Jersey Mike’s Franchise Restaurant offers a wide assortment of made-to-order submarine-type sandwiches, other hot sandwiches, and related food products and beverages for on-premises and off-premises consumption. Jersey Mike’s operated under the name “Mike’s Submarines” from 1956 to 2002 and then changed its name to Jersey Mike’s. In 2019 Sub Above LLC was formed as an indirect wholly-owned subsidiary of Jersey Mike’s Franchise Systems, Inc. JMFS was the former franchisor of Jersey Mike’s franchise system before the closing of the 2019 Securitization Transaction.
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Jersey Mike’s Franchise: A Constant Growth Business
The current CEO Peter Cancro started working at Mike’s Subs in 1971 at the age of 14. At the age of 17 when he graduated high school he bought the storefront and became the owner of Mike Subs. In 1987 he began franchising the business and since then he has expanded the Jersey Mike’s Franchise to 1800+ locations across the United States. There currently are 1796 franchise stores and 51 company owned locations.
Everything is made right in front of you so you know exactly what is being put into your sub sandwich.
How Much is a Jersey Mike’s Franchise?
The initial Jersey Mike’s Franchise Fee is $18,500. This is the upfront fee that must be paid when opening a Jersey Mike’s franchise.
Jersey Mike’s Franchise Cost
The estimated total investment necessary to begin operation of a Jersey Mike’s Franchise ranges from $144,668 to $786,233
The following costs are part of the upfront costs included in the initial investment. Many of these are one-time fees that are needed to launch the franchise.
Jersey Mike’s Franchise Cost
| Initial Franchise Fee | $18,500 |
| Real Estate and Construction Fee | $5,000 |
| Rent, Lease, CAM, Taxes, and Security Deposits | $0 – $38,250 |
| Architectural Fees | $4,876 – $16,000 |
| Leasehold Improvements | $62,299 – $349,838 |
| Equipment / Furniture / Small Wares | $11,255 – $101,677 |
| Initial Inventory | $966 – $29,044 |
| Insurance | $2,000 – $12,000 |
| Training | $2,500 – $56,850 |
| Grand Opening Advertising | $12,500 |
| Exterior Signage | $2,188 – $46,516 |
| Interior Branding / Graphics | $2,689 – $16,000 |
| Uniforms, Office Equipment and Supplies | $2,260 – $25,361 |
| POS System and Network Connection | $2,085 – $15,305 |
| Professional fees | $525 – $12,642 |
| Business Licenses and Permits | $25 – $15,750 |
| Additional Funds – 3 Months | $15,000 |
| Total Estimated Initial Investment | $144,668 – $786,233 |
Jersey Mike’s On-Going Cost and Fees:
Continuing Services and Royalty Fees: 6.5% of weekly Gross Sales
Cooperative Advertising and Development Fund: 1% of weekly Gross Sales
How Much Do Franchise Owners Make?
Jersey Mike’s Franchise Sales Figures
Jersey Mike’s does not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. However, if you are purchasing an existing Jersey Mike’s, the company may provide you with the actual records of that Jersey Mike’s.
However, using the Franchisor income statement we can deduce from look at the income statement line item “Franchise Revenue”
Based on 1585 franchise units
Continuing Services and Royalty Fees: 6.5% of Gross Sales
In 2020 franchise revenues were $120.8 million
Estimated 2020 Total Franchise Sales: $1.85 billion
Estimated 2020 Average Franchise Sales: $1.17 million
1 – Based on a midpoint investment of $465,451 with estimated profits of $117,253 at a 10% profit margin it would take about 5 years to recoup your investment.
2 – Based on a midpoint investment of $465,451 with estimated profits of $175,879 at a 15% profit margin it would take about 5 years to recoup your investment.
3 – Based on a midpoint investment of $465,451 with estimated profits of $234,506 at a 20% profit margin it would take about 3 years to recoup your investment.
The return on your investment is quite promising for the restaurant industry.
The best case scenario for a Jersey Mike’s franchise is making your money back in 3 years and if you have lower profitability of 10% it may take up to 5 years to get a return on your initial capital.
This is just an estimated sales based on the franchisor’s income statement and can vary greatly depending on the length that the particular franchise location has been open and how well the business is run. We did not include 2019 information as this is when Sub Above LLC acquired rights to franchise from Jersey Mikes Franchisor and only includes one week of financial data.
A Sub Above, LLC Income Statement
Statements of Income for the Year Ended December 31, 2020 and For the Period from December 23, 2019 through December 31, 2019
| 2020 | 2019 | |
|---|---|---|
| Revenues: | ||
| Continual service fees and royalty fees | $120,809,799 | $2,009,905 |
| Franchise fees | 3,497,854 | 80,546 |
| Total revenues | 124,907,653 | 2,090,451 |
| OPERATING EXPENSES – Selling, advertising, general and administrative | 20,108,656 | 239,515 |
| INCOME FROM OPERATIONS | 104,195,997 | 1,850,936 |
| OTHER (INCOME) EXPENSES: | ||
| Interest Income | (35,106) | (2,965) |
| Amortization expense | 2,437,202 | 41,001 |
| Other expenses – net | 2,402,096 | 38,306 |
| INCOME BEFORE PROVISION FOR STATE INCOME TAXES | 101,796,901 | 7,812,630 |
| PROVISION FOR STATE INCOME TAXES | 1,000 | 7,375 |
| NET INCOME | $101,795,901 | $1,805,255 |
Income Statement Key Insights
Sub Above LLC is the franchisor of all Jersey Mike businesses and the company was profitable in 2020 with a net income of 101.8 million in 2020. The large discrepancy in net incomes from 2019 to 2020 is because in 2019 Sub Above LLC was transferred the rights to being the franchisor and only had financial information for one singular week. However, by looking at 2020 finances Sub Above LLC has a very strong profit margin with revenues totaling $124 million and expenses of only $2.4 million.
A Sub Above, LLC Cash Flow Statement
Statements of Cash Flow for the Year Ended December 31, 2020 and For the Period from December 23, 2019 through December 31, 2019
| 2020 | 2019 | |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Net income | $101,795,901 | $1,805,255 |
| Adjustments to reconcile net income to cash provided by operating activities: | ||
| Amortization of intangible assets | 2,437,202 | 41,001 |
| Recognition of unearned franchise fees | (80,545) | |
| Amortization of services due from Manager | 1,918,656 | |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 127,309 | (268,167) |
| Services due from Manager | 10,000 | |
| Unearned franchise fees | 980,888 | |
| Accounts payable | 455,579 | 236,049 |
|
Net cash provided by operating activities |
107,725,535 | 1,733,593 |
| CASH FLOW FROM FINANCING ACTIVITIES: | ||
| Member’s contributions | 247,862 | 7,594,682 |
| Member’s distributions | (107,494,365) | (1,737,766) |
| Net cash (used in) provided by financing activities | (107,246,503) | 5,856,916 |
| NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 479,032 | 7,590,509 |
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | ||
| End of period | $8,069,541 | $7,590,509 |
A Sub Above, LLC Cash Flow Statement Key Insights
In 2020, A Sub Above LLC had cash at the end of the year of $8.07 million which is a 6% increase from the year end cash in 2019 of $7.6 million. However, some information is not comparable between 2019 and 2020 as 2019 only recorded one week of financial information. In 2020 there was $107.2 million distributed to members. This indicates the health of the financials as they only kept $480,000 of the $107.7 million they earned from operating activities.
How many Jersey Mike’s units have opened and closed?
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2018 | 1260 | 1411 | +151 |
| 2019 | 1411 | 1585 | +174 | |
| 2020 | 1585 | 1796 | +211 | |
| Company-Owned | 2018 | 78 | 81 | +3 |
| 2019 | 81 | 72 | -9 | |
| 2020 | 72 | 51 | -21 | |
| Total Outlets | 2018 | 1338 | 1492 | +154 |
| 2019 | 1492 | 1657 | +165 | |
| 2020 | 1657 | 1847 | +190 |
Over the last three years the company has seen large growth in the number of new franchise units opened. Company-owned stores have declined and have been transferred to franchise locations. On average over the last three years there has been an average of 179 new franchise locations. This expresses the growth and further market penetration that Jersey Mike’s is pursuing.
Is it worth investing in a Jersey Mike’s Franchise?
Jersey Mike’s has seen consistent franchise unit increases over the last three years and their parent company posted over $100 million in net income in 2020.
With almost 2,000 stores and Peter Cancro as CEO who has been with the business since 1971, it is evident this franchise is filled with enthusiasm for its product.
Jersey Mike’s competes with regional and local delis and as well as national chains such as Subway,Arby’s, and Firehouse Subs.
We strongly recommend you speak to at least 5 Jersey Mike’s franchisees to better understand the financials (see questions to ask).
Think Jersey Mike’s is the right franchise for you, or are you interested in other franchise opportunities in the Food and Beverage Industry? Check out our listings page on the Vetted Biz website for thousands of franchises available for your investment.
