Jersey Mike’s to Partner with Blackstone to Accelerate Leading Franchisor’s Continued Growth

Rhea-AI Summary

Jersey Mike's Subs announced a major deal where Blackstone will acquire a majority ownership stake in the company. Founder and CEO Peter Cancro will retain significant equity and continue leading the business. The partnership aims to accelerate Jersey Mike's expansion and enhance its technology investments. With over 3,000 locations nationwide, Jersey Mike's ranks #2 on Entrepreneur's 2024 Franchise 500. The transaction is expected to complete in early 2025, subject to regulatory approvals. Blackstone brings extensive experience in growing franchise businesses, having previously invested in Hilton Hotels, SERVPRO, Tropical Smoothie Cafe, and 7Brew.

Positive

• Blackstone's majority stake acquisition brings significant capital and resources for expansion
• Current CEO maintains significant equity stake and leadership continuity
• Company has strong growth with 3,000+ locations nationwide
• Ranked #2 on Entrepreneur's 2024 Franchise 500
• Strategic partnership enables technological advancement and digital transformation

Negative

• None.

Insights

Financial Analyst

This major acquisition by Blackstone represents a significant strategic move in the fast-casual dining sector. Jersey Mike's, with over 3,000 locations, offers Blackstone an established platform in a resilient market segment. The deal aligns with Blackstone's successful track record in scaling franchise businesses, as evidenced by their previous investments in Hilton Hotels and SERVPRO.

The transaction's structure, maintaining the founder as CEO with a significant equity stake, suggests a focus on operational continuity while leveraging Blackstone's capital and expertise for accelerated growth. The emphasis on technology investment and digital transformation indicates potential margin improvements and enhanced customer experience capabilities.

For Blackstone ($137.5B market cap), this investment adds another strong consumer brand to their portfolio, diversifying their exposure in the resilient QSR sector. The deal's completion timeline in early 2025 allows for proper regulatory review while maintaining momentum in Jersey Mike's current growth trajectory.

Market Research Analyst

Jersey Mike's position as the #2 ranked franchise on Entrepreneur's 2024 list demonstrates strong brand equity and operational excellence in the competitive fast-casual segment. Their expansion strategy, coupled with Blackstone's expertise in scaling franchises, presents significant growth potential, particularly in untapped markets.

The company's Coach Rod Smith Ownership program, facilitating store-level managers' transition to franchise ownership, creates a robust pipeline for sustainable growth while maintaining operational quality. This approach, combined with their successful charitable initiatives (raising $113M since 2011), builds strong community connections and brand loyalty - critical factors for long-term success in the QSR sector.

MANASQUAN, N.J. & NEW YORK--(BUSINESS WIRE)-- Jersey Mike’s Subs, a leading franchisor of fast-casual submarine sandwich stores known for its fresh sliced and fresh grilled subs, announced today it has reached an agreement whereby private equity funds managed by Blackstone (“Blackstone”) – led by Blackstone’s most recent flagship private equity vehicle – will acquire a majority ownership position in Jersey Mike’s.

Jersey Mike’s Founder and CEO Peter Cancro will maintain a significant equity stake and continue to lead the business. The partnership with Blackstone is intended to help enable Jersey Mike’s to accelerate its expansion across and beyond the U.S. market, as well as its continued investment in technology and digital transformation. Blackstone has a long history of successfully propelling the growth of leading franchisors, including in its previous acquisitions of Hilton Hotels and SERVPRO – and has also recently invested in Tropical Smoothie Cafe and 7Brew.

Cancro began working at the company’s original Point Pleasant, New Jersey location at the age of 14, which was founded in 1956 as Mike’s Subs. He acquired the location in 1975 at age 17 and began franchising units in 1987. Today, Jersey Mike’s is a premier national franchisor with more than 3,000 locations nationwide open and in development, and continues to be recognized for its high-quality and freshly prepared submarine sandwiches, and passion for its authentic products and customers. The company has been recognized as one of the fastest-growing fast-casual restaurant chains in America and ranked #2 on Entrepreneur's 2024 Franchise 500.

Peter Cancro, Jersey Mike’s Founder and CEO, said: “We believe we are still in the early innings of Jersey Mike’s growth story and that Blackstone is the right partner to help us reach even greater heights. Blackstone has helped drive the success of some of the most iconic franchise businesses globally and we look forward to working with them to help make significant new investments going forward.”

Peter Wallace, a Senior Managing Director at Blackstone, said: “Jersey Mike’s has grown for more than half a century by maintaining an unrelenting focus on quality (and delicious sandwiches) – consistently building on its loyal customer base as it has scaled nationwide. Blackstone has deep experience helping accelerate the expansion of high-growth franchise businesses and this area is one of our highest-conviction investment themes. We are excited to partner with an entrepreneur of Peter’s caliber and the talented Jersey Mike’s team. Our capital and resources will help support key investments in growth and technology for the benefit of Jersey Mike’s customers and exceptional franchisees. I highly recommend the #13 Original Italian, Mike’s Way.”

Giving back is also core to Jersey Mike’s mission. The company recently completed its 14^th Annual Month of Giving, surpassing over $113 million raised for local charities since 2011. It has also launched the Coach Rod Smith Ownership program, which helps provide store-level managers greater opportunities to become Jersey Mike’s franchise owners.

The transaction is expected to be completed in early 2025 subject to the satisfaction of certain closing conditions, including applicable regulatory approvals. Blackstone’s private equity strategy for individual investors is also expected to invest as part of the transaction.

Guggenheim Securities and Morgan Stanley & Co. LLC are acting as financial advisors and White & Case LLP served as legal counsel to Jersey Mike’s. Barclays and Bank of America are acting as financial advisors and Simpson Thacher & Bartlett LLP served as legal counsel to Blackstone.

About Jersey Mike’s

Jersey Mike's Subs, with more than 3,000 locations open and in development, serves authentic fresh sliced/fresh grilled subs on in-store freshly baked bread — the same recipe it started with in 1956. Passion for giving in Jersey Mike's local communities is reflected in its mission statement "Giving…making a difference in someone's life." For more information, please visit jerseymikes.com.

About Blackstone

Blackstone is the world’s largest alternative asset manager. We seek to deliver compelling returns for institutional and individual investors by strengthening the companies in which we invest. Our more than $1.1 trillion in assets under management include global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit, real assets, secondaries and hedge funds. Further information is available at www.blackstone.com. Follow @blackstone on LinkedIn, X (Twitter), and Instagram.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241118982737/en/

For Blackstone:

Matt Anderson

matthew.anderson@blackstone.com

(518) 248-7310

For Jersey Mike’s

Kyle Potvin

kpotvin@splashllc.com

(917) 838-4500

Source: Blackstone

FAQ

When will Blackstone complete the acquisition of Jersey Mike's?

The transaction is expected to be completed in early 2025, subject to regulatory approvals.

How many Jersey Mike's locations are there currently?

Jersey Mike's has more than 3,000 locations nationwide open and in development.

What is Blackstone's role in the Jersey Mike's acquisition?

Blackstone will acquire a majority ownership position in Jersey Mike's to help accelerate its expansion and investment in technology.

Will Peter Cancro remain as CEO after Blackstone's acquisition?

Yes, Peter Cancro will maintain a significant equity stake and continue to lead the business as CEO.