro was still at the slicer of Unit Number One. March is known within the chain as the Month of Giving, when operators are encouraged to give to their communities. For the last nine years, one day’s worth of systemwide sales are channeled to charities. The Day of Giving donations totaled $7.3 million in March 2019.
The chain also provides $5,000 grants to employees who have made an outstanding community contribution. Jersey Mike’s calls them Sub Abovers.
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