Peter Cancro is the Founder and CEO of Jersey Mike’s Subs. In 1971 at the age of only 17, Peter raised $125,000 to purchase the single store sandwich shop called Mike’s Subs. Today, Jersey Mike’s has over 2000 stores across the globe, and is closing in on over $2 billion in annual sales. Entrepreneur Magazine has ranked Jersey Mike’s #7 in the 2021 Franchise 500 Ranking.
In this episode, Peter joins host Fran Racioppi to share his recipe for building a franchise empire, and his foundation on a “SubAbove” culture of giving and a commitment to its people – investing over $150 million back into its store owners to update and modernize. Peter was named to the 2021 Power List by Nation’s Restaurant News.
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About Peter Cancro
Peter Cancro is the Founder and CEO of Jersey Mike’s Subs. In 1971 at the age of only 17, Peter raised $125,000 to purchase the single-store sandwich shop called Mike’s Subs. Today, Jersey Mike’s has over 2000 stores across the globe and is closing in on over $2 billion in annual sales. Entrepreneur Magazine has ranked Jersey Mike’s #7 in the 2021 Franchise 500 Ranking. Peter has built Jersey Mike’s on a culture of giving and a commitment to its people, investing over $150 million back into its store owners to update and modernize. Peter was named to the 2021 Power List by Nation’s Restaurant News.
Organizations will fail without transformative leaders. This show is a conversation with prominent visionaries, drivers of change and those dedicated to winning. In 1943, the Allied Forces determined a new type of leader was required to win World War II. These leaders would be assessed using a specific set of character traits, but selected using the whole man concept, a combination of traits needed to simply get things done and win, no matter the challenge. Code name Jedburgh’s three-man teams parachuted behind enemy lines onto the shores of occupied France during the nighttime hours before D-Day. Their only directive was to win the war at all costs. With little guidance and scarce resources, a few hundred specially selected, highly trained, innovative leaders turned the tide of the war. In each episode, I speak with trailblazers who have earned success through a dedication to talent development, preparation, introspection and the drive to get things done.
In this episode, I spoke with Peter Cancro. We talked about these couple of things. Peter Cancro is the Founder and CEO of Jersey Mike’s Subs. In 1975, at the age of only seventeen, Peter raised $125,000 to purchase the single-store sandwich shop called Mike’s Subs. Now, Jersey Mike’s has over 2,000 stores across the globe and is closing in on over $2 billion in annual sales. Entrepreneur Magazine has ranked Jersey Mike’s number seven on the 2021 Franchise 500 ranking. Peter has built Jersey Mike’s on a culture of giving and a commitment to its people investing over $150 million back into its store owners to update and modernize. Peter was named to the 2021 Power List by Nation’s Restaurant News. Peter, thanks for joining me.
Thanks, Fran. If I could first start off with thank you for your service with the military and thanks for your service to our country.
Thank you. It was an honor and I try to live up to it every single day. This has been quite a journey from the high school football fields of the Jersey Shore to building a global franchise. We met in 2017. I was a Financial Advisor at Merrill Lynch and we met at your office and you told me that the company had not yet hit its hyper-growth phase. You had about 1,000 stores, you were doing about $1 billion in revenue and you told me, “In the next five years, we’re going to double. This is going to set the conditions for our rapid growth.”
At that time, I was an MBA student and so obviously I knew everything about business and I was like, “This is insane. There’s no way. You cannot double 1,000 stores in five years and get there and then go from $1 billion to $2 billion in five years.” I thought about it and I was looking at you through the course of this meeting and there was no hesitation in your voice, but sheer confidence in your eyes. It was impressive and we sit here in 2021. We’re not five years. We’re four years in and you’re at the 2,000 stores that you’re closing on the $2 billion. This is an amazing story, but it started in 1971 at fourteen when you got a job at Mike’s Subs.
My brother worked there the year before I did and he told the owners, “My brother, I know he’ll work hard. I’m not sure how bright he is.” That’s how I got the job. It’s a small town, Point Pleasant, an hour South of New York. We’re inundated in the summer. It’s an extraordinary business. It increased like you wouldn’t believe, but it was entire families that worked at Mike’s. When I first started there, my voice mattered. That’s the culture that was there at Mike’s. All the Manzos, the Cancros, there were four Cancros that worked at the shop. It was very community-oriented from the beginning.
You’re there for four years and in 1975, you find out the store is going for sale. What happened that night?
The owner put the place up for sale and we all knew, but you know how businesses are when it’s for sale, it’s quiet. Nobody knows. One night my mother said, “I heard it was for sale,” and I was a little bit taken off guard. I was like, “How did you know? How did you find out?” You know how moms are, they know everything. That night, she said, “Why don’t you buy it?” I was on my way up to bed, I looked at her and laughed, went up the stairs, but something clicked. A light switch went off. The next morning was a Monday morning and that’s when I called the owner, I said, “What’s going on? I’d like to try and buy.” “I’ve got two people demanding contracts. I could hold them off for a week or so,” and that’s when I went out trying to raise the capital.
You go out to raise the capital. You’re seventeen. You need about $125,000 is what it was, which is about how much now?
$700,000 or so.
It’s not that easy. You meet up with one investor who wants a piece of the equity. Can you talk about that conversation? A critical thing in all businesses, small or large, is this equity dispersion and this equity distribution and a lot of people get this wrong.
I first went out trying to raise the capital and I found out this is more difficult than I thought. I go to some of the wealthy people that live in the neighboring towns and told them about what I was doing. There were a couple of groups that wanted to do something, but they couldn’t and I kept going. I called people up and go to talk with them. I went to see this gentleman that was going to love it and he wanted to back me 100%, but then said he wanted to be a 50/50 partner.
Working there for four years and seeing the business, I said to myself, “No, I don’t want a partner. It’s so much work and involved.” I don’t know why but I pushed back. I left that gentleman and I was back to ground zero and it was at the end of the week. I didn’t know what direction to go and that’s when I went over to my coach’s house and called him up. It was that Sunday night, so a week later and he said, “We can do something,” and he did. He wrapped in the real estate and the business and was able to package the whole thing. I closed on March 31st of my senior year in high school.
That’s so mature to think about at seventeen years old. I have to only think, what happened if you had to become a 50/50 partner with this person? The business could look completely different now.
It was not an option. I immediately said, “No,” and I wish I could tell you why, but instinctively I said, “I’m not going to do it.” I tell that to all the young folks that we’re looking to back in their store with a new coach, Rod Smith Award, I say, “Don’t take a partner.”
Coach Smith, he gives you the money, he backs you, you’re seventeen, you show up on day one and you’re the boss, now what?
I was a good fast slicer. My speed increased tenfold. When you’re an owner, things shift. If you’re working with the old crew and it’s tough for them to maybe swallow, but it was a small nucleus of people. It was only ten people on the roster total. It was fine. We got along fine and worked together okay. New people came in onboard and it wasn’t a problem with me. In youth sports, I was captain of the teams and captain of this, I was the president of my class. It was the leadership thing, taking charge was pretty easy for me.
I want to talk about your leadership style because that’s an important part of this story. To me, you’re someone who leads by example and we’ve seen the commercials. I enjoy watching your commercials. So many times, the commercials are not a reality, especially when you have an owner who’s in, but with you, it is. You know how to do every job in that store and you do it well. There are stories from employees of where you’ve come in and you got behind the counter and shown them, “I can do it faster. I can do it better.” That’s truly inspirational as a leader, especially in such a large organization, for someone to come in and be able to do every job. It instantly builds this credibility. How would you describe your leadership style and how do you approach your interaction with all facets of the company because you have the corporate entity, but then you have the owners and the employees of the actual stores?
The basic style has always been to be subservient, to put others first before yourself. Always pull people along, never push them. That is what I do when I go into a store. I get right behind the counter, talk to the kids and say, “How is it going?” I start cleaning the grill, I’ll go in and clean the bathroom. I’ll start working with the crew. No one is allowed to introduce me to the customers as the owner. I’m just Peter, I’m one of the workers.
Do you get called out? Do people come in and say, “That’s Peter.”
That’s the way it is and I say, “I started when I was fourteen, sprinkling, wrapping, like you and what you’re doing. Where are you going? What are you doing with school? What are you doing after this?” I challenge them to see where their lives are and that, “You’ve got a future here. You’ve got a small family nucleus that you’re a part of.” A leadership style is pulling people along and it’s amazing. They talk about these kids and it was funny in the ’70s, they say, “These kids today, you don’t understand.” The ’80s, the ’90s and still now, all these kids are great. You have to approach them as they did in Mike’s when I first joined in ‘71, that my voice mattered and you raise up each other and raise up together. That’s always been the mentality and now we’re here to serve our owners. We’re here to serve our customers and it trickles down if you will, that whole mentality, that attitude of putting others first before yourself.
You have a tremendous drive. We were talking before we started and you said you’re coming up on 50 years where you’ve been in this business and from the start of Mike’s Subs. I would say that I see the same drive in you that you were probably when you walked in that door at fourteen years old. When you look at your team, that’s hard to replicate. How do you train those around you and what do you expect from those around you? Do you expect them to match that drive? How do you assess their capabilities? You’re on the road most days, you’re in every store and you know every owner. What do you expect from those that sit around you?
Most of us have been involved in youth sports or group encounters, whether it’s in the band or music. It doesn’t have to always be sports. How many times have you heard the coach say, “Win or lose, I want you to hold your head high and walk off that field and know that you gave it your all, gave 100%?” We don’t demand it, but people see me running, not walking. Don’t walk when you can run philosophy. We go after it, we’re pretty focused and driven, but in a real positive way, we want people to have fun, enjoy it, because you enjoy it when you’re doing your best, when you’re putting it out there, trying to serve your community, and serve one another in the store. That’s what it’s about and that’s the direction that people feel and hopefully get from our team.
That’s pulling people along. People see you running and then they want to run behind you. They see that leadership and they say, “I’ve got to get on this train.”
I welcome them to run ahead of me. That’s fine with me, but they’ve got to run pretty fast.
You run fast and you have a lot of people following you. There are 2,000 stores at this point. When we were talking one time, you told me that this growth rate is going to continue over the next couple of years. You saw 2021 to 2023 being a period of time where you saw more growth in the last ten years combined. In 2019, you opened 181 stores and in 2020, you were on track for 200. Can you talk a little bit about the transition in your mind as the owner and the founder from a small business to a medium business, to a large business? In business school, this principle sets the foundation of many different classes.
There are entire classes on the evolution of a company, in the cycle of a company, but few people ever stand up and say, “This is how I lead my organization through this.” There are inflection points there. You see so many founders of large companies and you’ll go in and say, “Why do we do it that way?” You’ll get answers like, “The founder said so. Peter said so.” At some point, that becomes detrimental to the organization and inhibits growth, but you haven’t experienced that. How have you thought through that evolution of the company?
Just a quick note, anytime I change or say, “Let’s do it this way,” I say why and explain it. Does it make common sense? That’s how we go forward. It’s not just to do it, to do it. It’s funny, you say from a small company, so in ‘75, it was one store. We had amazing volume and did incredible business to the Jersey Shore. We didn’t start expanding until ‘87 and then we grew. All the books in school and everything, I don’t know if they teach or tell you about this, but there were a lot of up and downtimes. People say, “How did you do it? How did you get where you are now?” I said, “Do you really want to know? We showed up every day. We buttoned the chinstrap, we got in the game every day and went after it.” We’re motivated and still more enthused than ever to go after it.
As you said, we got to 1,000 stores and I didn’t want to celebrate. Everybody said we should have a big celebration, but everything that happened negative in my whole career, building up to 1,000 stores, flashed in front of me. I said, “I can’t celebrate, but I’ll be back for 2,000 stores and we’ll celebrate then.” It’s funny how it seems a few years later, here we are at 2,000 stores probably by August of 2021. We’re going to go over $2 billion in sales. As we said, we see ‘21, ‘22 and ‘23, bigger and stronger than the last ten. It’s amazing the momentum that we’ve got. As I’ve said often, it’s starting to grow. We opened 210 stores in 2020 and we’re going to open 250 new stores in 2021. We see the progression, we see us getting to 300 stores a year, but most of the growth, 90% of it is from the existing owners. The average person has 3 or 4 shops. They all come in with one and then they grow from there.
We want people who have the energy that fits our whole philosophy of giving. You can tell right away when you meet someone. I stood behind the counter since I was fourteen years old, meeting and greeting people. When I meet somebody, I know if we want to go forward with them or not. It’s amazing. Everybody’s got the money, but who understands? I always say, “Where did you go to high school?” They look at you a little funny. I say, “Did you play any sports? What did you do with your life?” That’s how we recruit and retain, but to go from a small company to a large, I’ve got to tell you back and I’ll say it again, we showed up every day. It was around 2016, I looked around the conference table, I looked at Boyd, Mike, and some of the other folks, the team and I said, “We’re doing pretty well,” and that’s how it happened. We were focused. We had our head down, we were working non-stop, growing and giving to the owners and all as a team, and sooner or later, we stepped back and evaluated. We said, “This is starting to grow.”
The core of any good business and anything, a family, organization, team, businesses is good people. You mentioned here that you can stand across the counter, look across the table and say, “Is this a good person who I can have in my organization?” You’ve encouraged people from all backgrounds to jump into this industry and join as an owner, whether they have restaurant experience, whether they don’t, it doesn’t matter. Here on the show, in my work with veterans, we do so much analysis of this concept of hire for character and train for skill. If you assess someone based on the character that they bring, a certain level of character traits, drive, resiliency, adaptability, humility, integrity, effective intelligence, team ability, curiosity, emotional strength, those are the nine that special operations forces assess and recruit on.
If you bring them in and they demonstrate those, you can then train them. It doesn’t matter what you did before. You came into the business as a very young man. You didn’t check all these boxes. You didn’t have some advanced degree. You didn’t have something that on a resume, somebody says, “If you don’t have that, you can’t get the job. You don’t have a certification.” You didn’t have 30 years in the industry. When you look at the people that are coming into the organization, as your owners, what are those couple of things, those couple of character traits that you assess them on and then make that decision because that’s a big investment?
It was funny, I was in the Greenwich, Connecticut store and I had a whole crew of folks lined up and dynamic young people then some older people. I got to the end of the line and I saw this young lady and there was something about her presence. She was very confident and she had the energy. She said, “When are we going to open a store in Springfield, Mass?” I said, “When you open one.” I looked right at her because I knew that I was going to go ahead with her and she’s going to be one of the Coach Rod Smith Award recipients. I met her for four minutes and I knew. I could see it in their eyes, their confidence, their energy, they care about the people there.
Everything I talked about before putting others first, subservient, leadership by example, it stands out. It’s not hard to figure. You know what I’m saying. That’s what we look for and embrace and see. It’s amazing to see all of our owners embrace that giving spirit and that’s the most gratifying thing for me in business. It’s to see all those owners get it. They’re embracing their community from senior citizen homes to kids’ leagues, to first days at children’s hospital. There are hundreds of charities that we support and it’s all drawn from the heart. Where their heart is drawn then that’s the charity that they support. That is so great. It could be a small little charity I’ve never heard of. Where can we make an impact in people’s lives and make a difference?
That’s a foundational element of your selection criteria because every store is partnered with a local charity and you encourage, almost require your owners to be entrepreneurs and givers into the community.
I laugh when you said that a little bit because on that Day of Giving, March 31st, 2021, the last Wednesday of March, every single store participates, but it is not a requirement. It is not mandatory. That’s so cool that all the owners get it. They want to be part of it, they know making a difference in people’s lives. Are they looking for something in return? No, they’re doing it out of their heart. What happens is you do it and people find out about it. That’s the movement that I feel we’ve started and we want to keep it going nationwide. People are starting to hear about that. I remember years ago, people would always come in the store and they’re like, “Peter, where do you get your people? They’re so incredible. I hear what you do for the community. Your subs are good.” That was second to the people, to the giving in the community.
Leadership is about getting people to do things because they wanted to, not because you told them. The culture of giving, the day of giving, the month of giving that Jersey Mike’s has under your leadership exemplifies that. If you think about the mission of Jersey Mike’s, it’s right there on your homepage, “Giving, making a difference in someone’s life.” You talk about the culture of giving is as much a part of our heritage as oil and vinegar. That’s everything. That is the culture. Can you talk a bit more about the last Wednesday of every March, the Day of Giving, and then this March 2021 expanding that out to a whole month?
For our giving, a lot of businesses you’ll see are getting involved in charities and giving a portion of their sales, they’re like, “We’re going to give so much.” It seems cause-related marketing is what the experts will tell you, you should be doing. When I heard that, I shrugged my shoulders and grinned and said, “I guess we’ll keep doing that.” In 1975, when I went into business, I said, “I was witness to Bob Hoffman, Hoffman’s Ice Cream and Jack Baker from the Lobster Shanty, two local businessmen in Point Pleasant, that gave unconditionally to the youth, for the first day, to the community and I was a recipient of that and saw it firsthand. This is what we’re going to do.” That’s where it comes from. It’s part of my life. It’s part of what I saw and received as an athlete. It’s what we continue to do going forward.
Hats off to Mr. Hoffman and Mr. Baker for what they showed me. They showed me the way if you will. That’s how it started and that’s where we go. All year long, we’re involved in giving, but March is a special month where we hope we raise maybe $8.5 million or $9 million in one day and during the month people come in and they take a slip, they add onto the sub amount and give. They see what local charity we’re supporting within store materials, but we don’t push the people. We don’t say, “Would you like to give?” They see it and they want to give because they want to give. I hate that in the supermarket when you go in and they say, “Do you want to give a dollar?” You’ve got to be careful with that. If people want to give, they see it, they’ll give, but then of course, Wednesday, March 31st, we throw that out and we’re full-court pressing, the giving.
That’s the entire day’s sales going to charity.
Everything that’s rung up goes to that local charity. It’s funny, we’re filming some commercials for it and the owners are going to be in it. They’re going to say, “We’re giving 100%. That means we’re giving it our all.” It’s neat commercials coming out for it.
It was over $7 million in 2020 and the goal in 2021 is $8 million?
In 2020, we missed because of COVID. We had to not do it. In 2019, it was over $7.5 million. We think in 2021, over $8.5 million or $9 million, I’m not sure, it’s something like that. We forecast it over $10 million in 2022. We’ll give all the proceeds. We’ll go to one charity next year to Special Olympics. We’re going to be the national sponsor.
I’ll be there in line. Investment in people. We talked about bringing in top-quality people, but you have made some very deliberate and conscious decisions to invest in the best people in the organization and the up-and-coming leaders of the next generation of owners. You referenced it a couple of times in the Coach Rod Smith Ownership Program. What’s the program and how are you selecting these individuals?
It started when we went out in October, November, and December 2019. We went around the country to 40 different co-ops and had hundreds of people in the room. It was owners, assistant managers and managers. That’s when we broadcast that we were the first franchise company in America, in the history of franchising, to pay for all the retrofits. It’s never been done before as far as we know. We told the owners that.
That’s $150 million. That’s $75,000 per store.
It’s $175,000 with marketing, with everything included. That’s our investment. I said, “We’re going to talk about pulling people along, about putting others first before ourselves, but we’re going to talk about our giving culture. As a company, we’ve got to be in too.” That’s when I announced we were paying for the retrofits. It was a lot of emotion in the room, owners and peers, and it was an unbelievable time. We went city to city and you would think that they would find out about it but for some reason, they didn’t. It was an extraordinary time. We went to three cities every week and nonstop. As soon as I said it, now the owners are happy. I told my story about how I got started. To the mass, I said, “This is how I got in. Somebody backed me. Somebody gave me a shot. I’ve got to tell you, I’m announcing the Coach Rod Smith Sponsorship Award because my coach gave me a shot. I want to give you a shot. Who wants to own their own store?” You should’ve seen it.
It’s about $400,000. We put up all the money, we signed the lease. They have to pay it back. We’re on the business. Their owners sponsor them, the franchise owner. We’re not stealing their people. We give 3% of the sales for three years. It’s almost over $100,000, the owner can make not losing a person. You’d be surprised, they want to give some of their key people the opportunity. That’s something to watch to see the owners willing to give up an assistant manager or somebody to go out and be on their own. It’s a whole team thing. Everybody helping each other rise up, if you will. It started to happen. We think we’ll have about 25 stores opening up within 2022 and then we hope to get the 50 to 100 deals a year. That’d be $40 million, 100 a year that we have to invest in our people, in our future.
I’ve got to tell you where it comes from. A gentleman, Tom Monaghan, the Founder of Domino’s Pizza, who’s on our advisory group. That’s what he did to expand. People from within bought and grew, and got into their own store. It’s amazing how you hear that. I heard that and I said, “We’re going to do that.” Not many companies are doing it and no one paid for all the retrofits. That’s an investment in our owners. We don’t call them franchisees, we call them partners, we call them owners. It’s a whole culture.
That’s out of the ordinary for this industry because so much is put on the owners in this industry.
It’s never been done.
You’ve spoken in the past about Tom Monaghan and him serving as a mentor. Mentors are so important for anyone. It doesn’t matter how experienced you are in business, whether you’re a young leader or a senior executive, you have to have a mentor. What would you say you’ve taken away from him in addition to what you’ve mentioned?
In 1991, we were on a rise. We were opening stores and we were investing everything we had back into growth. All of a sudden, the banking environment in the Northeast was the worst hit, and around the country. Banks went out of business. No one was lending money and we flatlined. I had to lay off five people, including my brother because we were done. It’s amazing how many bills you can pay when you don’t have any payroll. I picked up the book, Pizza Tiger and read that. I go, “I’m not alone. He went through this.” Everything that happened to me, happened to him. That book gave me hope. That’s how we got connected.
A friend of mine, Sarah Palisi Chapin, went to Purdue. She met Hoyt Jones. He went off with a doctorate degree and started delivering pizzas for Domino’s. It ends up he worked with Tom Monaghan, head of operations for 4,500 stores. We became friends and he came into the company in 2008, but that’s when I met Mr. Monaghan and I said, “I’ve got the book on every single page highlighted about what happened to him.” It helped me through that time. I told that story to a national audience when Mr. Monaghan was there for a talk a few years back. That’s how it started, that’s how we got together. It was a tough time, ‘91. My toughest recession in beyond 2008.
I want to get into that. I like what you said there about you have the book. We talked about that in two episodes ago when I had on the authors of The Talent War, Mike Sarraille and George Randle and we said the best advice they ever got was, plagiarize what works. There’s no need to recreate it. Take it, replicate it and do it again. It hasn’t always been ups and downs, you mentioned that a couple of times and you got into it there.
In 1991, you borrowed some money. You thought about going public because there were economic indicators of a downturn. How did you get through that? You talked about having to lay everybody off. How do you take a step back and say, “We’re going to get through this. We’re not going to quit?” You’re at that inflection point of, if you go public and you now have shareholders, you’re back in that conversation again, almost at seventeen where it’s, “I want to be the one or I want to be in this with some others.”
During tough times and problems, you can sit with a legal pad and try and work it out and ascertain, “What should I do? What direction should I go?” While you’re thinking about that, while you’re worrying about everything, you go in the morning and you go to work. I was standing in a little 400 square foot office, at Jersey Mike’s store alone and I was saying, “Lord, here I am. Help me through this.” It’s amazing day by day how when you start pushing and pushing and nothing happens. You step back a little bit and everything starts coming. That’s the way it’s seen. I went to visit every single owner and worked harder than I had ever done before. I called all the shots with the marketing, with this, with that. Months went by and we started getting out of it and seeing a difference and then everybody finally came back within 1 or 2 years, but it was a good long time I was flat-lined. ‘91, ‘92, ‘93, we didn’t grow, but we took care of what we had. We started growing again in ‘94, ‘95. North Carolina happened and they were on a boom, then we opened up and stores started growing.
What happened in 2006?
We had so much development in North Carolina, the high-tech bubble burst in ‘02. I saw a lot of our sales were coming from North Carolina and they lost 100,000 jobs. You see it affected us and then our stores were old and tired. I saw that we were again flat-lined and lost a lot of sales every year. It was negative sales. I’m like, “What is going on?” In January of ‘06, it was one of the lowest points, believe it or not. We went out and that’s the first time I went to see every single owner. I rolled the dice and I said, “I’ll put everything on the table.” We paid for the retrofits. It was only $15 million total, but it was all the money in the world back then. We got all the stores looking good and sharp. Sales started to rise, and in ‘07, ‘08, the company turned around. Hoyt came on board in 2008 and at the time Domino’s was in a downturn, they were not doing well. He came on board, we didn’t call one person, but we had a lot of Domino’s owners. If you think about it, the same culture, ethics, morals coming in with us. We started to grow with the right people, with the great people, area directors, Domino’s in California, Chicago, DC and Florida. The right team assembled and kept working and slowly but surely, it started rising up.
In 2020, COVID?
I came back on March 15th from Vermont. We’re on the Killington board of directors, the ski team. My son used to race years ago. It was a great organization, but all of a sudden I was like, “What’s going on?” We were down the first week, like everybody else, like 45%, next week down by 45%. Everybody was saying, “Hold onto your money. Don’t do this, don’t market,” but I went in the complete opposite direction that everyone said we should go. I felt strong about we’ve got to make a move and we did.
Why? Can you explain it? That’s a tough decision.
I saw that we were going nowhere. We were going down, we were getting crushed. I said, “We’ve got to do something.” We have the capital, so I pivoted. We always advertised on sports. All of a sudden I said, “We’re going to advertise on the news.” We were on all the major network channels and the morning show news and we hit it hard. We went out and gave 50% off, which the people saw as a gift to them. We were willing to help people that were out of jobs and work, and then we kept pushing. Feeding America came and we got involved with that. I saw lines that were miles long and I said, “We’ve got to do something. I woke up in the middle of the night and wrote the commercial. We raised enough money to serve 25 million meals in a weekend.
It was unbelievable the outpouring of America to our stores to help contribute to the food banks. That’s what we saw. We touched the core. I had never been on TV before with commercials, but I felt, “I’ve got to step up. I’ve got to get out there and do it.” Somehow, we pulled it off and kept pushing harder than ever during that time. We always like to say, “We are fortunate to remain open and serve,” and we did. We had the tables and distance serving, mostly take out. We were perfectly set up for it. We gave as many as five million subs out to first responders, healthcare workers, and senior citizen homes that were on lockdown. We sent them subs and cookies. I have an aunt that was in a nursing home, so we made sure that we took care of her. It was all kinds of charities and not just one group. I know the hospital workers are heroes and all that, but the families and kids. Where the need was, we went after it. We like to call it the power of the sub sandwich.
How do you motivate the owners? Everybody’s affected by COVID, but your location, your geography affect you in many different ways, whether it be local regulations or state regulations. How do you sit across all these engines? You have the international component sitting in Australia too. How do you motivate the owners?
Here’s what I did. The very first week, we cut our royalty and marketing fees in half. We were like, “Here you go, you don’t have to pay this.” We did it for 8 weeks and then 4 weeks at a discount as well. Right away, I said, “You’ve got to hold onto your cash.” One night, we had 1,000 people online going through the payroll protection where they had to figure it out page by page. We had somebody going through it. Every single owner got funded. It was small amounts for a small business. It’s funny, we did not go after it. I said, “This doesn’t sound right,” and it’s funny how different companies went and got in trouble because they got the money. “What are you doing getting the money? You’re a public company, that’s not for you.”
The moves we took first were to cut the fees, so the owners, we’re with you. We marketed like never before, with unprecedented push with marketing and awareness. When the governor shut down the states, they thought everybody was shut down. They didn’t know that certain businesses would be open. That was our way of saying, “We’re open.” It worked. It was very effective. We rose up and then we sent $2.5 million out to the owners to give to their local community. I knew they didn’t have much money. How can you tell them to give away all their product? I paid for everything. “Go, give away the food, go to the hospitals, go to the police, the first aid. Go and help these people and feed them.”
The owners unbelievably kicked in as well. You hear about millions and millions served. I’m pretty proud of all of our team, our owners, the unbelievable efforts. Even the crews. The crew and them, they were into it. They love showing up and making it happen because they were scared. The workers coming in are like, “What’s happening? What’s going on?” The parents are not wanting their kids to come in, but we made a safe environment. People could see tables in front 8 or 10 feet away making the product, contactless pickup and the digital. We had an unbelievable app and investment in technology. They say Domino’s and Starbucks is a technology company, so are we. We’ve won numerous national awards. We were the first to integrate with Uber and DoorDash, meaning take the iPad off the wall and it goes right into our system. All of that helped us with a digital component, which you read about all the restaurants. If you don’t have the digital capacity, you’re not growing. We were ahead and ready for this because of our investment two years prior.
The business model has supported this being takeout only. I want to talk a little bit about how you assess businesses. I talk a lot with people I work with about people, process and technology. We’ve spoken a lot about the people. The technology component is interesting and amazing to hear that you were ahead of it by investing in that over the last couple of years and understanding the trends in the industry. Now, there’s this process. Everything at Jersey Mike’s has a process down to every single detail. Whether that’s slicing meat, baking bread, opening the store, closing the store, even starting a new store and the application process and then everything that goes in. You can see it right online. You have that one documented step-by-step for potential new owners. Can you talk about process development at Jersey Mike’s and who’s involved in that? Where do you determine what needs centralization at the headquarters level and the corporate entity versus what you decentralized down to owners?
We’re one of the few companies that are very hands-on with everything. When you’re getting involved, do you have financing? We help them with that go to these lenders. Because of our track record and the strength of our franchise company, we have lenders that are ready to go if certain people need a general requirement. We set up the financing for them and with them. We track the sites. We drive the real estate. We find the site next to Starbucks, Chipotle, Panera Bread, or the Five Guys. An expert is, we’re open, so you sell a lot of stuff. That’s a good location. We keep it real. The exact formula or science, as soon as you figure that out, the better.
Before you sign the lease, you’ve got to know what it’s going to cost. You’ve got to know about the air conditioning, the heat. You’ve got to know about the grease trap. You’ve got to know exactly what it’s going to cost. What is the landlord doing for work? That’s critical. You’ve got to guesstimate how many subs you’re going to sell a day. How many breads are going to go out the door? How well are the other businesses doing? You can almost guess what you’re going to gross. That’s what we do and we’re out in the suburbs, the soccer moms, middle-class income, but now coming in to more urban areas doing well also because people understand the value of our product. A whole sub is like, “This is unbelievable. This feeds three people.” The price of that, they think it’s expensive, but no. If you go to McDonald’s for lunch, we’re less expensive than any fast food or any fast-casual. We’re the most affordable, but you’ve got to figure it out.
Process improvement requires iteration. In order to get iteration, you have to have feedback. Can you talk about the communication structure that you’ve put in place with your owners for that feedback cycle so that you’re constantly iterating and getting better? The only way to rapidly grow at the rate that you have is to take that input and all that data out from the stores and then put it back into the process.
It’s always a learning process and I’m the one that goes out every day and says, “I want to learn. I want to grow. I don’t assume that I know everything.” I joke and I say, “Most everything,” but I do not know everything. If you have that mindset as a company that, “We’re here to serve and we’re here to learn,” and you go through these different openings and the new people coming in, they want to come in and have a proven system. They want to come in and know you know what you’re doing with municipality inspectors, with all these issues on the lease, the business terms. If they have their own attorney looking at the lease, that attorney may not know what to look for.
We guide through the process of reviewing a lease, signing a lease, construction training. The opening, we’re there for a couple of weeks with the people and training, teaching and coaching. It’s incredible service and support, but it has to be. Many franchise companies don’t do what we do. We have owners that are involved with other franchise companies and they say, “Peter, your company and what you do, no one matches it.” That’s coming from our existing owners that have other concepts they are with. It’s great to hear and all that, but it’s what we do. We care. We want to be involved in everything. Lower the costs, make sure the business model works and we have one of the most impressive business models in the industry, as far as what it costs to open and then what we gross. The return is unprecedented in the industry.
You talked about bringing new people in. Your training programs are a hallmark and again, unique to the industry. You’re investing three times more time into training than any other food service franchise. You operate under this value of put others first before yourself and you have different programs for different levels within the organization. Can you talk about those training programs and why are they so important to you and the business?
Initially, we had three weeks training and they were going to open a store and now, it’s almost three months. We had 180 hours and we were good. Everybody felt it was strong. I went into a meeting and I said, “How’s everything going?” They said, “Good.” The next day, I said, “We’re going to 360.” I doubled it. I sensed and knew that to make the subs a slice of fresh, there’s a lot of training involved. Some franchise, it’s 5 to 10 days. Ours is, “You’ve got to go to work.” Two people work for 2.5 months and a third person works for 1.5 months. It’s coordinated to the timeframe to open the store. They leave their job, go to training and open up the store. It’s built into the price of opening the store and we’re proud of it. We’re a training company, ongoing training and support.
Now, we’re doing online virtual training. You’ve got to put enough meat on, you’ve got to have a speed of service, you’ve got to be ready for the people coming in and now those tickets with the bags to go. We’ve evolved as a business and rapidly changing. We were there. It was the original store at fifteen seats, and all takeout. That’s our business. The model with COVID fits right in with what’s happening. What are you going to do differently now that COVID is here? We say, “Nothing. This is our business.” The training is cool. We have a big training that Brian Loughran, our head of training, is putting on starting after the month of giving, which is on April, May. It’s comprehensive.
All of the co-ops are coming together. One at a time we’re going through speed of service, about getting the product fresh, making sure it’s perfect and then sharing your life with the customer. How do we be genuine? How do we be real behind the counter? People see through that, “How are you?” Sometimes when I go into business, I go, “Why are you talking to me like that?” Be genuine, be real. That’s what you tell the kids. Start being yourself. What’s empowering that people love is when they can be real and genuine, and not some script by the company.
This is fascinating because so many companies miss this opportunity in the training. I think about my time in the military and we trained for years, for minutes to hours of execution. The investment that goes in is exponentially higher in that training than actually when you’re in there in the moment. It’s nice to see, but one of the biggest challenges with training is compliance. How do you ensure compliance across 2,000 stores?
It’s a constant going into the stores and several times a month working with the crews. It’s not so much compliance. It’s like, “You know what to do.” It’s the training and teaching them to make sure that it’s here too, that they don’t fall off. It’s not checking on them, it’s not filling out sheets, but coming in and working with them. Put down your clipboard and get behind the counter. You go, “What’s going on in your life? What’s happening?” They’re going through tough times, individually or as a family. That’s part of it and getting people to come along. You’ve got to work with them.
Wreaths Across America is one of the many initiatives that you have, but a big one for veterans. Can you talk a bit about that initiative?
I first found out about it from a friend, Edith Knowles, who lived in a nearby town. Her brother, Bud Thorne, was killed in the Battle of the Bulge. Granted, that was how many years ago, but she said, “He never came home for Christmas.” If you relate that to these times, when she would say it to kids, “He was a kid, he was a teenager and he never came home for Christmas,” it doesn’t matter if it’s many years ago, it’s still relevant. She’s the one that found out about Karen and Morrill Worcester from Maine. They started putting wreaths on the graves at Arlington Cemetery and their motto is, “Remember the fallen, honor those who serve, and teach our children the value of freedom.” That last line struck a chord with our company, with me, that I said, “We’ve got to get involved.”
We found out about it. We went down and through the years, we’ve been involved, I don’t know how many years now, but it was pretty cool. Years back, we put a wreath on every tomb in Arlington Cemetery. There are 350,000 graves. We raised enough money and we do it every year. We’ve raised millions for Wreaths Across America. I was down there and I said to a fellow, “Where are you from?” “I came up from Fort Lauderdale. I heard about this and I wanted to be here.” It’s amazing, you could see it on our website, Wreaths Across America. One of the Gold Star Mothers whose son died tells a story at our national meeting and we made a video out of it and it was so heartfelt. It brings down the house anytime you watch it. She talks about giving over yourself is when you find out about yourself. It’s so touching seeing everybody from all walks of life, every race, creed, religion, everybody’s there to support our service members. We’re very strong on that. We care about it deeply and teach our children the value of freedom.
For all the veterans out there, we thank you for that. It is impactful and it is certainly noticed by everybody.
Come down with me. It’s mid-December on a Saturday and be part of it.
I would love to. Count me in. Thank you. Another initiative that you have is the Sub Abover Grants, which has been described as extraordinary people making a difference in their communities. What motivated you to start that?
That’s the big thing. That’s why we never said a word about our giving for decades. We just did it. We found out, “We probably should tell people what we’re doing because then people find out about it and then they want to be part of it. They want to grow and do the same thing.” What we started with the Sub Abovers is going out and saying, “You know people in your own community, what are they doing?” They nominate the folks that they are impressed with. Amazing stories come in. We look at the thousands of applicants that come in and we choose quite a few winners and we give money towards their cause.
There was this one young lady who started giving blankets to homeless people. Another fellow, unfortunately, his child committed suicide, so he got involved in education and awareness for that. There are many different causes of people around the country giving of themselves to other people. That’s where I talked to you about it before. I see an unprecedented movement in our country, for that matter, around the world, where you could see in people’s eyes, they’re looking to serving one another. They’re looking out to help one another.
I know it was very prevalent after 9/11. You walk down the street and go, “How are you doing?” Everybody was together. I know they say we’re divided now, but I disagree. If you shut the news off, there’s so much negative and hate there, and you’ll see the good out in this country. It’s an unbelievable movement right now where people are together. That’s part of the Sub Abover. Look at your community and nominate people that are doing incredible things. It starts out with small things. It doesn’t have to be that big. People say, “I could never do anything. I could never start something.” No. You go out every day and you make a difference. It doesn’t matter how small, it’s always impactful. It’s making a difference in someone’s life.
It starts with a single sub shop on the Jersey Shore. It’s one step, you have a vision and if you can execute on it, it doesn’t matter what you’re doing, you put your head down and you will get there and succeed. 2021 comes, an entrepreneur releases the Franchise 500 and Jersey Mike’s gets ranked to number 7. I need to explain this for the readers because how this ranking is done is important because the ranking is completed on a survey of the franchisors based on five criteria. It’s costs and fees, size and growth, support, brand strength, financial strength and stability. The top ten, it says Taco Bell, Dunkin Donuts, UPS, Popeye’s, Culver’s, Kumon, Jersey Mike’s at seven, Planet Fitness, 7-Eleven and Servpro. McDonald’s at eleven, KFC at 25, Jimmy John’s at 72, and Firehouse Subs at 78. Subway is not even on it. I look at this list and it’s so impactful because it’s your owners who are saying, “I love this company,” and this is not just restaurants. This is every franchise. When you look at this, how do you stay grounded? I would look at this thing and I’d be off the wall.
It’s funny how I pick it up and I have a moment. Once in a while, I say, “Wow.” I look at this and I had a talk with my mother who passed away years ago and I said, “Mom, what do you think of this?” It’s a franchise ranking of not just restaurants, but all franchise companies. To be ranked seventh, I joke sometimes, “I think we’re doing a few things right.” It’s that humble approach that we show up every day, we go to work and go after it aggressively. We get the right people. Very simply, we work hard. We try and get involved in the community, make great products and great service. We care and show up every day. That’s the motto.
Our growth for the next three years is going to be bigger and stronger than the last ten. With 2,000 stores, we’re going to have a special celebration. When we hit that 2,000th store, we’re going back to the original store in Point Pleasant, which is now the training center. We’re going to be handing out shirts nationwide, 2,000 Strong and right underneath, Make A Difference. We’re going to have commercials out about franchisees, what they care about, and what they care about giving. What’s a local thing they like to do? It’s going to be so touching, and no one’s doing what we’re doing, sending a message like that.
It’s real, it’s genuine and it’s who we are. I’m pretty proud of our whole group, our owners, all the crews, the staff. When I go into the store, I go, “I was right there with you at fourteen, sprinkling and wrapping. Come on, we’re in it together.” They can tell that I mean it because I’ll sprinkle with them, I’ll make the cheesesteak. I look at the kids and I never say, “You did a good job.” I say, “How did I do?” They go, “You did okay.” It levels you with them. You’re not above them, you’re with them. I say that during the rush. I’m still fast, but I’m messy, for the laugh and joke.
That’s what brings everything together. Anyway, seventh place, we’ll take it, but we can’t get hung up on the articles or the clippings. We’ve got to keep proving it out every day. I’m always about on the company, what are we doing this week? What are we doing next month? That’s great, we’ve done this and achieved that. It’s like football season. You win a game, what’s the next game? You have a championship season, what about next season? You’ve got to keep coming. Not that we’re not satisfied or whatever, but we’ve got to keep raising the bar. That’s where our heads are at.
I tell a lot of people that I work with companies, teams, and organizations that nobody cares what you did yesterday. You can use it as a benchmark, but it’s about what you do today to get to tomorrow that matters. When you celebrate the 2,000, for one day, will you take a step back before you start the drive to 3,000?
As I said, we hit the thousandth store and I said, “No.” Everything negative that happened came over me. I said, “At the 2,000 stores, we are going to have a little gathering and be at the original store. That store, we’re going to call out a local charity and we’re going to run all day hard and give them money to make a difference.”
The next day, you start the next drive. I want to ask you and take it back to something that was very important to the Jedburghs back in World War II. They had to do three things every single day to be effective. They had to be able to shoot, move and communicate. If they could do these three things with precision every day, they could solve any challenge that came their way. What are the three things that you have to do every day to be successful and win?
On a store level and that’s where we always go. Even our big corporate office and all these people, it’s very simple, every group that comes together, every national meeting, I talk about fresh onions, lettuce, tomatoes, fresh-baked bread, everybody in uniform, clean store and then share your life with the customer. That’s all I ever say and that’s how we win by serving our public. It’s like when I was fourteen when I showed up at Mike’s, my voice mattered. It’s having a culture that people can win together. It’s the small things and I’m sure it was the small things that achieve victory way back when and it’s now as well. Being ready, being prepared, focusing on all the details and that’s how victory comes.
I had the #12, Cancro Special. I have to know, where did it come from? You’ve got to describe it too.
I always had different choices of subs and provolone, roast beef, which is USDA choice top rounds, it’s the best, and then a little pepperoni. I started having that and people would come in and say, “Let me have that Peter sub. Let me have the Cancro Special.” We put it up on the menu, but it didn’t sell enough, so it’s not about me. We had to take it off the menu. One of the things about Jersey Mike’s is we have these off the menu products, so #12, the old #4, the subs that used to be that people know about. I’m sure they give you a little look when you say, “Let me have a Cancro Special.”
I got the look and the girl turned around and there was a board behind. It had all of them listed. She checked it and I saw her pointing to it.
They said, “Let me have,” then a number. Whenever I go, I look up at the menu because I don’t know what it is, some of the numbers and when I left, there was 1 through 9. It’s expanded a bit.
Peter, this has been an amazing and impactful conversation. When I think about you, I think about some of the core characteristics that define success. I mentioned the nine of them as I defined them. I look at you and I say the top four, humility, curiosity, drive, integrity and this team ability, being in there to round out a five. For me, it’s integrity. When I think about what you do, I think about Jersey Mike’s and how you approach everything. The quality of being honest, having strong moral principles and to do what’s right when no one is looking, is I believe how you’ve built yourself, how you’ve built this organization. It’s why you’ve had success. It’s why you have been a leader that has rallied a community behind you. I say community because that’s what it is from owners to your corporate staff, to the employees. Everybody loves Jersey Mike’s. I applaud the efforts that you’ve made. It’s an amazing story. I thank you for everything that you’ve done and for joining me here.
Thank you so much. I appreciate that. I enjoyed it.