After Nearly Going Bankrupt, How Franchise Jersey Mike's Fought Back and Won CEO Peter Cancro learned to prepare for the worst, which set him up for lasting success.
One night in 1975, 17-year-old Peter Cancro knocked on his high school football coach's front door in Ocean County, N.J. Cancro, a senior and the team's quarterback, was there to ask for a $125,000 loan to buy the sub shop he'd worked at for the past four years. Hours later, Cancro left with the loan, a seven-year payback plan and the intent to purchase Mike's Subs.
Since then, he's turned that small sub shop into Jersey Mike's, a national franchise with 1,400 locations nationwide and more than $1 billion in annual sales. It's the fastest-growing sandwich chain in the U.S., with more than 18 percent sales growth year over year, according to industry research firm Technomic. (Firehouse Subs, its closest competitor in sales growth, achieved less than 5 percent growth last year.) But there were brutal bumps in the road, including a dance with bankruptcy that changed the way Cancro runs his business.
How did you get your start at the sub shop that would become Jersey Mike's?
I started working at Mike's Subs in 1971, when I was 14. My older brother, John, worked there the summer before, and the boss asked him, "What about your brother?" John said, "I know he'll work hard, but I'm not sure how bright he is." That's how I got the job.
What made you fall in love with the operation?
It was in a small beach town in New Jersey, so New Yorkers always came down, along with people from North Jersey. It made us a little more worldly down at the shore. In the summertime, the population quadrupled. We had lines out the door, and we were making a crazy volume of sandwiches. There was no Burger King or McDonald's around. We were it.
You started franchising in 1987. By the early '90s, you've said, the company was on the brink of bankruptcy. What happened?
We opened stores pretty rapidly and put every dime back into growing the business. We had about 35 stores along the Jersey shore. Then 1991 hit, and that was the worst recession for us. It still hasn't left me. Because we had been putting everything toward growth, there was no money in the bank, no reserves, nothing. I had to lay off the six people I had in the office, and that was the toughest thing ever.
How did you work through this with your franchisees?
We met with all the individual store owners to make sure everything was being done right at each location. The business at our existing stores was great, but no one could afford to buy new stores -- it was a growth problem.
So how did you ultimately turn things around?
When you don't have any payroll, you can pay a lot of bills. And I worked more than 100 hours a week. I focused on marketing and did a lot of local radio because we couldn't afford TV. We also started some direct mail campaigns and initiated door-to-door grassroots marketing one mile around the stores. Within three years, I'd hired back all the employees that had been let go.
All these years later, how has that experience stuck with you?
At the time, we were mostly reacting. But any business plan will tell you to look at the downturns and upsides and spend more time planning for potential downturns. Think about what could happen, and plan for it. Show up early, stay late.
Most important: What's your favorite sandwich?
The Cancro Special, of course! It's provolone cheese, roast beef and pepperoni, made "Mike's way." It doesn't sell that much, but if you walk in and ask for one, they know.