In a strategic move within the fast-food industry, Blackstone has made an acquisition of Jersey Mike’s Subs, a prominent sandwich chain. The transaction marks Blackstone’s latest investment in a growing food franchise, emphasizing its ambition to enhance its portfolio in this sector. Jersey Mike’s has consistently expanded its market presence, and this acquisition is expected to bolster its growth trajectory. Analysts are closely observing how this acquisition will impact the competitive landscape, especially with recent similar transactions in the industry.
Blackstone’s move to purchase Jersey Mike’s Subs follows a trend of acquisitions in the food franchise sector. Earlier, Roark Capital acquired Subway, signaling increased interest in established fast-food brands. Blackstone’s strategy is likely influenced by the growth potential of such investments, as evidenced by its previous involvement with brands like Tropical Smoothie Cafe and 7 Brew Coffee. This approach aligns with a broader industry pattern of consolidating successful chains to optimize market reach and profitability.
What Does the Acquisition Entail?
The acquisition, valued at approximately $8 billion including debt, involves Blackstone’s flagship private equity vehicle and associated funds. The deal is anticipated to close early next year. Blackstone aims to support Jersey Mike’s expansion both domestically and internationally, with a focus on technological and digital advancements. The asset management firm views Jersey Mike’s as being in the nascent stages of its growth journey, with CEO Peter Cancro expressing confidence in Blackstone’s role in fostering further development.
How Will Leadership and Ownership Change?
Peter Cancro, who has been instrumental in Jersey Mike’s growth since acquiring the first franchise in 1975, will maintain his leadership role and retain a significant equity stake. His continued involvement is expected to provide stability and continuity for the brand. Blackstone’s investment strategy, particularly its emphasis on enhancing franchise businesses, aligns with its goal of leveraging Jersey Mike’s established reputation and operational framework to achieve greater market penetration.
Jersey Mike’s history dates back to 1956, with a robust expansion strategy that began in the late 1980s. The chain now operates over 2,800 locations with plans for further openings. Blackstone’s experience in accelerating franchise growth is anticipated to complement Jersey Mike’s ongoing expansion efforts, potentially increasing its footprint and revenue streams.
The average unit volume for Jersey Mike’s traditional locations stands at $1.3 million, reflecting a solid operational performance. This metric is a key consideration for Blackstone as it seeks to enhance profitability. The acquisition could also influence competitors in the fast-food sector, prompting further consolidation and strategic partnerships.
As Blackstone integrates Jersey Mike’s into its portfolio, stakeholders will watch to see how the firm’s resources and expertise impact the sandwich chain’s operations. The acquisition underscores the continuing trend of private equity involvement in the fast-food industry, with potential implications for market dynamics and consumer offerings. This transaction could serve as a bellwether for similar deals in the sector, shaping its future direction.
