Jersey Mike's

It all started in NJ. Franchise Interview with Jersey Mikes

Dan - Good morning, how are you guys?

Marty - Great, Dan. Dan, joining us is my co-host, Don Johnson. I don't know if you know Don. Don is the President of Diamond Financial Services. I know, Don, you wanted to say hi to Dan.

Don - Yeah, hey Dan thanks for coming on. We have spoken in the past and as you know my company is working and I have enjoyed speaking to Brian and Mike at the corporate office and I am excited you guys are right in our backyard. I have gone to Jersey Mikes for years. Marty and I first met our wives in the Point Pleasant area and I am not too far from there.

Dan - Now that's great stuff. Actually I grew up in Point Pleasant as well. My first Mike's sandwich was in 1968.

Marty & Don - Wow!

Dan - So, yeah, I have some history. It is very cool stuff. The Jersey Shore is really unique and one of the coolest things about our franchise, not comparing everyone else, but there is some real history there. There's the Jersey Shore and that is in everything that we do and that is so cool that Peter Cancro has done that because living in California and making our sandwiches out here, the same ones that I grew up with, people get a sense of what the Jersey Shore is all about and that is pretty cool.

Marty - And you are calling from California this morning, do you miss New Jersey, Dan?

Dan - Absolutely I do. I do not miss the weather but it is nice to go back for a cold weekend. You can walk on the snow and the ice but just a weekend. I do not need the slush. Yeah, the weather is great out in California.

Marty - My wife grew up on Jersey Mike's Subs as well. Just so you know, Dan, she was very excited about today's show. Being from the area, we got a lot of big hype about it.

Dan - I tell you the coolest thing being involved with Jersey Mike's out here in California is my history with Peter Cancro. Of course you know who owns the company and I played at a different high school. He went to Point Pleasant Beach and I went to the Borough. We played football against each other for 4 years. It is so much fun to be a part of that because it takes me right back to my roots.

Marty - I heard that.

Dan - Nothing like working in a business that is connected to your roots!

Don - That's the big Thanksgiving Day rivalry, right? Beach and Borough.

Dan - It is now. Absolutely. But we tied our senior year. We were co-division champs our senior year so neither of us has an edge. We tied 6-6 so we are both co-champions so we have to leave it right there.

Don - I guess it was meant to be that way.

Dan - I guess it was meant to be, yeah.

Marty - What were you doing before working with Jersey Mike's or joining the family?

Dan - I started my restaurant career out here with California Pizza Kitchen and I spent 10 years with them. Then I went with a development company called Caruso Affiliated Holdings who had a California Pizza Kitchen franchise and built stores with them. We worked on some other projects and then it was just the right time for me to step out and open the Camarillo store 5½ years ago with the first California location of Jersey Mike's.

Marty - Sounds like all that experience helped you in what you are doing now.

Dan - You know life is perfect some times. California Pizza Kitchen does a fantastic job of their customer service and their employee support, morale and that whole category. They are just fantastic and so learning from them on that side and then being able to go on the development side and learn about real estate leases and things like that...it was just amazing that it prepared me to take this next step which was to open up a new territory for a new restaurant company.

Don - It is interesting how it kind of came full circle for you. You were familiar with it back in your home town and now you are developing it.

Dan - I will tell you a quick story. I was with California Pizza Kitchen. I was running a store in Studio City and I was reading through Restaurant News. I saw an ad in the paper and it said "Meet the country's best sub-Jersey Mike's subs." The thing for me was I left Point Pleasant after high school, went into the service and college and then came out west a long time ago. I saw this and I was offended because I know that the best subs in the country are in Point Pleasant - Mike's Subs. I did not know that there was any other store than Mike's so I called the number really to give the guy a hard time and say "Hey pal have you ever been to Mike's Subs because that is the best subs in the country!" and he goes "That's who we are, we are Mike's Subs, who are you?" and I say "Dan Rowe from Point Pleasant Borough" and bam! All the way to Peter's name and it was like "wow." So my dream was to bring this out to the west coast and it took quite a few years putting as much money together as I could and open our first location with my partner Angel Valasquez, a great operations guy.

 

I envisioned opening multiple stores in California. We opened up in the tiniest little spot. You could hardly see it. You pretty much had to be a Boy Scout to find this location. Everybody thought I was an idiot but I always felt really strong about the product, that there is no other sandwich out there that can compare to this when you have it Mike's way. You know that # 13 Mike's way. So this out of the way spot, this hole in the wall, we gave this great Jersey Mike's service. We made the sandwich the way it was supposed to be and we took this little location (1,200 sq. ft.) and turned it into a very, very big store and it started us out right in California. It wasn't about being in this fantastic center and having everything perfect, it was almost a spot like Point Pleasant. A tiny little spot, out of the way. And that was the beginning in California for us. We are up to 31 stores now in 5 years. We do not grow like we want to put one on every corner, we just want to be in every community. That is what we want to do.

Marty - That's great.

Don - That just goes to show you. A good product at a good price in a set system is going to work.

Dan - Well I am going to throw something else at you and it goes right back to the roots where we are from. Well you haven't been to California Jersey Mike's, you have been to the sub shops back east, but when we brought these shops out here what we really focused on was the type of service that I grew up with in New Jersey and a lot of Jersey Mike's, that is what they work from. And that means you look people in the eye. You have a conversation. You get to know their name. You get to know their sandwich. You are a part of the community and we have done that from day one out here and I tell you in California that just doesn't happen often. People are excited about our product but they are more excited about walking in and getting recognized and having their little kid get a free cookie because we do that for every kid under 10. We know their schools, we support their teams. It is the way it is done in New Jersey and there is something grounding about it doing it out here in California because it really works well. We have done so much out here for the community. It is just great. There is a different style service that we bring and it adds to our product when people really enjoy that back home kind of in-your-face "How are you?" "Hey, what's up bud." "Hey you look great today!' That sort of thing.

Don - A little fun atmosphere.

Dan - Yes. Energy. You notice it immediately. A lot of our customers call it energy. They walk in and they feel the energy in the restaurants. That makes it rewarding for everybody. It is easier to work and to slice for 7 or 8 hours when you are having a blast with your customers and your kids, your 14, 15, 16 year olds. Today's kids learn a skill of being able to look someone in the eye and say hello and make conversation that is going to help them for many, many years to come.

Don - They might be future franchisees. Those teenagers working the stores.

Dan - You know what, they may be future franchisees or may end up being an attorney some day. They may interview for a school some day and get in because they had a personality and they are able to use it. So it is a tool that I really enjoy teaching these kids.

Don - Talk a little bit more, Dan, about the history. We know it started in 1956 in Point Pleasant. What happened from there? When did the company start franchising?

Dan - Peter Cancro was a junior in high school. At the end of his junior year, he surprised at least us on the Borough side by doing a deal with the bank and his football coach and purchasing the store and owning it between his junior and senior year. It was very funny because it was like "He did what!" What about being a kid? So he owned his own store. I think it was 1984 when they started to add other stores, started franchising and growing and over the years, you know, North Carolina was a very big state. A lot of people from Jersey went down to North Carolina and they would order subs and have them sent to them on dry ice because you had to have the right sub. And then with my involvement 5½ years ago, we are up to 380 stores right now. We are on a path to have over a 1,000 stores in 5 years. And I believe that is pretty conservative. Again, we do not push like "lets open stores, lets open stores." We find the right people to work with. The right franchisee. We have a different type of franchisees in our stores and so finding them and matching them up with the right community, that is how we grow.

Marty - Yeah, a lot of times we compare it to a marriage and it is so important to have the perfect match between the franchisor and the franchisee. I think it is great that you guys do that.

Dan - And you know out here in California it has really been important from day one that our representatives, our franchisees have that heart. They can talk to people. They have that personality. Not just the first 10 people that walk into the store but 10,000 people later in their 7th or 8th year that they still have that same energy and enthusiasm. So we put them through a lot. We interview them. It takes a month or two at least. But we are going to have them work in a store. We are going to have them go out and do some research. I'm going to really get to know them. There are a lot of successful people that come in that want to do franchises with Jersey Mike's out here in California but because they have been successful in another business doesn't mean that they are the right fit to work in a restaurant. And truthfully I want them to be happy too. I don't want them to turn around in a year and have them look at me and go "what the hell did I get myself into?"

Marty -You guys date a little. We had a guest on a couple of weeks ago who said he wants the franchisor and franchisee to date a little before they make an agreement.

Dan - You bet. You bet. If you are going to volunteer to work in the store for 3 days in a row, maybe 7 or 8 hours a day and they are going to do the medial tasks such as wipe down tables and chat with guests and things like that. If they can do that and they can walk out of there and they can say "I had a blast. That was great!" I got the right person. If they come back and they go "Boy that's a long day, I didn't know what to do with myself." Then I do not have the right person. It makes a big difference to work in the store a little bit.

Don - I think in general I like the Jersey Mike's approach to growth. I think that's great where you are being a little more selective, slower growth, making sure that franchisee is taken care of because obviously that person is going to want to grow himself and have the proper territory and make this a career and be passionate and like what they do and don't have that turnover.

Dan - You bet. What is really neat about my area as well is I have about 4 franchisees that have multiple stores right now in the last 5 years and that is going to grow. We just opened up in Westwood, right next to UCLA and to top it all off, the real estate has become so much better in the last couple of months than it was for the last couple of years that we are now the "A" player. Jersey Mike's is an "A" player out here in California. Before 4 years ago I had to try to convince people that we are more than a one store shop. Now they are coming for us. The developers and the real estate people. They all want Jersey Mike's in their centers because the competition has been all over the place and we are completely different. So that is fun.

Don - What a great position to be in. Not only that but now it is a buyer's market I guess for the lease negotiation. You are in the driver's seat on that which is what has been going around with the economy. That is a great aspect too for the new franchisee coming into the system.

Dan - It certainly is. It really, really is. Our stores do very well and we are very pleased how things are going in California and also our clientele is pretty devoted. We are a destination restaurant out here and that is a dream even for some of the big guys. You know the big sit down restaurants, you want to be a destination restaurant. Every store of ours has a story of someone driving 10 or 15 miles to get a sandwich and drive back home again. It is just beautiful right now and the real estate market I haven't seen it like this and we are getting deals from landlords that are just fantastic. It's a good way to go right now.

Marty - That's good to hear. There are some benefits sometimes of the economy.

Dan - You don't feel like your cashing in on anyone and everyone else being down a little bit but what you do is you focus on what you do well and you just keep going forward. My belief is there is enough for everyone out there but there is certainly a place for Jersey Mike's in the right communities. We are going to do well in the middle to upper incomes because those are the people who are not necessarily totally affected by this market but they are not after the fast food price. The big $4.99, $5 line right now that all the other people are doing. We are not there. We are a totally different sandwich.

Don - Dan, describe the Jersey Mike's franchise system when you are describing it to a potential franchisee. You did a little bit before. When it becomes like a gathering place and you know friends. But how do you describe it to a potential investor?

Dan - As far as owning a franchise?

Don - Yes.

Dan - What is really important for us is that the franchise owner is an operator. We want that person to operate that restaurant. If there is going to be an investor that is going to come in and he also is very excited about Jersey Mike's then we feel that is the right kind of guy. He is going to have to show us who his operator is and we are really going to want to see that the operator is involved in the restaurant 100%. In other words, they can be a partner or something like that would be really good. That is important for us because we do not want someone to walk in, do a 3 store deal, throw a couple of managers in the stores and look to open other stores and forget what we are about from the beginning. Out here when I have people who are interested in doing multiple operations, we want them to start with one store.

 

We want them to operate that store for a couple of months so they really get it and they really understand it. If they are training their managers, if they're training supervisors to carry that on then we want them working in the store with them and then when they open that 2nd store, they have already created someone who is going to run that 1st store just like they did when they were there. After that they can grow. What is really crucial is the training that we do. There really aren't many companies that train like this. Our franchisees are going to spend 360 hours in the store. That is 6, 7, 8 weeks of full-time, in-store training. They cannot work a job. They are going to have to let go of their job. We do it when they are in construction and by the time they get out of that 360 hour training period, they can probably run any store in California from the number 1 store to the number 30 store in sales because they get it over and over again.

They work every position. They slice, they sprinkle and they understand the oil and vinegar. We go through human resources. We do everything. I know there are companies out there that have a 15 day training program and a VHS tape or whatever and you throw it in there and that is your training program. This works well for us. We get fully trained people. The support that we give is right from the beginning. We are going to help with site selection. We are going to approve every site. In most of our areas we have architects and contractors that we worked with multiple times so we have a system that when they buy into it, it is going to make it pretty easy. Because you know most people when they get into construction, they look forward to it but it is a long, winding, hard road to get that door open. So we assist all the way through the opening. We are going to help them get the store set up. We are going to help them open their store and support them for the first 2 weeks. After that, we do monthly evaluations. We do a lot of visits. We really stay in touch with the franchisee because it is about them being successful. We want them to make money.

Don - There is no short cuts there. You really make sure, 360 hours...

Dan - No. There's no short cuts. When I sit in interviews and we are on our second or third interview and I'm telling them that they are going to be in a store for 360 hours, you can tell right there if that is going to work or not. "7 weeks? Are you kidding me? I'm 42 years old and I'm going to train in a restaurant? How much can there be in making a sandwich?" That's a great question. "How much work can there be to make a sandwich?" Our sandwiches are simple. It's all fresh. It's all sliced fresh. It's not that difficult. We do not have a ton of ingredients on our line. We don't have all sauces, we are all about oil and vinegar, onions, lettuce, tomatoes and oregano. That is what we are about and our fresh sliced cold cuts. People are really surprised that they are going to be in there 360 hours. Boy, it's well worth it. We have fantastic franchisees. I mean we really have terrific franchisees.

Don - It is in the detail that separates the stronger franchisee.

Dan - It is. And the ongoing training. What Jersey Mike's has done really well, is they continue to bring people back. Franchisees have been in the system for a year, 2 years, 10 years and do a back to basics program. John Hughes is our training director and he does a back to basics where you know what let's just start talking about oil and vinegar. Okay, I made 8,000 sandwiches, why should I talk about oil and vinegar? Because that is what is important. It is that they get the right amount of oil and vinegar. That's the sandwich. You had the sandwich. That's the hook. It's like a drug. You have that onion, lettuce, tomato, oil, vinegar and oregano and every couple of days, you think about what you have to have. It's something but what is it? It's that oil and vinegar. I have been doing that my whole life. So it doesn't seem complicated but to get it right over and over again, you have to pay attention to the details. You are right, training is crucial.

Jersey Mike's franchise

Inside Jersey Mike's

Dan - Well think about the customers on the west coast. Think about people coming to a Jersey Mike's for the first time in the west coast. I don't know how familiar you are with California but there is a lot of competition everywhere. There are restaurants everywhere. There is every kind of restaurant in the world out here in California. But when you come into Jersey Mike's and you get the energy and you get the people with the enthusiasm that say hello and look you in the eye and then you watch how we make our sandwich and the product comes out of the meat case in it's original form, you know, the long cheese.

 

Most people say "Wow, my day used to take me to a place like this when I was a kid." And you pull out a roast beef that has been cooked in the last 24 hours. You know for woman out here in California, the #6, the roast beef is the number one sandwich because you can't get roast beef like that anywhere. Back east it is a little different. There are a lot of sub shops, there is a lot of sandwich shops that make the sandwich like that. Out here in California, nobody makes it like that. So I have to tell you that people come into our stores and see that product come from the beginning. It does not come out of a plastic bag. Everything is sliced fresh. The onions, lettuce and tomatoes are all fresh. The red center is in the tomato. They are all ripened. They are not yellow or white centers. All that stuff put together there is a need out here. When you bite into that sandwich, you know what the final result is, it's fantastic.

Marty - New question we have been asking on the show, Dan, is what role has technology played in your franchise. I imagine there have been a lot of changes since 1956.

Dan - The guy, Scott Scherer, that is in charge of technology for Jersey Mike's looks at me like a caveman, like I have no clue what I'm doing. I really don't. I'm still tackling the Blackberry and things like that. But I do know that in moving forward right now the direction we are going is we are really going to be part of the Facebook and the MySpace because we have this cultish following. Someone sent into my e-mail, join the Jersey Mike's Facebook club and it was started by some customer because it is a Jersey Mike's fan club or something and we have that little bit of that cult following in Jersey Mike's. I don't know you if you guys ever read a book called the "Tipping Point" but I think we are part of that tipping point because like I said before people are really passionate about our product. As far as customers are, you will never hear anyone say "go down to x sub shop" which could be the biggest sub shop in the world. Go down here and try that sandwich or something.

 

You will hear people say out here "You have to go to Jersey Mike's and try #13, man. You have to go try that. Go to this store right over here." So we have that cultish following and part of it is going to be on Facebook and part of it is going to be e-mail clubs we have going and the technology part of it is unbelievable. The reporting now within 15 minutes I can see all 31 stores sales, within 15 minutes. And in the 8 stores that I own, I can pull the store up on a camera at the same time.

Marty - That's fantastic.

Dan - It is fantastic. And it's a new way of managing. We can use those cameras for going back into customer issues, training people on how to handle the situation. I got a guy who ran into a store, grabbed the tip jar and ran out. They caught the guy down the street because we have the camera and everything and called the police. They had the evidence and it's fantastic technology right now. Plus the online ordering. We are rolling that out with the company. You sit at your office, you have 15 people in your office and everyone is going to have lunch at Jersey Mike's. All 15 people jump on their own computer and just add to the order. It gets sent over to Jersey Mike's. Somebody goes to pick it up at 12:30, your name is on it, the whole thing and you take it home. It's fantastic.

Don - Especially with a cash type business, it is nice to have that technology. It cuts back on theft. That is pretty big I would imagine.

Dan - For any franchise and any business. What they don't understand in the beginning is how to control your costs. It runs away from you in the beginning and all of this, the food cost and labor are really essential. You have to control your costs in a franchise, especially when you first start out. We do pretty well when we first start out because of the type of promotion and opening we do. We get really involved in the community. We do $1 sandwiches for the first 5 days when you bring a coupon in and that $1 goes to a local charity and that is how we open all of our stores. It's really great because we like doing that kind of work and our customers like seeing us do that and they get to have our sandwich for the first time. Connecting all of that up with the technology, it is just incredible.

Marty - How big is the industry? Are there any numbers? I know you are in a pretty huge industry.

Dan - No. I would never even think about it actually. There is a lot competition out here and there is a lot of competition back east. The sandwich is the #1 choice of Americans on what to eat. It is more popular than pizzas, hamburgers or whatever. And we have the largest franchise in the world that is part of our competition. So I don't even think about that. I think about what we do and what we do well and I will let everyone else take care of themselves.

Don - What other types of characteristics do you look for in a franchisee?

Dan - First thing I am looking for is that energy and enthusiasm. When they look at me and reach out and shake my hand, do they have that magic? Do they have that ability, because like I say, it is not just the first time but do they have the ability to do that 10,000 in a row? When I get that person right there that is excited about what we do...and almost all of our franchisees are customers. There are really very few people looking for business opportunities that stumble upon a Jersey Mike's. It is usually a customer. And the customer becomes a franchisee because their passion continues to build for what we do.

They are totally addicted to the sandwich and they can't stay out of the store. They get to know everybody's name in there and all of a sudden they realize they don't want to be just a customer. We have a franchisee that opened just a couple of months ago that was a former TV producer here in California who did quite a few well known shows. He is so happy doing what he is doing. He cannot stay out of a Jersey Mike's. He just loves it. And now he is going to be signing a 3 store deal. So he is moving onto 3 more stores. We look for that excitement and enthusiasm. We are going to teach you the restaurant business and it is not that difficult. We are going to teach you inventory. We are going to teach you how to control your costs and your labor. Speaking of technology, we can look at a store anytime in the last year and tell you what hour of the day you were heavy on in labor for the entire year so you might be able to cut back a person at that hour or something. We are going to teach you all of that energy and enthusiasm and the ability to go out and meet people and meet the community. That is what we are looking for. We will teach everybody else the rest.

Don - So really no prior business ownership. No sales. Just a person who has that passion, energy and enthusiasm is a main ingredient?

Dan - You bet. Most people were professional. If you are going to have a couple of hundred thousand dollars to invest in the business, you probably have done well at something else before. You probably have an idea how to balance your checkbook and probably have an idea of maybe some payroll and managing some hourly employees or some type of management. So, you know, they are coming to us as professionals in what they have done. They have the right personality. We put that together with the training. We have some darn good franchisees here in California. Some really standup people.

Marty - That's really important. What is the best way for our listeners to get more information on becoming a Jersey Mike's Sub franchisee?

Dan - jerseymikes.com. We have a website that will guide you to more information that will help you fill out the application to get some preliminary information or they can call 1-800-JerseyMikes (1-800-321-7676) and ask for their franchise department/sales department.

Marty - That's fantastic. We also have a link up on our show page as well, Dan, for our listeners so they can just link right to your website. And I want to thank you again. You have been an incredible guest and I would love to have you guys back in the near future. I think you will agree, Don.

Don - Yes, definitely. Maybe you can even have a franchisee on. Some of these franchisees would be nice to have on in the future, Dan.

Dan - Absolutely and that would be great. I would be happy to do that and, Don, we will grab a sandwich the next time I am back in Jersey.

Don - Definitely.

Marty - Thanks so much Dan for coming on the show.  Don, lets go to Jersey Mike's for a sub! Click the play button below to listen to the show.