Blackstone strikes $8 bn deal for sandwich chain Jersey Mike's Subs

Jersey Mike's Sub, a fast casual sub sandwich franchise, operates over 2,800 locations

Blackstone has agreed to buy Jersey Mike's Subs, the sandwich chain said on Tuesday, in a deal that a source said valued the company at around $8 billion, including debt. 

Reuters had reported on Monday, citing a person familiar with the matter, that Blackstone was nearing a deal for Jersey Mike's.

The deal, which is expected to close in early 2025, underscores private equity (PE) firms' increasing interest in franchise operators. 

Last year, PE firm Roark Capital agreed to buy Subway, Jersey Mike's bigger rival, in a deal valued at up to $9.55 billion.

Jersey Mike's, known for its submarine sandwiches, traces its roots back to 1956 when Cancro started working at the company's Point Pleasant, New Jersey location, which was founded as Mike's Subs. 

 

Cancro acquired the location in 1975 and began franchising units in 1987. Since then, Jersey Mike's has grown into one of the major fast-casual restaurant chains in America with over 3,000 locations nationwide open and in development. 

"We believe we are still in the early innings of Jersey Mike's growth story and that Blackstone is the right partner to help us reach even greater heights," Jersey Mike's founder and CEO Peter Cancro said. 

Cancro will maintain an equity stake in Jersey Mike's and continue to lead the business. "Blackstone has helped drive the success of some of the most iconic franchise businesses globally and we look forward to working with them to help make significant new investments going forward," Cancro said. 

Blackstone, the world's largest alternative asset manager with more than $1.1 trillion in assets under management, has been on an investing spree in food franchises this year. 

In February, Blackstone announced an equity investment in 7 Brew Coffee to boost the expansion of the drive-thru beverage business. 

In April, Blackstone agreed to buy Tropical Smoothie Cafe, a franchiser of fast casual restaurants, from PE firm Levine Leichtman Capital Partners. 

"Blackstone has deep experience helping accelerate the expansion of high-growth franchise businesses and this area is one of our highest-conviction investment themes," said Peter Wallace, Blackstone senior managing director. 

Blackstone's previous franchise deals include the 2007 acquisition of Hilton Hotels and its investment in Servpro, a franchise in the cleanup and emergency restoration industry. 

Guggenheim Securities, Morgan Stanley, and White & Case were the advisers to Jersey Mike's. Barclays, Bank of America, and Simpson Thacher & Bartlett advised Blackstone on the deal.