Jersey Mike’s Subs was the fastest-growing U.S. chain in Nation’s Restaurant News most recent Top 100 census, closing out 2014 with 857 restaurants. It added around 200 more restaurants in 2015, and opened its 1,000th location in October.
Hoyt Jones, president of Jersey Mike’s Franchise Systems Inc., discussed the chain’s success with Nation’s Restaurant News, as well as an unusual plan to incentivize the staff at its Manasquan, N.J., headquarters.
Jersey Mike’s is mostly franchised, with about 40 company-owned restaurants. Did you open new corporate units this year?
Yes. It’ll be anywhere between a dozen and 15 stores. We made a strategic decision probably two years ago to put the resources in place financially and people-wise to open more corporate locations.
The short answer is [CEO] Peter [Cancro] wants to give an opportunity to people who work in our office to participate in equity in the business. We have an office here in New Jersey that’s got 75 people. We’ve got everything from sales, to real estate, construction, accounting, IT, marketing, legal. There are a lot of folks here that ordinarily wouldn’t be able to participate in ownership of a store. At some point in time, Peter wants to be able to provide people here with the opportunity to have ownership in a store that provides an additional income source.
So will it work like this? “Here’s your bonus: You now own 20 percent of the Morristown, N.J., location.”
Yes. Right now, with the existing stores, the managers are on a trajectory to have ownership in the stores, and then the next phase will be at some point in time to provide people who work in the office an opportunity to get an equity piece in a store.
We’re going to build another 20 [corporate] stores, give or take, next year, and we want to increase that because the sales volume and EBITDA of the corporate stores are outperforming franchised stores. They’re performing at a really high level.
Are you opening more corporate locations to make sure you provide opportunities for operations people who are ready to manage their own restaurants, allowing them to grow so they don’t leave and work someplace else?
Yes. And when you have a manager who has equity in the business, you get longevity and continuity. Customers want to see that. They want to see a recognizable face because they want to be recognized. That’s part of our service. When someone comes into our store, we’re not just making them a sub. We’re kind of sharing our life with each customer and trying to get to know them. If we know a person by the sub that they eat or where they work, it’s a much more friendly, homey environment.
A lot of the fastest-growing chains in the country have a strong community outreach component. Do you think there’s a correlation between community outreach and success?
There’s no doubt. People in the community know which businesses they can count on. It was important to Peter when he owned the first [Jersey Mike’s, in Mount Pleasant, N.J.,] that when people came to him and said they needed a donation, he was the first to do it. It’s been part of the culture since the first store.
That’s one of the key things when we talk to [potential] franchisees. It’s not just about the money or their experience in the restaurant business. We’re looking for the right cultural fit, and we ask them questions about what kind of giving they’ve done in their existing businesses to see if they’re going to be a right fit for us.
Cause marketing is kind of the new buzzword, but Peter’s been doing it since 1975. Our big thing is our “Month of Giving” in March. We end it on the last Wednesday of the month, and we donate 100 percent of the sales of each store in the system — not profits, but sales, every dollar that comes in the door that day across the country — goes to the charity of choice for that particular market. I think last year we raised around $3 million for the month and gave a lot of money to a lot of great charities.
Does Jersey Mike’s have a preferred type of charity?
No. It might be children’s hospitals or high school athletic booster clubs. Bert’s Big Adventure in Atlanta raises money every year to send kids with illnesses to Disney World. We got involved with Wipe Out Kids’ Cancer with Cindy Brinker [in Dallas] quite a few years ago. We’ve basically adopted them and they’ve adopted us. We’ve also worked with some armed services groups around the country.
Do you leave the choice of charity up to the franchisees?
Each market picks the charity of choice. That’s important because somebody in the market obviously has the passion for what the charity is, so there’s a connection.
You mentioned cause marketing, but in fact your actual marketing tends to be centered around quality, rather than charities.
In our manifesto, one of the statements is you “give to give,” which implies that you’re not giving to get recognition out of it.
We don’t try to toot our own horns. We’re not looking for the accolades. We’re doing it because it’s the right thing to do, and the community responds and hopefully becomes loyal through it. But that’s not necessarily the reason to do it.
So our advertising right now is the “Sub Above” campaign. We’re just promoting what we’ve been doing since 1956, which is freshly sliced subs and fresh grilled cheesesteaks and hot subs. Just trying to make people aware of what we do and what is a key differentiator for us.
2016 plans, marketing initiatives, more
What are your plans for 2016?
Hopefully we’re in the 225 to 250 [new unit] range. That’s where we’ve been trending the past couple of years. Our pipeline’s pretty full. The real estate’s there, and we hope we’ll be able to fulfill that.
How many of those units do you expect to be corporate?
Twenty to 25 — about 10 percent. Eventually, Peter would love to have 10 percent be the total number of corporate stores. We might pick up a few stores through acquisition, but there really aren’t that many franchisees that we have in the system that are selling today. Most of them are growing. I think 65 to 70 percent of our stores were with our existing franchisees, and that will continue next year.
Any new marketing initiatives?
Fingers crossed, we’re going to launch a new online ordering app. We’ll continue with the “Sub Above” campaign, continuing to try to differentiate ourselves with our fresh products. We’ll spend a lot of time on training next year. We’re going to have a big certified trainers conference in January in Phoenix and talk about our “14 feet of experience,” which is basically the line [customers are] going down, from the slicer to the cashier. [We want to] provide a little bit more of a sense of urgency — continuing the banter between customers and employees, but trying to get our speed of service.
Is that a challenge, making sure people don’t feel rushed but also moving them along?
One of the things we do [to speed things along] is we ask, “Do you want it Mike’s way?” That’s with oil and vinegar, oregano, lettuce, tomato and onions. So you can ask that one question and then have a conversation about the game last night or how their day’s going without having to say, ‘Do you want lettuce?’ ‘Do you want tomatoes?’ ‘Do you want this?’ It’s part of the training that we’ve got in place. It’s been there for a long time; it just needs to be reinforced.
We talk a lot in the Northeast about how we move faster than in other parts of the country. Is that true? Does speed of service vary much from one part of the country to another?
I don’t think so. I think it’s a matter of just making sure that the customer’s comfortable. We try to train our people behind the line that if the customer’s in a hurry and they want you to make the sub as efficiently as possible, they may not be interested in a big conversation that time. But there are other people who might want to chat for a second, and you have to be able to tell the difference between the two.