Not So Profitable Meat on a Roll!

Jersey Mike’s Subs was founded in 1956 by Peter Cancro, and from 1987 he franchised the brand across the country. The marketing concept behind the franchise was to offer quality subs for a low price. The original slogan was “A Sub Above” Jersey Mike’s is known for its signature sub, The Original Jersey Mike’s Sub, made with premium meats and cheeses.

According to the Better Business Bureau, Jersey Mike’s Subs’ average rating score is 3.25 out of 5 stars, which is well below the industry average of 3.74. Furthermore, the chain has received an “F” rating from the BBB due to many unresolved complaints. With so many issues unresolved, you’ll want to think about if you still wish to invest in this franchise.

Subs and sandwiches are among the most competitive products in the restaurant industry, making it crucial for franchisees to consider a franchise opportunity carefully. While a national chain may offer a solid product, a local brand will often provide a more intimate experience for customers.

Would you instead buy a 24-hour nationwide fast-food franchise or a low-cost, low-effort restaurant that still has the potential to be very profitable like Ike’s or Taffer’s Tavern?

How Much Does A Jersey Mike’s Franchise Owner Earn

Earnings for franchise owners at Jersey Mike’s are around $73,000 annually. This ranks in the lower range of the sandwich franchise sector.

Hey, I’m Dan Rowe. As an expert at helping businesses find the right franchise, Fransmart is committed to providing exceptional customer service. Our team will guide you through the investigation, evaluation, and purchasing process to help buy your franchise. Our comprehensive analysis of existing franchisee complaints, competitors’ proposals, and company research shows that Jersey Mike’s is not the best investment in the franchise industry.

It would be best if you also researched how much a franchise owner earns in the US. The video below will help you create a financial model and understand the factors you need to consider to calculate how much a franchise owner is likely to make after investing in the franchise opportunity.

Let’s First Share Jersey Mike’s Insight Briefly;

Jersey Mike’s Subs is a sandwich chain based in the United States. It was founded in 1956 and has grown to be one of the largest submarine sandwich chains in the country. While Jersey Mike’s has grown to over 1910 stores, the chain is still snowballing.

How much will it cost to open a Jersey Mike’s Franchise?

  • Fees/ Expenses
    • Liquid Capital—–$100,000
    • Net Worth——$300,000
    • Initial Franchise Fee——$18,500
    • Initial Total Investment——$178,523 to $746,342

To open a franchise, you need a net worth of $300,000 and capital of $100,000. The franchise fee will be $18,500.

7 Reasons Why Not to Buy a Jersey Mike’s Franchise:

According to Jersey Mike’s Franchise research, starting a franchise has its advantages and disadvantages. Low cost of entry, small space requirement, low equipment costs is just some of the benefits. On the other hand, as cons, you will have to work harder than usual, there are no shortcuts to success, and your location will be limited to metropolitan areas. Beyond this, we have shared 7 main reasons you should not go for the Jersey Mike’s Franchise in 2022.

#1 Skewed Popularity of the Brand 

If you’re looking for an investment that will allow you to make a quick 6-digit profit, then Mike’s Franchise is not for you. However, there are other strong brands out there that will meet your needs. Halal Guys franchise, for example, can allow you to make a 3-4x return on your investment.

The niche market and niche brand that Jersey Mike’s operates in results in a smaller and more selective customer base limiting your ability to grow quickly. A new franchisee would need to know the audience first and perform a lot of outreach work to engage with customers who have never heard of your brand, thereby adding to the overall costs.

#2 High-Risk Cost to Open the Franchisee: 

The initial franchise fee is $18,500, and the total investment to launch a single store ranges from $178,523 to $746,342.The average annual revenue for a company-owned location in 2021 is estimated to be $212,000, including sales of non-traditional franchises if the same quality standards are adhered to. That said, the investment figures are nowhere near the store’s yearly profits i.e., only $73,000. When you have such a high-risk investment, it’s better to rethink the buying proposition for Jersey Mike’s franchise. Instead, consider another franchise like Rise Southern Biscuits & Righteous Chicken or Brooklyn Dumplings and start your business with less risk and cost.

#3 Not Optimum Market Value of the Brand: 

Jersey Mike’s Subs’ market cap is $2.19 billion, but bigger competitors like Subway and Firehouse Subs are way ahead of it.

Jersey Mike’s sub chain will continue to grow in value as it continues its upward growth trajectory, currently outpacing the competition by double-digits with an average of 10% exponential growth. 

Jersey Mike’s Subs is behind in its growth rate across the board. It needs to work on marketing and customer service basics before hoping to compete with larger sandwich chains. Only people who have that patience and confidence with the parent company should only look forward to buying the Jersey Mike’s franchise.

# 4 High-Calorie Menu Is Hard To Sell In The Current Scenario

Jersey Mike’s might have the healthiest “Sub” in its name, but it’s not without its nutrition issues. The Chicken Philly Sandwich by the brand has 670 calories, while Subway’s roasted chicken sandwich provides 270 calories. Further, Jersey Mike’s has more sodium, fat, cholesterol, calories, carbohydrates, saturated fat, and sugar than Subway.

After Covid-19, many of us have adopted a Mediterranean diet or healthy lifestyle and prefer to avoid intake of such high calories; finding a good market for such a menu would be difficult for the franchisee in 2022. More recently, a survey said that 75% of people who want to eat healthier today prefer to visit fast-food franchises like Greek from Greece serving healthy diet food and skipping what they were eating 10 years back.

#5 Requirement of Additional Funds: 

If the initial investment was heavy on your pocket, then reconsider the option of buying the franchisee as there is more cost involved in running the franchisee store profitably. For example, a franchisee will pay a $50,000 upfront fee and a $10,000 construction fee. Additionally, the business will have to pay the cost of running the store every month. This may include analytics for marketing, advertising, or social media platform fees, or software utilities used in customer service. Businesses must also plan for unexpected upfront costs, including legal compliance efforts. While royalty rates are capped at 6% of net sales by the franchise contract, imprecise tracking of royalty payments can result in substantial financial penalties.

 #6 Training and Set-Up Time: 

Jersey Mike’s Franchise owners have to go through a lengthy training period before running their own businesses. Before they even open for business, they attend a more than 3 week-long in-store training course that explains its practices and procedures. The second step of the program is another week spent with regional franchise trainers, who offer additional guidance and tips on keeping customers satisfied and sales high. This certainly adds up to your launching duration.

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#7 Lack of Incentive Programs:

 Another yet prominent limitation of the franchisee is the lack of programs for veterans and minorities. This says that if you have previous experience handling or operating a franchisee, you will never go for Jersey Mike’s, the reason being less discount and other absence of related benefits. The company operates on a small scale and has fewer resources for special benefits or lending discounts. The brand also, therefore, lacks incentives and accessibility requirements. 

Conclusion: 

The statistics show a startling trend: none of Mike’s Franchisees operate only one store. In fact, most franchises own multiple businesses in addition to Mike’s. Owners who focus entirely on shop ownership usually see much smaller profits and often find it hard to earn a living from their businesses. 

We strongly recommend enthusiastic entrepreneurs looking for franchise opportunities to make huge profits from a proven business model to check out our one-of-a-kind Food franchise unique opportunity.

Sources:

https://www.jerseymikes.com/about

https://mobile-cuisine.com/franchise/jersey-mikes-cost/

https://www.franchisehelp.com/franchises/jersey-mikes-subs/

https://www.owler.com/company/jerseymikes

https://www.mashed.com/201369/secrets-in-n-out-burger-doesnt-want-you-to-know/

https://www.bbb.org/us/nj/manasquan/profile/restaurants/jersey-mikes-franchise-systems-0221-90069512/complaints

https://www.inc.com/dave-schools/how-jersey-mikes-ceo-turned-125000-into-1-billion.html

https://www.jerseymikes.com/franchise/investment

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