Jersey Mike's Q2 Earnings Call Highlights

Key Points

• Sales momentum improved: Second-quarter same-store sales rose 2.3%, up from 1.7% in the first quarter, while early third-quarter sales were tracking above 3%. Systemwide sales increased 10% to approximately $1.21 billion.
• Growth strategy remains focused on digital and expansion: Digital marketing now represents more than 20% of advertising spending, digital orders accounted for 43% of sales, and the company opened 83 restaurants in the quarter. Jersey Mike’s has a domestic pipeline of more than 1,600 units and plans to open its first U.K. location by year-end 2026.
• 2026 outlook reaffirmed: Management expects 2.5%–3% same-store sales growth, at least 8% net unit growth and at least 20% adjusted EBITDA growth. Following its IPO and debt repayment, net debt stood at roughly $1.5 billion, with leverage at approximately 4.4 times.

Jersey Mike's NYSE: JMKE reported second-quarter same-store sales growth of 2.3%, accelerating from 1.7% in the first quarter, as transaction growth, digital marketing and limited-time menu promotions supported demand.

Chief Executive Officer Charlie Morrison said same-store sales continued to improve early in the third quarter, with the company tracking above 3%. He said the performance exceeded broader fast-casual industry trends, where traffic has remained under pressure.

“Same-store sales grew 2.3%, accelerating from the first quarter, driven by continued momentum and transaction growth,” Morrison said. The company is targeting average unit volumes, or AUVs, of $2 million over the long term, compared with approximately $1.4 million currently.

Second-Quarter Financial Results

Systemwide sales increased 10% year over year to approximately $1.21 billion in the second quarter, supported by 2.3% comparable-store sales growth and 8.1% net unit growth, Chief Financial Officer Michele Allen said.

• Total revenue rose 10% to $208 million.
• Adjusted EBITDA increased 7% to $114 million.
• Royalties and other revenue grew 11% to $138 million.
• Advertising revenue rose 6%.
• Company-owned store sales increased 18% to $13 million.

Allen said adjusted EBITDA growth was affected by the timing of advertising spending and the company’s transition away from an area director model. Advertising expenses trailed advertising revenue by $3 million during the quarter, compared with a $13 million gap a year earlier. That year-over-year difference reduced EBITDA growth by about 11 percentage points, she said.

Excluding the advertising-timing effect, adjusted EBITDA would have grown 18% year over year, Allen said. The company also benefited from $8 million in lower costs tied to moving from the area director model to an internally staffed support organization.

Allen said Jersey Mike’s had seen no material impact from the recent Cyclospora outbreak, noting that the company sources whole-head lettuce domestically and cuts it fresh in stores rather than using bagged or pre-cut lettuce.

Digital Marketing and Menu Strategy

Morrison said the company has shifted its marketing approach in 2026, increasing digital marketing from less than 1% of total advertising spending to more than 20%. The company is using digital channels to reach consumers who may know the brand but do not visit frequently, including younger and more diverse customers.

Loyalty registrations rose 22% year to date, while advertising awareness among Hispanic guests increased 6% from a year earlier, according to Morrison. Digital channels represented 43% of sales during the quarter, up about 200 basis points, and the company is targeting a long-term digital sales mix of 60% to 70%.

Delivery accounts for just under 20% of total sales, Morrison said, with first-party delivery representing only about 3% of delivery sales. He said the company sees potential for first-party delivery to reach as much as 10% of total sales over time as marketing directs customers to Jersey Mike’s digital ordering platforms and loyalty program.

The company also highlighted limited-time offerings as a way to attract new and less-frequent guests. Morrison said the Chicken Salad promotion was highly incremental and helped drive second-quarter sales momentum. Jersey Mike’s relaunched Mike’s Hot Italian during the third quarter, supported by a regular-size price point of $8.95.

Management said it intends to remain selective with product innovation, expecting to run only two or three limited-time offers annually in order to create customer interest without adding operational complexity. Morrison said the company is also testing additional opportunities centered on its flat grill and existing protein lineup.

Development Pipeline and International Expansion

Jersey Mike’s opened 83 restaurants in the second quarter, bringing first-half openings to 130. The company ended the quarter with 3,378 systemwide stores, an 8% increase from a year earlier.

Management said the company’s franchisees continue to generate cash-on-cash returns above 40%, while 2026 openings are producing higher AUVs than locations opened in 2025 through the comparable point in their development cycles.

The domestic development pipeline includes more than 1,600 units, of which more than 1,400 are signed and committed and another 200 are in final negotiations. Morrison said the pipeline provides visibility into roughly five years of domestic development. The company sees long-term capacity for more than 7,500 U.S. locations and 15,000 globally.

In Canada, Jersey Mike’s had 30 open restaurants and commitments for 600 additional stores at the end of the quarter. The company also expects to open its first U.K. restaurant by the end of 2026. Morrison said the London flagship site will be located on New Oxford Street, while supply chain arrangements, menu localization and store design are nearing completion.

The U.K. menu will largely resemble the U.S. offering, with deli-style subs, hot subs and Philly cheesesteaks, along with localized items including a salted beef product, Morrison said.

Outlook, Debt and Capital Allocation

For full-year 2026, Jersey Mike’s expects same-store sales growth of 2.5% to 3%, including growth of 3% to 4% in the third quarter. The company expects net unit growth of at least 8% and adjusted EBITDA growth of at least 20%, including at least 13% growth in the third quarter.

Allen said pricing is expected to contribute about one percentage point or less to comparable sales in the second half, with most growth expected to come from transactions. Management said cannibalization has remained below 100 basis points over the last several years and does not expect that trend to change.

After the quarter ended, Jersey Mike’s completed its initial public offering, selling 43.5 million Class A common shares and generating about $300 million in primary proceeds. The company used the proceeds to repay debt, leaving it with approximately $1.5 billion in net debt, including about $290 million of unrestricted cash, and a leverage ratio of roughly 4.4 times.

Allen said Jersey Mike’s expects to deleverage through EBITDA growth and cash generation. The company views a leverage range of 3.5 times to 4.5 times as an appropriate balance between financial flexibility and returning excess capital to shareholders.

About Jersey Mike's (NYSE:JMKE)

We are Jersey Mike's: A high-growth franchisor of fast casual, submarine-style sandwich restaurants specializing in authentic, hand-crafted, craveable subs. Built over 70 years on one uncompromising belief – that a truly great sub sandwich can change your day and that a truly great brand changes its community – Jersey Mike's is now one of the largest and fastest-growing limited-service restaurant brands based on U.S. systemwide sales and unit growth, with 3,300 stores across all 50 states and two countries – nearly all of which are franchised.

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