After borrowing $125,000 to buy his local sub shop at age 17, Peter Cancro has built Jersey Mike’s into one of the nation’s fastest-growing fast-food brands, on track to hit nearly $4 billion in systemwide revenue this year from 3,000 locations (99% of them franchisees).
It’s also made Cancro a supersized fortune. Including both the value of the business and his share of dividends paid out over the years, Jersey Mike’s sole owner is worth an estimated $5.6 billion. That’s more than Mark Cuban or Steven Spielberg, and twice as much as Jimmy John’s founder Jimmy John Liautaud.
Read the full story on Forbes: https://www.forbes.com/sites/jemimamcevoy/2024/07/28/6-business-lessons-from-jersey-mikes-billionaire-peter-cancro/
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0:00 Introduction
0:46 Peter Cancro Shares The Beginning Of Jersey Mike's
2:51 How Much Does Jersey Mike's Make?
6:14 Jersey Mike's Expands
9:54 How Does Jersey Mike's Give Back?
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It’s also made Cancro a supersized fortune. Including both the value of the business and his share of dividends paid out over the years, Jersey Mike’s sole owner is worth an estimated $5.6 billion. That’s more than Mark Cuban or Steven Spielberg, and twice as much as Jimmy John’s founder Jimmy John Liautaud.
Read the full story on Forbes: https://www.forbes.com/sites/jemimamcevoy/2024/07/28/6-business-lessons-from-jersey-mikes-billionaire-peter-cancro/
Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1
0:00 Introduction
0:46 Peter Cancro Shares The Beginning Of Jersey Mike's
2:51 How Much Does Jersey Mike's Make?
6:14 Jersey Mike's Expands
9:54 How Does Jersey Mike's Give Back?
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
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More From Forbes: http://forbes.com
Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
Category
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LifestyleTranscript
00:00The American obsession with fast food dates back to the 1940s and 50s and more recently we've seen the rise of an affordable yet elevated class of fast food.
00:10Riding the momentum of this wave is Peter Cancro, the owner of Jersey Mike's, who has run the sub-chain for nearly 50 years.
00:17You know, oftentimes people say, what would you do differently, you know, in your life if what you knew now you knew then?
00:24And I say, nothing. I'm not going to do anything different.
00:28Cancro has grown Jersey Mike's into one of the nation's fastest growing fast food brands, on track to hit nearly $4 billion in system-wide revenue this year from 3,000 locations.
00:39And the Jersey-born native himself is worth an estimated $5.6 billion as the business's sole owner.
00:46When I travel out around the country to see the stores, I don't have the tie on, but I have an Oxford blue shirt with the sleeves rolled up always and jump behind the counter, sprinkle, wrap, slice, make the hot subs, banter with the customers and the employees.
01:03They're not allowed to introduce who I am. And of course, I'm still the fastest slicer.
01:09Jersey Mike's sells itself as being the only chain with slice-to-order fresh grilled sandwiches.
01:14It actually started out as a small sub shop in Point Pleasant, New Jersey, originally called Mike's Subs, where Cancro worked making sandwiches from the time he was 14 years old.
01:24The Jersey's sure are growing up here in Point Pleasant. What a place to grow up. Small town. Everybody kind of knew your name.
01:31Summertime, of course, gets extremely busy, but that's how all the business happened. That's how a small little Jersey Mike's sub shop thrived from the summertime business.
01:41The business went up for sale when I was a senior in high school and not for a second did I ever think about buying the business.
01:56And then one night my mother said, Peter, I heard it was for sale. She looked at me and said, well, why don't you buy it?
02:04And I sort of laughed and went upstairs and that's when the light bulb went off. And the next morning, got up, went out to try and raise the capital.
02:13Called up my youth football coach, Rod Smith, who was a banker. And he said, you know, I think that we can do something. And he did.
02:22So we purchased a store for $125,000, which today's dollars is about $750,000. And he always said, why did you lend so much money to such a young kid?
02:34And no lie, he said, I knew Peter could get the ball across the goal line. It was something that I really wanted to do and gave up the college career of studying law, political science at North Carolina Chapel Hill.
02:48You know, at that age, you don't think that you can fail.
02:51Soon, the loan was paid back and Mike Subs was selling around $1 million worth of sandwiches a year, the equivalent of nearly $7 million a year today.
03:00So after taking over, it was 1975 and we just ran that one business for so many years. It was one of the largest volume shops in the nation, in the world, if you will.
03:12We were doing about $130,000 in gross sales per week in today's dollars. So we went from Mike Subs to Jersey Mike's in 1987. Mike's was a little bit too generic, we thought.
03:25And Jersey is really where the product is from. Are you an authentic Jersey sub? It's kind of the state sandwich, if you will.
03:35So we started franchising in 1987 and really grew and everybody wanted to come in. We didn't really try and market it to sell. It's just people found out that we were growing and we grew pretty well around Ocean and Monmouth County.
03:51Most major fast food chains operate on a franchise model, which allows them to expand quickly and cheaply.
03:57To own a Jersey Mike's, local operators pay an initial fee of $18,500, put up around $500,000 to open a new store, and then pay an ongoing royalty of 6.5% of sales to license the brand.
04:11And then in 1991, we were so committed to just spending everything that came in on marketing, on growth, on helping owners succeed, that all of a sudden the banking market fell out in the Northeast.
04:24One of the worst recessions for our company, for me, still today.
04:29And we had a layoff of my six employees that I had, including my brother, John, and everyone else on the staff. And I stood in the office alone and said, well, you know, here I go.
04:41But everybody came back. Of course, it was a tough time, well-remembered, but something that looking back, you know, I don't know how I could have prevented it.
04:51But today, you know, that's an important part of your business plan, is that structure of financing and how you're going to grow.
04:59Kenker redoubled his efforts, and by 1994, he had dug Jersey Mike's out of the hole and hired everyone back.
05:05By the end of the decade, Jersey Mike's had surpassed 100 locations.
05:09You know, it's funny, as we grew out of the state of New Jersey, no one knew who we were north of LA or in Seattle or in Ohio.
05:18But when we opened up and we opened one store or two stores, we would always win the Reader's Choice Award from local people saying that we had the best sub.
05:29Their sales per store are astronomically higher than all of the other sandwich sector peers.
05:39Over the past five years, Jersey Mike's has averaged annual sales growth of 20.2 percent, according to food service consulting firm Technomic, with revenue jumping from $1.3 billion in 2019 to $3.3 billion in 2023.
05:53They've nearly doubled their number of stores since 2019 and are now opening around 300 stores a year, everywhere from Alaska to Hawaii.
06:01That kind of growth is unbelievable in the saturated United States sandwich market. It's unbelievable.
06:10And yet, as they grow, they open locations strategically.
06:15They have not overexpanded. Even now, at this point, they only have about 3,342 units in the United States.
06:25They have not overexpanded, as had their other very large peer, Subway, which has been struggling for a number of different reasons.
06:37Subway has lost over 7,000 stores in the United States over the last five or six years.
06:45It's not just the moneymaking that keeps franchisers happy. It's Cancro's leadership.
06:50Peter Cancro has the reputation with his franchisees as being a straight shooter,
06:58a guy who in his early days actually showed up to work with franchisees and to sell franchisees in a battered station wagon.
07:09During the pandemic, Jersey Mike's paid to have all their company and franchise restaurants remodeled.
07:15That is unheard of in the restaurant franchise business.
07:20But they did it at a time when they knew that the restaurant economy was bad.
07:26Well, the entire economy was bad and that their franchisees needed it.
07:31Potential Jersey Mike's franchisees are put through a vigorous screening process.
07:35The company claims only about 1% of people who apply to own a Jersey Mike's are approved, making it more competitive than getting into Harvard.
07:42Another reason is the startup costs.
07:45Opening restaurants are not cheap. The funds just weren't available.
07:49You know, when you're $120,000 in student loans, what bank is going to want to borrow money to a bunch of 20-something year olds in the midst of a pandemic?
07:58Me applying for the Rod Smith Award was kind of my last ditch effort to Jersey Mike's.
08:03A great way to snag a Jersey Mike's franchise is to work at Jersey Mike's.
08:07So far, Cancro has awarded about 75 franchises to former employees and managers.
08:12He even co-signs these stores' leases and lends the lucky new franchisees money to cover startup costs.
08:18I always love kind of asking them who wants to get their own store because of our program, the Rod Smith Sponsorship Program.
08:27We're trying to get as many that never would have dreamed about having their own business into their own business.
08:34And that is really one of the things that, you know, I take great pride and admiration for these young people and what they're doing.
08:41One of the key things, too, with the young people getting involved is that the lease, the landlords today won't take them.
08:48They don't have enough capital.
08:50So our company guarantees the lease for them, loans the money, and of course, they pay it back over a seven- or a ten-year payout.
08:59But it establishes them as their own business, their entrepreneur.
09:04And it's really just so great to see and to watch.
09:08It's not just employees the company looks to help.
09:11Cancro looks for franchisees who are willing to get their hands dirty and buy wholeheartedly into the company's culture,
09:17which includes a focus on community and charitable giving.
09:20When I was in high school, I watched Bob Hoffman of Hoffman's Ice Cream and Jack Baker of the Lobster Shanty give to the community, to the first aid.
09:28So I'm seeing that in high school.
09:30So when I took over senior year at 17, I said, this is what we're going to do.
09:35This is what we're going to do.
09:36So that's where it comes from, that giving.
09:38We're always giving to wherever our heart is drawn.
09:41That's where we go.
09:43And it's not planned.
09:44I come across different charities and we decide, you know what, let's do it.
09:49And I love that part of the business.
09:51And the owners are always all in with that as well.
09:54You don't buy at Jersey Mike's.
09:56You're awarded at Jersey Mike's.
09:57And when you put this logo on, there's a lot of weight to this.
10:00When you put this logo on, you represent a brand that has spent since 1956 giving back, putting their money where their mouth is.
10:08And then in addition to that, making a great product with it.
10:11I don't know if there's any other business out there that does the giving back just at the scale that we do as a company.
10:18On our giving day in March of every year, all owners put up all their sales for the day.
10:24And last year, we raised over $25 million in one day.
10:29So that's a big part of our origin.
10:35Canker is engaged in an aggressive marketing push, spending nearly $600 million over the past three years on marketing such as TV spots featuring fellow Jersey Shore native Danny DeVito, who debuted as Jersey Mike's first celebrity spokesperson in 2022.
10:51We have never done that in the history of our company.
10:53Just felt that let's just keep talking about our product, talking about our people, talk about our restaurants.
10:59But I considered it.
11:01They brought in Danny DeVito and we met and I knew right away that it was the right move.
11:07He grew up in Asbury Park, New Jersey, the Jersey Shore, very close to Point Pleasant.
11:12And we just sort of hit it off right from the beginning.
11:15But if you watch Danny on the commercials, he comes across very real, genuine and heartfelt.
11:21It was incredible how it really helped our momentum as a company.
11:25People sort of laughed along with us and just sort of smiled.
11:29And it really, really was effective for our brand to grow.
11:34Canker is seizing that momentum with plans to open another 5,000 stores in the next five years and 300 in Canada in the next decade.
11:42I think at 17, I didn't think it could grow to this point, but always aggressive and going after it.
11:50And what I was taught from my coaches as a youth, playing football, basketball, baseball,
11:57that helped rear me up and kind of tell myself that there's nothing you can't do.
12:09I remember being in California, one of the first stores we opened, a lady walked in and she actually looked at me and goes,
12:16What are you, from Jersey? And I looked right at her. I go, yeah, you got a problem with that?
12:20And she goes, oh, no. But it was just so automatic. And I said, oh, no, I'm sorry.
12:26But we both laughed and it was just so great.
12:29But that's sort of how it is that the Jersey, you walk around with a little bit of pride.
12:34So, you know, and sort of like we're going to take it and we're going to grow it and be nonstop.
12:41Cancro denies rumors that he's selling soon, but after being so involved in this business for so many years,
12:46one can only speculate how much longer he'll want to hold on.
12:49You know, people ask, did you ever have any second thoughts? And I go, no.
12:54You know, it's really just went with it and, you know, had a lot of fun for the past 49 years.