Dive Brief:
- Jersey Mike’s has agreed to sell a majority ownership position to private equity funds managed by Blackstone, according to a Tuesday press release. Jersey Mike’s founder and CEO Peter Cancro will continue to hold a significant equity stake and oversee the business.
- The transaction is expected to be completed in early 2025, subject to certain closing conditions and regulatory approvals. The terms and purchase price of the majority sale were not disclosed.
- Jersey Mike’s was reportedly considering a sale to Blackstone earlier this year that was estimated to be worth $8 billion.
Dive Insight:
This agreement will help Jersey Mike’s accelerate its growth in the U.S. and other markets, according to Tuesday’s announcement. The chain has been growing rapidly, opening roughly 250 units annually for the past three years. At the end of 2023, Jersey Mike’s had over 2,680 units open with an additional 1,275 under contract, according to the chain’s 2024 franchise disclosure document. The company projected 300 restaurant openings this year.
The chain commenced international expansion earlier this year. It signed its first major agreement outside the U.S. in January, a 300-unit deal with Redberry Restaurants in Canada. Redberry, which became area director for Canada as part of the deal, bought Jersey Mike’s other Canadian locations in Ontario. Redberry is expected to open five units in the country this year.
Blackstone’s expertise in growing franchised businesses should help Jersey Mike’s growth trajectory. The private equity firm bought Tropical Smoothie Cafe earlier this year and recently invested in 7Brew, both rapidly growing concepts.
“Blackstone has deep experience helping accelerate the expansion of high-growth franchise businesses and this area is one of our highest-conviction investment themes,” Peter Wallace, a senior managing director at Blackstone, said in a statement. “Our capital and resources will help support key investments in growth and technology for the benefit of Jersey Mike’s customers and exceptional franchisees.”
The deal will also help Jersey Mike’s continue to invest in technology and its digital transformation. The chain partnered with SoundHound earlier this year to pilot a voice ordering artificial intelligence tool. This technology handles all calls at participating locations and can handle multiple calls at once, allowing staff to focus on other tasks.
This deal comes about a year after close competitor Subway agreed to sell itself to Roark for about $9.6 billion. Outside the U.S., Subway signed a rash of development agreements adding up to over 10,000 commitments globally. However, Subway has average unit volumes of roughly $500,000, according to CNN. Comparatively, Jersey Mike’s AUVs are over $1.3 million, per the chain’s FDD.
