By Clare Baker
Jersey Mike’s first opened as a small sub shop in Point Pleasant, New Jersey in 1956. In 1975, 17-year-old employee Peter Cancro bought the operation and in the decades that followed, grew the business through franchising. Today, Jersey Mike’s has more than 750 locations nationwide and is one of the fastest-growing restaurant chains in the country.
Here, COO Michael Manzo, a Jersey Mike’s veteran who started behind the counter in 1979, shares his advice for small businesses.
Tell us about the history of Jersey Mike's? Why and how did you get started?
I started working with CEO Peter Cancro back in high school in the late 70s. In 1975, Peter purchased the store, so he was the owner at the time. When I came out of the Marine Corps in 1985, I started back at the store waiting to become a state trooper, and in 1986, [Peter] came to me and said, “Look what do you think if we start franchising?”
So, we changed the name from Mike's Sub to Jersey Mike's, and we started franchising in ‘86 and ‘87. So, it's been a lot of years, but just in the last seven or eight years we've really concentrated on true growth and true franchising with our franchisees.
What we’ve learned in that time is inclusion and collaboration with the franchisee is key. And as long as the franchisees are profitable, they're going to obviously be happy and they'll put more effort into growing the brand, and that's what's happening right now. We have almost 40 percent of our growth is from within, which is a tribute to our system, our other franchisees and the folks in Manasquan, NJ at the home office. It's rewarding to see that these franchisees believe in the brand and the system so much that they're reinvesting back into it.
How did you set Jersey Mike’s apart from other sandwich shops in the beginning?
Because we didn't have a whole lot of marketing dollars, and we were just a small mom and pop organization for quite a while, we concentrated on “inside our four walls” marketing. So, we took care of the customer--we pride ourselves in customer service and hiring the right people, paying a little bit more, and worrying about the returning numbers on the customer.
If you had $500 left in your monthly budget at the end of the month, how would you spend it?
I asked [a coworker] this question. I knew what the answer was, but wanted to say what she said. Her answer was “I would give out 500 free sub coupons so that customers would come in and try the product.” And that's where our marketing plan has been from the beginning--just get the food in the hands of the customer. Ninety-percent of our first-time customers say they're going to return, and our approval rating--which takes in store service cleanliness, product value, product quality--is always in the 88th to 90th percentile of acceptance. We always believe that you worry about inside your four walls, don't worry about the competitors and don't focus on them.
What the differentiator between Jersey Mike’s and everybody else is that we slice every sandwich in front of the customer and, of course, we ask them if they like it Mike's Way, and I think the personal connection with making the food right in front of the consumer and then bantering with that consumer, that's really an emotional connection we have that we believe that sets us apart.
What marketing tactics did you find to be particularly effective that a small business could also use or replicate?
With franchising, we learned early on that no matter what type of budget you set with a franchisee during construction, let’s say you have $7500 dollars earmarked for marketing, as they came upon opening that store, usually that money was spent in the construction phase. So about six years ago, we changed the system so upon lease signing, they have to forward their marketing allowance check to us, we hold it in escrow, and then as we open their store, we work hand-in-hand with the franchisee on their marketing plan. Probably 80% of the marketing plan is the standard plan, and our standard plan is that we give away thousands and thousands worth of free sub cards, with the caveat that to that you can have a free sub but you must give a dollar donation or maybe a $2 donation to a local charity.
Today, we are opening up two stores, and the local charity for one is a volunteer fire department in New Jersey. That's been a staple of ours since day one is giving back to the communities that we serve. The marketing plan goes hand-in-hand with the community, and that is set in stone with the franchisee even before they sign a franchise agreement.
Why is it so important for Jersey Mike’s to give back and be connected with the community?
That started way back in the 70's with Peter when he owned and operated just one store. When he worked in the store that he eventually purchased, the local businessmen always supported the athletes and scholars in the local high school where Peter attended, which happened to be the same high school I attended. That was cause marketing, but back then, nobody had a name for it.
I remember when I was managing his only store at the time. We gave away a $500 check to a team that was going halfway across the country to a tournament, and we just kept sponsoring the football team, the wrestling team, the Key Club, the band members, etc., and we noticed that those folks were coming back into our stores and eating our product. So, from day one that was just a part of doing business.
What we're really proud of is that so many great stories come out of it. Two years ago, we raised over a million dollars for Susan G. Komen Breast Cancer awareness. We make sure when we're working with such a very large company that those dollars were geared towards local mammograms, local transportation costs to help that patient. It didn't go to an administration cost--we had a lot of say in that. That's another really proud moment. Most recently [we had] a proud moment with Superstorm Sandy where Peter drove the initiative, and franchisees were behind it--we were able to give the local food bank, which was short on food quantity because so many people were displaced. We gave them a $100,000 dollar check [for] spur of the moment type of stuff. So, the leadership from the corporate office along with the belief and integrity and the passion from our franchisees is what makes these things so much more beautiful than a mandate from quote-unquote corporate. The franchisees truly believe in it because they practice this themselves in their own communities.
What would your advice be for a small business owner who wants to expand to multiple locations?
If they're looking to get into franchising, I would tell them to join the International Franchise Association or get involved with the local associations because these groups are truly there to educate smaller business owners. Now I believe we should have joined the IFA long before we did--about four years into it--and it's just the support and the ideas and the best practice sharing that we do at conferences. Steve Caldeira does a great job with putting people together where he sees fit. He also has so many different initiatives, like FranPac, which is a political action committee that we support. Just stay involved because there are a lot of good groups out there that just want to help smaller operators’ growth because at one time, we were all small, and we were looking for that leadership position.
For other different companies that are just looking to grow from within and keep multi-unit operations corporately-owned, I would say complete transparency with profit and loss statements with your employees. If they understand the cost, they understand how you make money, because if they understand how you make money, they'll make money because they're looking out for your bottom line, and you can always share the bottom line.
What do you think the advantages are of being a small business?
I think decision making is a lot easier when you are a smaller company. There are only a few people in the conference room to make quick and easy decisions. You can go into research and development a lot faster and move products around a marketing plan. As you get bigger, there's too many moving parts you have to take under consideration. That's why we developed--way back in the late 90s--a national advisory council. We met with them twice a year and we just proposed some ideas. Again, that interaction collaboration, transparency with that type of committee was very important to to us at the time. I think the difference with small businesses is that you have some tax advantages, but you may have some obstacles with financing, whereas a large business usually has the risks laid out with lower risk.
What do you think have been the keys to Jersey Mike’s success?
So, we're up here in San Francisco right now and we're interviewing franchisees and somebody asked that question yesterday. We've been through seven recessions since [we’ve] been making sandwiches. Through all the recessions and these hard times, I think being true to our brand, to ourselves, true to our franchisees has been the reason why we're successful. You can look at the timeline and you'll see that we had growth spurts and then after the growth spurts there was a drop in franchise sales and franchise development. It was at those times when we probably didn't know what we were doing in a sense, but we stopped and surveyed our success and then kept building on operations. So we're an operation driven company. We have always worried about the quality of the sandwich that we make every day and we never changed that, and that was really important to the brand certainly during the growth years.
We have 629 stores open right now, and the thing is that the big secret to Jersey Mike’s is that we only open stores on Wednesdays. It's a cultural thing that has persisted through all the years of opening stores. It's so systematic now that if your store is ready to open on a Friday, you have to wait till the next Wednesday. We do that for a number of reasons--there's plenty of operational reasons, marketing reasons, but all the franchisees have bought into it and understand it, so Wednesdays are really a special day. So, when you're on Jeopardy and that question comes up, now you know the answer.
If you had one piece of advice for a small business owner, what would it be?
There's a business side - have a plan, work the plan, keep the end in mind. Adaptability is key in this world, finances are key, but most of all have fun. Have some passion in whatever you do. If you're making a sub or if you're in the non-food segment and you're renting cars, just be the best you can be and have a lot of fun and passion. Everything else is mandatory--you have to be flexible, you have to be smart with your business plan and you have to work your plan. I see a lot people just losing it because they lost their passion along the way and they stopped having fun.