Jersey Mike's has become one of America's fastest-growing sandwich chains. Its founder, Peter Cancro, is now a billionaire, facing a big decision: continue expanding his company or sell it for a huge profit.
A major investment firm, Blackstone, has agreed to buy a majority stake in Jersey Mike's for a reported $8 billion, including debt. Mr. Cancro, who will remain CEO, will keep a smaller share of the company. Exactly how much he'll keep hasn't been officially confirmed.
Mr. Cancro, 67, built Jersey Mike's from the ground up. He started making sandwiches at a small shop in New Jersey when he was just 14. He emphasizes fresh ingredients, high-quality meats sliced to order right in front of customers – a key to their success. This personal touch helped Jersey Mike's become a fast-growing brand with nearly 3,000 locations (most of them franchises) and close to $4 billion in revenue this year. This success has made Mr. Cancro very wealthy, with an estimated net worth of $5.6 billion – more than Mark Cuban or Steven Spielberg.
Jersey Mike's impressive growth – an average of 20.2% annual sales growth over the past five years – is partly due to its "affordable luxury" approach. They offer high-quality sandwiches at a price point that appeals to a more affluent customer than fast-food giants like McDonald's and Burger King. This allows them to charge up to $19 for their larger sandwiches and still make a healthy profit.
Mr. Cancro plans to open thousands more Jersey Mike's locations in the coming years, both in the US and Canada. He's backing this expansion with major advertising campaigns, including TV ads featuring celebrity spokesperson Danny DeVito.
The big question is how long Jersey Mike's can maintain its local feel as it expands rapidly. Many of its competitors have been bought out by large investment firms. Mr. Cancro himself seems to be preparing for a potential sale, having moved part-time to Florida for tax advantages. While he denies being close to a deal with Blackstone, he acknowledges having had many discussions over the years.
Even with its growth, Jersey Mike's remains family-focused. His wife and several family members work at the company. Many friends and neighbors are also employees. The future is uncertain, but Mr. Cancro suggests he will sell when he's no longer enjoying the work.
Peter Cancro: The Visionary Behind Jersey Mike's
Mr. Cancro's journey started in a working-class family in New Jersey. He initially planned to play football in college and become a lawyer, but at 17, he bought the sandwich shop where he worked part-time. He secured a loan from a friend's father and, with the help of family and friends, quickly paid it off.
He opened a second restaurant, but later focused on franchising, recognizing the potential for growth. The company expanded rapidly, but faced challenges during a recession in the early 1990s. Mr. Cancro persevered, and Jersey Mike's continued to grow, eventually exceeding $1 billion in sales in 2018.
The COVID-19 pandemic presented another challenge, but Mr. Cancro responded by investing heavily in store renovations, technology upgrades, and a marketing campaign thanking franchisees and supporting healthcare workers. This bold strategy led to a significant sales increase.
The Rigorous Franchise Process
Jersey Mike's is very selective about who becomes a franchisee. The acceptance rate is exceptionally low, making it harder to get a franchise than to get into Harvard. Mr. Cancro looks for dedicated "owner-operators" who are deeply involved in their communities. Potential franchisees undergo extensive training and are expected to participate in community service initiatives.
This rigorous selection process and support for franchisees has led to exceptionally low turnover rates. This careful approach to expansion seems to be paying off.
Challenges and Opportunities for Jersey Mike's Growth
Despite paying employees well, Jersey Mike's keeps labor costs low compared to competitors due to its efficient assembly-line style operation. Mr. Cancro has a succession plan in place, with his daughter poised to take over as CEO. He acknowledges that now would be a good time to sell, given the high prices being paid for restaurant chains, but he's not rushing the decision. He emphasizes that when he leaves, he will do so completely, possibly to pursue other interests, such as owning a sports team.
FAQs
Q: How many Jersey Mike's locations are there?
A: Currently, there are nearly 3,000 locations, with plans for significant expansion.
Q: How much does a Jersey Mike's sandwich cost?
A: Prices vary, but their larger sandwiches can cost up to $19.
Q: What makes Jersey Mike's different from other sandwich chains?
A: Jersey Mike's emphasizes fresh, high-quality ingredients, meats sliced to order, and a "local deli" feel, even as it expands nationally. They also have a strong emphasis on community involvement.
Q: Is Jersey Mike's a franchise?
A: Yes, approximately 99% of Jersey Mike's locations are franchises.
Q: How do I become a Jersey Mike's franchisee?
A: The process is extremely selective. It involves a rigorous application and selection process, and prior experience working for Jersey Mike's significantly increases your chances.
Q: How much is Peter Cancro worth?
A: His net worth is estimated at $5.6 billion.
Q: Is Peter Cancro selling Jersey Mike's?
A: While he hasn't confirmed a sale, he has acknowledged discussions with potential buyers and is considering his options. A deal with Blackstone is reported but not fully confirmed.
Q: What is Peter Cancro's background?
A: He started working at a Jersey Mike's predecessor at age 14 and eventually bought the business. He’s a New Jersey native who built the company from a single location.
Q: What is Peter Cancro's plan for the future?
A: He's considering various options, including continued expansion and potentially selling the company. He has indicated he would fully step away from the business when he does decide to sell.
Q: Did Blackstone buy Jersey Mike's?
A: A deal has been announced, but specifics such as the exact ownership percentages haven't been publicly confirmed.
Q: Will Peter Cancro still be involved with Jersey Mike's after a sale?
A: Yes, he will remain CEO.
Q: How does Jersey Mike's keep labor costs low despite high employee wages?
A: Their efficient assembly-line style and relatively small staff per location (12-15 compared to a typical McDonald's 20-50) allows them to maintain lower labor costs as a percentage of sales.
Q: What is Jersey Mike's marketing strategy?
A: They employ aggressive marketing, spending hundreds of millions of dollars on advertising, including television commercials featuring celebrities like Danny DeVito.
Q: What is Jersey Mike's approach to community involvement?
A: They encourage community involvement and charitable giving from both corporate and franchisee levels. Franchisees are expected to donate a full day's sales annually to charity.
Q: What is the succession plan for Jersey Mike's?
A: Peter Cancro's daughter, Caroline Jones, is being groomed to take over as CEO.
Q: Why is Jersey Mike's so valuable?
A: Its rapid growth, high profitability per location, strong brand recognition, and potential for further expansion make it an attractive acquisition target.
Q: What other restaurant chains have been sold recently?
A: The article mentions Subway, Popeyes Chicken, Panera Bread, and Dunkin' as examples of restaurant chains that have recently been acquired at high valuations. This illustrates the current market for restaurant acquisitions.
Q: Will the sale to Blackstone change Jersey Mike's?
A: This is uncertain. While Blackstone is a large investment firm, Mr. Cancro's continued involvement as CEO suggests some continuity, but the long-term impact remains to be seen. The article uses Domino's as a positive example of a successful sale and continued growth under new ownership.
Q: How did Jersey Mike's perform during the COVID-19 pandemic?
A: Despite the challenges, Jersey Mike's experienced significant sales growth due to Mr. Cancro's strategic investments in renovations, technology, and a unique marketing campaign focusing on community support.
Q: Why did Peter Cancro move to Florida?
A: The article suggests this was partially due to tax advantages.
Q: Will Peter Cancro buy a sports team?
A: The article mentions this as a possibility, given his wealth and interest in sports sponsorships.
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