Is Jersey Mike's a Good Franchise to Own?
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- Опубликовано: 28 май 2024
- Jersey Mike's was started in 1956 in the seaside town of Point Pleasant, New Jersey, and was originally known as Mike's Subs. It's hard to imagine that back then, very few people had heard of a Submarine Sandwich, and people from New York and Philly would travel an hour or so to get their sub fix.
For 15 years, Mike continued making his subs until 1971, when Peter Cancro, a 14-year-old high school student, started working there. He would change Mike's history forever. After working there for 3 years, and at only 17 years old, Peter approached his football coach, who was also a banker, about buying Mike's place. The coach floated him the money, and at 17, not even old enough to legally slice a sub, Peter was the proud owner of Mike's Subs.
Unlike founder Mike, Peter was interested in expansion and opened a couple more outlets locally. But customers were dropping hints to Peter by suggesting how much they missed the subs when they left Jersey Shores and went back home. Peter thought about franchising, and in 1987, Mike's became Jersey Mike's Subs.
Today Peter Cancro is still the CEO of Jersey Mike's and oversees over 2600 locations with over 3 billion dollars in annual revenue and for others here in Canada Jersey Mike's just signed a deal with Redberry to open 300 restaurants throughout the country.
But, is Jersey Mike's franchise a good franchise investment? Let's start with the positives before the negatives.
The cost to open Jersey Mike’s Franchise ranges from $203,583 to $1,317,005, which includes the $42,000 to $44,000 franchise fee. Note that the lower end investment is usually a unique situation, such as converting an existing restaurant, and your investment will most often trend towards the mid-range of the estimates.
How much can you earn? An average Jersey Mike's Subs franchise traditional location in 2023 generated 1.3m, the highest store did almost 3.8m, and the lowest was $492K. Corporately owned stores were even higher at 1.5m average. Always remember these figures are restaurants open at least one year, so your first year may not be as strong as you build a customer base.
Royalties are 6.5% of gross, 1% to corporate ads, and 4% for national media fund. So 11.5% of your gross revenue goes towards these costs. Are those your only fees? No, I'll post some others on the screen, but these are pretty standard in any franchise agreement. Pay particular attention to this one: liquidated damages, which means if your store goes under, you are still liable to pay any royalties your store would have made if you hadn't closed. We recently did an interview with a franchise lawyer covering this and other things you need to watch when buying a franchise, link is above.
Now let's look at some of the concerns a potential Jersey Mike's buyer might have.
While accepting the 2024 restaurant leader of the year award Peter Cancro stated Jersey Mike’s is ‘always for sale’ indicating he just hasn't seen the right offer yet and Blackstone's valuation was only 8 billion.
Typically when a private equity firm takes over a franchise it is often not great for franchisees. We've covered these scenarios on the channel when giants take over a brand they often implement sweeping changes that are not well received by most franchise owners. If Jersey Mike's changes hands that family atmosphere and care may change for the worse.
Another consideration is your ability to actually run a store. Contrary to what you might think these stores dont run themselves. Employee hiring and retention are major challenges, and a quick visit online shows that many employees are unhappy about working at their store.
One comment states "90% if the staff is job hunting and arent confident in how things have been ran."
While all businesses today face this particular challenge, food franchises suffer from some of the highest employee turnover rate at up to 80%. As a Jersey Mike's franchise owner, are you comfortable, or at least willing to deal with employees leaving, continually training new employees, or even filling in personally if people don't show up? Restaurants account for 1/3 of all working teenaged persons, so you will often be dealing with younger, less experienced people with varying personalities and ideologies.
Jersey Mikes has been involved in lawsuits including paying $150k to the attorney general for a no-poach clause it had made all franchisees sign. "No Poach" prohibits other franchise locations in the system from hiring existing employees from other locations which essentially drives down wages.
Specific to your situation, you want to check local competition, both from the same system and external competitors. There are a lot of fast food franchises out there, some cities completely saturated, you want to check local competition, both from the same system and external competitors.
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How many pizza and subs franchises do we need…Subway, Jersey Mikes, firehouse, Jimmy John’s
not sure, regardless how about you go ahead and open the next greatest food franchise that doesn't already exist? Ya know, since you have such a strong and awesome opinion on the matter. You obviously can do it better.
@@kindafast6499 Only if your mom helps me…because she made a very intelligent child by giving you birth‼️🤷♂️
Unless you have restaurant in your blood, meaning you were born to be in the restaurant business, I don't know why anyone would want to be in fast food....
Well put :-) Thx for the comment.
The # 12 Cancro special makes more sense now, kid was driven. If they sell to Blackstone the quality & quantity will fall off a cliff. I've noticed a bit of a fall off as they've opened more stores.
how many stores have you sampled
Good work! Keep em coming!
One of these opened in the next town over, same mall as the Subway, and across the street from Togos. Haven't been to jersey mikes yet.
Thanks family 👏🏽
Thanks for watching!
I used to go to the original Mike's when I was a teen. Still love them!
Never take financial advice from a guy in a pink blazer, has always been my rule of thumb
I personally use plaid socks as a benchmark of superior advice but to each their own. (It's an AI generated character BTW) thx for visiting!
Jersey Mike's have awesome subs. Their philly cheesesteaks are really good. Most franchisees make a living maybe 100k a year for themselves unless crazy busy location. Youa re buying yourself a job as an operator/owner and not an investment. Equipment depreciates over time so what you are left with is how friendly the lease is to the tenant, what sales are, and how much profit to derive an equity multiple when you want to retire or sell and do another business etc. To be more hands off and build in layers of management you would have to own dozens etc. If location is superior you would want to own the dirt and keep cost the same versus rent and cost keeps going up. Hopefully they do not sell to private equity. PE equity sucks as they kill many brands. They try to change ingredients int he name of profit and then brand suffers. Red Lobster proof of this has been bad for many years after Darden sold it off to U.S. equity group and now Thai based group sell the seafood. Likely all farm raised junk now and low quality meanwhile the local concept seafood place has fresh food shipped in and almost same price. I own NNN buildings with tenants and we like to stay away from P.E group operators because they often go dark or bankrupt and use remote LLC's single member or batch grouping to not affect their parent corp total holdings. So they give you sh&t guarantee and screw the landlord. No thanks.
Why do they add pepper to the tuna? I can add pepper if I want to and control how much I would add, but I can't take a pair of tweezers and pick off every speck of pepper just so I can eat the sub. I don't like pepper in my tuna so why does Jersey Mike's insist on making it with pepper? That's the only reason I buy my tuna subs at Subway. I hope someone from their corporate office reads this and removes pepper from the list of ingredients for stores so I can buy a sub there again.
Better to operate in a. C store
Are you allowed to share snips from an FDD? Just curious
Most FDD's are publicly accessible on several state portals as well as sold on the open market. I've had complaints from franchises but never any legal demands. Thanks for watching!
He doesn't share what can't be shared.
He's covered what's publicly accessible but harder for most potential investors to interpret.
Must be nice, someone floating you money to buy a business
Churches Chicken is the franchise to go with
Maybe. It depends on the market but Church's is a higher investment than Jersey Mike's ($1,119,150 to $1,631,300) and has lower average system revenue, $1,152,105 AFTER remodeling. Older stores make even less! Thanks for watching!
idk about that one. jersey mikes seems more profitable. in my city (memphis) churches is run down ghetto junk spot. but in Texas they do great
Just offer free life insurance to all your employees and hire only 6ft+ people.
They hired people with no customer service ability.
Who's the hirsute dude in the pink suit?
A fictional character created by AI.
Not in Commifonia
I got food poisoning there never go back!!!!!!!!!