Jersey Mike's Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: System-wide sales rose 11% to $1.2 billion, while same-store sales increased 3%, revenue grew 10% to $209 million and adjusted EBITDA climbed 20% to $125 million.
• Digital and unit expansion remain key growth drivers: Digital sales reached 43% of quarterly sales, loyalty registrations increased 21% year to date, and the company opened 80 stores in the quarter, bringing total locations to 3,456.
• Outlook and shareholder returns reaffirmed: Jersey Mike’s maintained its 2026 targets for at least 2.5% same-store sales growth, 8% net unit growth and 20% adjusted EBITDA growth. The company also authorized $100 million in share repurchases and declared a $0.35 special dividend.

Jersey Mike's NYSE: JMKE reported third-quarter system-wide sales of $1.2 billion, up 11% from a year earlier, as 9% net unit growth and a 3% increase in same-store sales supported results. Same-store sales accelerated from 2.3% in the second quarter and were driven primarily by transaction growth, according to Chief Executive Officer Charlie Morrison.

Total revenue increased 10% to $209 million, while adjusted EBITDA rose 20% to $125 million. Chief Financial Officer Michele Allen said royalties and other revenue grew 12%, while the company’s transition from an area-director model to an internally staffed support model contributed $9 million year over year to adjusted EBITDA.

Adjusted net income was $74 million and adjusted earnings per share were $0.23. Allen said the company introduced those metrics during the quarter and did not provide prior-year comparisons because of its pre-IPO capital structure. The company generated $170 million of free cash flow through the first nine months of 2026, including $88 million in large special items such as area-director buyouts.

Digital marketing and transaction growth

Morrison said the company’s strategy remains focused on reaching $2 million in average unit volumes, expanding transactions and increasing franchisee four-wall cash-on-cash returns. The company identified broadening its customer base, growing digital and delivery sales, menu innovation and consistently delivering its deli experience as key components of that strategy.

Jersey Mike’s shifted digital marketing from less than 1% of its media mix before 2026 to about 20% this year. Morrison said purchase consideration has improved among consumers ages 18 to 34, women and Hispanic consumers. Loyalty registrations rose 21% year to date.

The company has approximately 14 million loyalty-program users, including roughly 7 million to 8 million active users, Morrison said. Active loyalty customers visit about once per month, compared with as few as two visits annually for customers outside the active database. He said the company is still building its first-party data and personalized marketing infrastructure and expects the effort to develop over the coming quarters.

Digital sales represented 43% of sales in the quarter, up about 100 basis points from a year earlier. The company continues to target a 60% to 70% digital sales mix over the long term. Delivery was among the company’s fastest-growing channels, Morrison said, following changes to its approach to third-party and first-party delivery, including a royalty-free markup for franchise owners.

Catering sales increased 17% year to date and have risen above 4% of sales, compared with roughly 3% a year earlier. Management said it believes catering could eventually represent as much as 10% of sales. Morrison said the company is encouraging franchisees to pursue local catering opportunities while using platforms including DoorDash and ezCater.

Menu offers and customer value

Morrison said the summer Chicken Salad limited-time offer helped attract new guests. The company also relaunched Mike’s Hot Italian, which has produced sales mix levels consistent with its first-quarter performance. About half of customers who purchased Mike’s Hot Italian during its earlier launch were new to the business, he said.

In October, Jersey Mike’s introduced a digital-only Mini Bundle featuring any mini sub and chips for $7.99. Morrison said the offer was margin-friendly for franchisees and had performed well in its first two weeks. The company expects to offer two to three limited-time offers in 2027.

Management said it intends to preserve the brand’s premium position despite increased value offers across the restaurant industry. Morrison cited the $8.95 price point on Mike’s Hot Italian and the Mini Bundle as examples of offers that provide customer value without pressuring franchisee economics. He said franchisee margins have improved year over year, supported by stable or improving food costs and transaction leverage, even as the company has taken only limited price increases.

Development pipeline expands

The company opened 80 stores in the third quarter, bringing year-to-date openings to 210 and total system stores to 3,456. That represented approximately 9% net unit growth from a year earlier. Morrison said 2026 openings are generating higher average unit volumes than the 2025 opening class at the same point last year.

Jersey Mike’s has identified more than 1,600 domestic trade areas for future development and has visibility into roughly five years of domestic development, management said. Morrison added that the company’s real estate pipeline is above year-ago levels and franchisees remain interested in accelerating development. He said typical development costs are just over $500,000 per store and that franchisees are generally well capitalized.

Internationally, the company ended the quarter with 41 Canadian stores, including 20 openings year to date, and expects to open its first U.K. location in the coming weeks. Morrison said the company has identified 14 priority international markets across Europe, the Middle East and Asia, and expects to announce additional markets and partners over the next six to 12 months.

Outlook and capital returns

Jersey Mike’s reaffirmed its 2026 outlook for same-store sales growth of at least 2.5%, net unit growth of at least 8% and adjusted EBITDA growth of at least 20%. Allen said fourth-quarter net interest expense is expected to be about $25 million, and the fully exchanged diluted share count is expected to be approximately 318 million.

The company expects advertising expenses to exceed advertising revenue by $5 million for the full year, though it expects the two to be approximately equal on a full-year basis beginning in 2027, subject to quarterly timing differences. Allen said third-quarter EBITDA outperformance versus prior expectations was driven by advertising-fund performance that was approximately $5 million to $6 million better than anticipated.

At quarter-end, the company had about $1.5 billion in net debt, including $325 million in cash, and a net leverage ratio of 3.9 times. The board authorized a share repurchase program of up to $100 million and declared a special cash dividend of $0.35 per Class A share for shareholders of record on Nov. 5.

Allen said the two actions represented about $200 million of capital returned less than four months after the company’s IPO. She said management expects to generate predictable cash flow and return excess cash to shareholders, with the mix of repurchases and dividends depending on market conditions and relative valuation.

About Jersey Mike's (NYSE:JMKE)

Jersey Mike's, commonly known as Jersey Mike's Subs, is a fast-casual restaurant company focused on submarine sandwiches and related food offerings. Its menu includes hot and cold subs, wraps, salads, beverages and desserts, with catering services also available at many locations.

The business operates primarily through a franchise-based model under the Jersey Mike's Subs brand. Restaurants are known for preparing sandwiches to order, including sliced meats and cheeses, fresh vegetables and the company's signature “Mike's Way” preparation.

Jersey Mike's traces its roots to 1956, when the original submarine shop opened in Point Pleasant, New Jersey.

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