Blackstone to Acquire Jersey Mike’s Subs in $8 Billion Franchise Expansion Deal

Jersey Mike’s Subs, a fast-casual restaurant chain renowned for its submarine sandwiches, has announced its acquisition by Blackstone in a deal valued at approximately $8 billion, including debt, according to sources familiar with the matter.

Key Highlights of the Deal

• Valuation and Structure:
  The transaction includes an earn-out clause, tying the full payout to Jersey Mike’s opening its 4,000th store. Earn-out structures have grown in popularity in M&A deals, linking payments to future performance milestones.
• Growth Ambitions:
  Blackstone aims to accelerate Jersey Mike’s domestic and international expansion. Currently, the chain boasts over 3,000 locations in operation or development.
• Founder’s Role:
  CEO and founder Peter Cancro, who has led the company since acquiring its original store in 1975, will retain an equity stake and continue to oversee the business.
• Advisory Teams:
  Guggenheim Securities and Morgan Stanley advised Jersey Mike’s, while Barclays and Bank of America worked with Blackstone.

A Rising Interest in Franchises

The deal highlights private equity’s increasing focus on franchise businesses:

• Subway Acquisition: In 2023, Roark Capital acquired Subway in a deal valued at $9.55 billion, also incorporating an earn-out clause.
• Blackstone’s Investments: The firm has been active in food franchises this year, with investments in 7 Brew Coffee and Tropical Smoothie Cafe.

Jersey Mike’s Legacy and Vision

Founded in 1956 as "Mike’s Subs" in Point Pleasant, New Jersey, Jersey Mike’s began franchising in 1987 under Cancro’s leadership. Its fast-casual model and fresh ingredients have made it a prominent player in the U.S. restaurant market.

“We are still in the early innings of Jersey Mike’s growth story,” Cancro remarked, emphasizing Blackstone’s potential to elevate the brand.

Blackstone’s Franchise Expertise

With $1.1 trillion in assets under management, Blackstone has a proven track record in scaling franchise operations, including its acquisition of Hilton Hotels and investments in Servpro.

“Franchise businesses represent one of our highest-conviction investment themes,” said Peter Wallace, a senior managing director at Blackstone.

Looking Ahead

The acquisition is expected to close in early 2025, ushering in a new phase of growth for Jersey Mike’s. This deal exemplifies the growing alignment between private equity firms and high-growth franchises, positioning both entities for mutual success.