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How the founder of Jersey Mike’s turned one sandwich shop into a billion-dollar business

March 16, 2020, 11:15 AM UTC

My first job was at Mike’s Subs in Point Pleasant, N.J., a small beach town on the Jersey Shore. My older brother worked there the summer before I did and got me the job. I was 14, and I would sprinkle the subs as they came down the line, wrap them, and work the cash register. I did everything, except I wasn’t old enough to work the slicer.

The owner was great. He ran the business like a tight-knit family. Even though I was a teenager, he gave me the feeling that my voice mattered. I made $1.75 an hour, which was big money in 1971. I worked full-time in the summers and part-time through the school year. 

Back then, there were no McDonald’s or Burger Kings in town. Mike’s was a 1,000-square-foot store with 17 seats, and most of the business was takeout. It did what would be $40,000 a week in today’s dollars.

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“I learned by doing,” says Jersey Mike’s CEO, Peter Cancro.
Photograph by Patrick James Miller for Fortune

In 1975, when I was a senior in high school, the store came up for sale. I was president of my class and going to college to study law. One night my mother said, “Mike’s is for sale. Why don’t you buy it?” I laughed, went up one flight of stairs, and by the time I reached the top, I decided to do it.

I talked to the owner, who had a couple of potential buyers but could hold off the sale for a week or so. I started knocking on people’s doors, trying to raise $125,000 to buy it. On Friday, a gentleman said he would put up all the money but wanted to be 50/50 partners. I knew the amount of work involved in running the store and wanted to [own it outright], so I said no.

On that Sunday, I called Rod Smith, my Pop Warner football coach, who was also a banker. I told him what I wanted to do, and he helped finance the real estate and business loan. He knew me, and he said I always get the ball across the goal line. Back then, you shook hands, trusted people, and did business that way.

So my senior year I went to homeroom, history, English, skipped gym, and went to work. I had to come up with a medical excuse on why I missed gym so much, so I said I had a bad back.

There were 12 people working in the store in the off-season, and we had worked together for years, so they were happy for me. When you’re 17, you feel invincible, and most times you are because you think that way. Paperwork and taxes were a challenge, but I learned by doing. 

People came from all over the country to vacation at the beach, and at the end of the summer, they would order our subs to take home with them. In 1986 we opened a second store in town and changed our name from Mike’s to Jersey Mike’s, so that people would know where the product was from. People were asking us to franchise, so in 1987 we started doing that.

We got to 35 stores when the recession hit in 1991. No one would lend money in the Northeast, which really hurt us. Everything we had made was spent on growth, advertising, and more people, and we overspent. We were negative a million and a half dollars and were counseled to declare bankruptcy, but I said no way. 

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Cancro (left) with a customer outside the original Mike’s location in Point Pleasant, N.J., circa 1977.
Courtesy of Jersey Mike’s

I had to lay off all six people in the office, including my brother. It’s amazing how many bills you can pay when you have no payroll.

It was tough times. I was married with three young children. I owed money to equipment companies, construction companies. I’d float one bill and pay another to keep from going into collection.

I persevered by showing up morning to night, seven days a week. I liquidated my 401(k), sold the ­Mercedes-Benz and any extra things we had, bringing it down to one used car.

I went out and did the store visits myself for more than a year, then gradually started hiring people back. 

In recessions, we do better because people give up the tablecloth restaurants for our shops, so the business was still great. I got lucky breaks, and things turned around. I learned to slow down and not overspend. By 1998 we hit 100 stores. 

In the beginning, I went charging up the hill. Now I look around the hill and plan first before expanding. 

When we meet new people who want to buy a franchise, I want to see if they understand our culture. We’re big on community involvement, which I learned from the town merchants in Point Pleasant when I was 14.

All our marketing is local. In March we do a Day of Giving, when the owners give all their sales to a local charity. Last year we raised $7.5 million for good causes. Cause-related marketing benefits charities and makes you a part of the community. 

We pay people higher than minimum wage. It’s up to the owners, but we recommend a percentage for payroll out of the gross. In California, for example, minimum wage is $12 an hour, but with 10 to 12 people in each store, those who work the slicer can make $20 to $22 an hour.

In ’08 and ’09 a recession happened again, but there was still some money to be lent. Everyone was hit, but our company grew through it because we had enough stores open and had planned better for capital and growth.

We’re in 47 states, Canada, and Australia and have about 1,700 stores now. In 2019 we did $1.4 billion in sales. It’s still owned just by me. 

What I love about being CEO is making a difference in people’s lives. Mostly I’m proudest of having coached all my kids’ sports teams. No matter how busy I was, I made it back for their practices. And they all got their first job at age 14. 

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Peter Cancro’s Best Advice

Rise up together. With each customer transaction, don’t just say, “How are you? This is how much you owe.” Make human contact. Share something about yourself with your customer. If someone’s down, try to help turn that around.

A version of this article appears in the April 2020 issue of Fortune with the headline “Prime Sub.”

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