Sandwich shop Jersey Mike’s Subs is bringing Garden State flavor to the Washington area, with plans to open 15 stores in the region before the end of the year.
The move is part of a larger strategy to add up to 100 locations to its portfolio of 500 stores nationwide this year, pitting the Manasquan, N.J.-based restaurant chain against upstarts Firehouse Subs and Jimmy John’s Gourmet Sandwiches. All three are elbowing their way into the Washington market, where chains such as Subway, Quiznos and Potbelly Sandwich Shop dominate.
At last month’s International Council of Shopping Centers convention in Las Vegas, the sub shop pulled out all of the stops to draw potential franchisees and landlords to its booth.
It was hard to miss Jersey Mike’s decked-out deli, complete with cold cut slicers. Lines at the display spilled into other booths as peppy franchisees cheered, chanted and dished out some 6,000 mini subs in a day.
“The team out here has a lot of energy,” said Danny Malamis, the company’s Washington area director. “They’re making subs, coming up with cheers ... it’s great.”
Malamis brought the first Jersey Mike’s to the Washington area in early 2010, when he opened his own franchise locations in Laurel and Germantown. Before the end of that year, he opened a third location in Frederick, then a fourth in Gaithersburg last June.
This year, Malamis, who is signed up to open 25 franchises within seven years, has two stores in the pipeline — one is to open at Beltway Plaza in Greenbelt this fall and the other in Cumberland, Md.
“Seeing the way Jersey Mike’s treats franchisees was a huge draw,” said Malamis, the former chief executive of Domino’s Pizza’s franchise association. “I never thought I’d leave Domino’s, but the leadership and return on investment at Mike’s impressed me.”
There are currently 12 Jersey Mike’s locations in the Washington area, with another scheduled to open this week in Stafford. The company is aiming for 140 locations in the Baltimore-Washington area in seven years.
In 2011, Jersey Mike’s awarded contracts to open 216 restaurants in 76 markets. While the primary focus is franchise growth, the company intends to open 10 to 15 company-owned stores a year (none in Washington), according to president Hoyt Jones.
“We have a lot of momentum and have been fortunate to attract really strong franchisees, most have had previous experience or own other brands,” he said. “We have a multi-unit growth strategy, so we’re doing three-, five-, 20-store deals.”
Same-store sales at Jersey Mike’s, Jones said, were up 7 percent in the first quarter compared with the prior year. The company has added 35 new stores through the first five months of 2012.
Started in 1956 in the seaside town of Point Pleasant, N.J., Jersey Mike’s is known for its classic hoagies, drizzled with oil and vinegar. Chief executive Peter Cancro worked at the shop as a teenager before purchasing it at the age of 17, with the help of a bank loan and money raised from neighbors. He delved into franchising 13 years later in 1987, and has since expanded into 30 states.
According to restaurant consulting firm Technomic, Jersey Mike’s is the 13th largest sandwich shop in the country and will likely crack the top 10 this year with its current growth trajectory.
“Serving fresh-sliced meats has made [Jersey Mike’s] a strong franchise concept, but it also presents challenges because it tends to take a little more time. That’s a speed of service issue they have to work through,” observed Darren Tristano, executive vice president of Technomic.
Subway, Arby’s and Quiznos lead the sandwich sector. Sandwich shops, in general, have been one of the three fastest-growing segments of the restaurant industry, behind bakeries and coffee shops. The sub segment boasted $24 billion in sales last year, up 4 percent from 2010.