00:00:02 · S0, Charlie Morrison, S2
[00:00:02] S0: Bloomberg Audio Studios. [00:00:04] S1: Podcasts. Radio. News. [00:00:07] S0: Jersey Mike's. Their shares up on the day here after delivering a top and bottom beat for the third quarter. Joining us right now live in studio is the CEO of Jersey Mike's, Charlie Morrison. Charlie, great to have you here. [00:00:20] S1: Great to be here. Thank you. [00:00:21] S0: Basically your first full earnings report since you went public here. Same store sales up. [00:00:26] S1: About 3%. Yep. That's good. That is good. [00:00:28] S0: Give me a sense here. [00:00:29] S1: Is that sustainable? I think it is sustainable. [00:00:31] S2: It's yet another consecutive quarter of increasing our same-store sales for the year, driven primarily by traffic growth. [00:00:39] S1: And if you look out over. [00:00:40] S2: The long term, this is going to be our 21st consecutive year of delivering positive same-store sales growth as a brand, which nobody else in the restaurant space can say. [00:00:49] S0: Well, give me a sense that since the quarter has ended, what does traffic look like? I don't know if you actually can give me a hard number, but give me some sense here as to what the momentum is here now into the current quarter. [00:01:02] S2: Yeah, I think we don't disclose specifically our traffic numbers versus our average check or the effect of price increases. But this year, We've taken a strong position on really building traffic in the brand over the entire year. [00:01:16] S1: We've been less focused on price.
00:01:16 · Charlie Morrison, S2, S0
[00:01:16] S1: We've been less focused on price. [00:01:19] S2: We've taken a little bit of price this year, whereas a lot of the market has taken lots of price over the past few years. We've decided the focus here, the healthy side of growth, which is traffic. which, again, has been building sequentially quarter over quarter, and we anticipate continuing that for a long time to come. [00:01:32] S0: With regards to pricing, I mean, how aggressive can you be with that, particularly in an environment where we just hear all these stories about how the consumer is becoming more stretched or at least more selective in where they spend? [00:01:43] S2: Yeah, I think some people feel like you can't take any price. [00:01:48] S1: I mean, value is really the play right now. [00:01:50] S2: We're taking a little bit of price, and I think that's natural and, quite frankly, healthy for an organization to continue to do that. But the consumer is very value conscious right now. And our focus is on value. And we're offering value not by way of discounts, but by featuring our products in a very meaningful way at a price point consumers love. We generally have a fairly high-end menu, if you will, a premium price point. [00:02:14] S1: Yeah. And enjoy that. But right now, a couple of things we're doing. [00:02:18] S2: A mini bundle for $ 7. 99, which pairs a mini sub with chips for that price point. [00:02:23] S1: Yeah. Value is really the key. It doesn't have to be through price. Well, that's what I'm curious, though.
00:02:23 · Charlie Morrison, S0, S2
[00:02:23] S1: Yeah. Value is really the key. It doesn't have to be through price. Well, that's what I'm curious, though. [00:02:28] S0: I mean, you talk about the premium price point. So, yeah, when I walk in, I see the menu price. But you've been offering promotions and other sort of ways that gets that price down to a little bit. Does that eat into margins at all? What's the balance? [00:02:39] S2: It actually hasn't eaten into margins. Over the year, we've had a couple of different promotions. A chicken salad sub over the summer that was value priced at $ 8. [00:02:47] S1: 95, but a great food cost for our franchise owners. [00:02:50] S2: Recently, we relaunched a product called Mike's Hot Italian, a great product off the hot grill. Big, broad audience in terms of who it actually appeals to. Again, margin accretive, actually, for our franchise owners, so they've seen almost no, in fact, Quite frankly, their food cost is actually a little better year over year than it was a year ago. [00:03:10] S0: Talk about the growth, meaning the footprint growth of Jersey Mike's. You have more than 3,000 stores now. You and the management have talked about this idea of 7,500. Right. Huge. [00:03:22] S2: That's just the white space for the United States. So just under 3,500 stores, 3,450 today. We opened 80 in the most recent quarter and anticipate that trend of about 300 stores a year for the next foreseeable future, next few years. [00:03:37] S1: Over time, we think the white space in the U.S. is 7,500.
00:03:37 · Charlie Morrison, S2, S0
[00:03:37] S1: Over time, we think the white space in the U.S. is 7,500. [00:03:40] S2: We have another 7,500 store opportunity for the global footprint, so a total of 15,000 for the brand over time. [00:03:46] S1: Well, I'm curious. [00:03:47] S0: I mean, let's just stay in the U.S. for a second, though, because, I mean, that's a lot of stores, and I'm curious as to how you go about sort of sourcing locations so that you're not going into a situation where one is cannibalizing the other. [00:03:59] S2: Yeah, we don't have that problem. We have plenty of white space. In fact, this year, we remapped to the entire United States. We identified 1,600 plus distinct trade areas that we committed with our franchisees for long-term development over the next five years. None of those really impact the existing stores. So cannibalization in our business is very, very minimal. [00:04:20] S0: Are you worried about growing too fast? I mean, I think about your previous job at Salad & Go, and one of the criticisms was that Maybe Salad and Go, you know, grew too fast and that led to some of the issues that led to its problems. Is that a concern at all? [00:04:34] S1: Not at all. Not at all.
00:04:34 · Charlie Morrison, S2, S0
[00:04:34] S1: Not at all. Not at all. [00:04:35] S2: At Jersey Mike's, we've been opening over the past few years at least 300 stores a year. We anticipate continuing that. And then the international footprint as we develop that. We're only in Canada today. We will be opening in the UK in the coming weeks and then more global markets ahead of us. So that type of growth, we're really well built for it. It doesn't put a strain on the business at all. [00:04:57] S0: Your average unit volume now is about $ 1. 4 million. You have a $ 2 million goal. That's a big gap between where you are now and where you want to go. How fast do you get to $ 2 million? [00:05:08] S1: We haven't put a time number on that. [00:05:09] S2: What we do know is we have a lot of experience with stores that are above $ 2 million already today in our system. We know what right looks like. Part of it is getting our franchise owners out and developing the market, building the catering business. Over time, we're going to build the brand around a digital marketing strategy that invites a broader consumer base in and increases the frequency. Today, we get a lot of sales from a fairly narrow group of customers that use us very frequently. We know there are a lot of people out there, generally younger customers, More diverse, spanning the spectrum of income, and we're attracting those customers into the brand. As we do, that'll build their frequency, and over time, that'll lead us to that $ 2 million average unit volume. [00:05:48] S0: Charlie, really great to have you here.
00:05:48 · S0, Charlie Morrison
[00:05:48] S0: Charlie, really great to have you here. [00:05:50] S1: Thanks for having me. Absolutely. [00:05:51] S0: Charlie Morrison, he's the CEO of Jersey Mike's, fresh off the company's earnings report.