Chomping Away at the Competition

Originally Published at Asbury Park Press by David P. Willis

Peter Cancro, founder and chief executive officer of Jersey Mike's Subs, is at home behind the counter, piling the meat on a sub sandwich, and sprinkling on the oil and vinegar.

"That's my passion. That's my love," said Cancro, after taking a turn, vigorously shaking the bottles over a sandwich, dispensing "the juice."

At age 52, Cancro, of Wall, has lived the sub business for most of his life. His company, based in Wall, is now the 185th largest sandwich chain in the U.S., according to Technomic, a Chicago-based consulting firm, with 388 locations in 27 states, most of them franchises. With 21 stores in New Jersey, there are 17 in Monmouth and Ocean counties.

Now Jersey Mike's Subs is poised for a growth. The company expects to add 65 to 75 locations this year, and up to 100 next year.

Not bad for a Point Pleasant Beach kid who bought the deli where he worked at an age when he was too young to slice the cold cuts.

Cancro started at Mike's Subs in Point Pleasant Beach at age 14. Instead of working at Hoffman's Ice Cream, another Jersey Shore landmark, for $1.50 an hour, he went to Mike's, which had been around since 1956, for $1.75 an hour instead.

"If you worked at Mike's, back in the day that was the place to work, and Hoffman's Ice Cream," Cancro said. "There were no Burger Kings, no McDonald's. You were working there, you were part of the elite team, if you will."

At age 17, after hearing about the owner's intentions to sell the shop, he decided to buy it.

"I skipped school for a week, went out and knocked on doors," Cancro said. A banker, who also was Cancro's Pop Warner football coach, agreed to a loan so the teenager could buy the Mike's Subs business for $125,000.

"It was an unbelievable business," he said. "Back then, you didn't think you couldn't do it. There was no negative thought."

Over the next 10 years, he opened two other restaurants. By 1987, he decided to franchise the concept, changing the name to Jersey Mike's Subs. "I said, "I think we've got something here. I think we can replicate this and grow,'" Cancro said.

The "authentic Jersey sub" is the company's niche, which Cancro said differentiates it from other sub chains, such as Subway and Quiznos. Subway made the submarine sandwich known around the world, Cancro said. "They have really proven the product worldwide."

But that's where the comparison ends. "They're not an authentic Jersey sub," Cancro said of the competition. At Jersey Mike's Subs, the meat is sliced fresh for each sandwich in front of the customer. "Everything made to order," Cancro said. "Nothing premade."

"We are not the fast food sub shop," he said.

In the mid 1990s, Jersey Mike's Subs opened 80 to 90 stores in a four-year period, bringing it to North Carolina. The company also had stores in Cincinnati and Tennessee. "North Carolina's the first one where we went in, opened and just kept going," Cancro said. "That really launched our company."

But around 2005, Jersey Mike's reached a critical point. The public had given its subs high marks, but they also criticized the look of the stores. "They came in and they said, "Yeah, it's kind of a mom and pop look,'‚" Cancro said.

So the company decided to establish its brand, highlighting the Jersey Shore lifestyle. "At the Jersey Shore, which is very different from any other part of Jersey, we kind of like to differentiate ourselves," Cancro said.

The store's decoration includes a large postcard from 1956 "Welcome to Point Pleasant" and clapboards. A $5 million store renovation project was completed by October 2006.

After the project, sales at stores open at least a year grew by 10 to 15 percent, he said. Growth was slower in 2008 and the company has seen same store sales so far this year grow by about 2 percent even with the rough economy, Cancro said. "People still buy lunch," he said. "They come out to dinner and get a couple of whole subs and drink and that's why we have to advertise the value."

The Jersey Mike's now has a brand, and likes to be near other more upscale spots, such as Panera Bread, Starbucks and Chipotle Mexican Grill.

"We want to be with the high-end really branded companies," Cancro said.

Now the company is focused on expanding its presence in its current markets. In April, it entered the Chicago market. "We are just starting to grow," Cancro said.

"We have found some people recently who have the same passion for the brand and for the product and the same business philosophy as Peter," said Hoyt D. Jones, the company's president who has helped to develop expansion plans.

Darren Tristano, executive vice president at Technomic said Jersey Mike's has expanded from coast to coast.

"There is something about their concept that franchisees like enough to invest in and consumers like enough to frequent in spite of the tremendous competition with Subway, Quiznos and other sandwich chains," Tristano said.

He credits the fresh cut meats. "Typically at Subway, you don't know where the meat is coming from," Tristano said. "Here you can see it. You can see it with your own eyes."

Mike Buchheit and his family stopped by the Point Pleasant Beach store last week. Residents of Dowingtown, Pa., they had been to Jersey Mike's in Pennsylvania.

Buchheit said they liked the quality. "We had good experiences with them in the past," he said. "They cut the meat right in front of you and everything's fresh. The people are very pleasant to order from, to work with."

Meanwhile the company also has concentrated on other aspects of the business, including training. It has increased its training programs, which includes bringing franchisees to its Point Pleasant Beach store.

"You want to take the essence of New Jersey, of this Jersey Shore, and implant it in their brain so they get it," Jones said.

The company and franchisees also focus on outreach in their local communities, a core part of Jersey Mike's culture, Cancro said. "We're not outsiders. We become insiders."