The sandwich chain that recently went public is investing heavily in digital media, and it’s a move CEO Charlie Morrison says is already delivering results. Jersey Mike’s, which debuted on the market in late July, has shifted its marketing focus toward digital channels, and Morrison says the bet is already paying off.
Speaking on the company’s first earnings call as a public company, Morrison laid out a plan to convert the brand’s 90% awareness into actual sales, particularly among younger customers who know Jersey Mike’s but don’t eat there often. The company reported same-store sales tracking above 3% in the third quarter so far, and digital marketing is a big reason why.
The Digital Pivot
Jersey Mike’s has dramatically rebalanced its marketing budget. Digital spend has gone from less than 1% of the chain’s total marketing budget to more than 20%. That shift is meant to do two things: reach more people and get existing customers to visit more often.
“Digital media gives us the ability to reach more diverse Gen Z consumers who are familiar with Jersey Mike’s but may not be frequent customers today,” said Morrison, according to a transcript on AlphaSense. “It allows us to engage with those customers in a much more targeted and relevant way, ultimately convert awareness into trial and trial into frequency.”
NFL games will continue carrying TV ads starring Danny DeVito and Eli Manning. Morrison argues that digital expansion is the path to expanding the audience, rather than simply holding onto it.
So far, the numbers show real progress. Morrison reports that loyalty registrations are up 22% year to date. Hispanic guest awareness of the brand has risen 6% year over year, thanks to value messaging.
Sales Momentum Continues
For the quarter ending June 28, Jersey Mike’s restated its earlier reported same-store sales gain of 2.3%, a figure that came from increased customer traffic rather than higher average spending.
The momentum has carried into the back half of the year. The company projected comparable sales would increase between 3% and 4% for the third quarter, and between 2.5% and 3% for the full year.
The portion of sales coming through digital channels is growing. In the quarter just ended, the share of sales from these channels rose by roughly 200 basis points, reaching 43% of total sales. Morrison has stated that he thinks this share could eventually grow to between 60% and 70%.
The expansion is linked to a move toward first-party delivery. Delivery makes up roughly 20% of sales, yet just 3% of that comes from direct orders placed by customers. Morrison explained that the figure is low due to the brand’s past reluctance to ask shoppers to place their own orders.
He pointed to a simple example: Jersey Mike’s in the past didn’t have Instagram posts that invited guests to “click to order here.” The new push will include more call-to-action messaging designed to drive guests to the company’s website or app for delivery orders.
A Careful Approach to New Products
Morrison has kept the release schedule for new products tight, with digital marketing set to be the main channel for announcing them. The boss said customers should expect around two to three limited-time offers per year. The reasoning behind this approach is that he doesn’t want to increase operational difficulty for a system where most stores operate under franchise arrangements.
This year, Jersey Mike’s has already held two LTOs that have succeeded. Its grilled Italian sub began in January. That item proved so popular that the company returned it to menus for NFL season this week.
The summer saw a Chicken Salad Sub LTO catch on alongside the promotion, both offered at a value-positioned $8.95 price for a regular that guests found appealing.
Morrison is cautious about how the brand communicates its value proposition. He explained that Jersey Mike’s messaging around value will concentrate on the quality and freshly sliced meats and cheeses prepared in front of guests. Looking ahead, he argued that such attributes matter more to consumers who are growing more selective about where they allocate their spending.
“For Jersey Mike’s, value doesn’t mean compromising on quality or chasing transactions through discounting or overreliance on LTOs,” said Morrison. “It’s about consistently delivering a product and experience that customers believe is worth paying for.”
Building the Dinner Daypart
Jersey Mike’s has a daypart imbalance, and Morrison wants to fix it. Lunch accounts for 50% of sales, with “afternoon snack” contributing another 20%. Dinner is just 30%.
Hot subs, in particular, could help build dinner sales, Morrison said. The brand also plans to test later hours. Most Jersey Mike’s units close at 9 p.m.
The target figure for average unit volume sits at above $2 million. At the moment, the chain’s AUV rests at $1.4 million.
That figure already dwarfs a major competitor. Per Technomic data, Subway’s AUV is $510,000 across its 18,773 units. Jersey Mike’s AUV is roughly three times that.
Room to Grow
At the close of the second quarter, Jersey Mike’s operated 3,378 stores, a gain of 8% net units from prior periods. Morrison estimates the brand could eventually reach 7,500 locations across the country, with an additional 7,500 abroad.
Jersey Mike’s is expanding internationally, with roughly 30 locations now open in Canada and another 600 on the way. Founder Peter Cancro also has ambitions for the United Kingdom, where a flagship store in London is set to debut soon.
On Wednesday, the market responded positively to what was said, with shares rising by more than 7% during midday trading, reaching a price of $22.40.
The company’s shares began their life after the initial public offering with some instability. They started at $21 per share before falling by roughly 6% on the very first day of trading. Since then, the price has risen to reach a peak of $24.99 per share.
The Good Problem
The challenge, Morrison said, was a good one. He noted that the brand already has 90% awareness. His concern was getting that awareness to translate into trial, and then getting that trial to turn into repeat use.
That’s where the digital spend comes in. The chain is using targeted ads to reach consumers who know Jersey Mike’s but haven’t become regulars. The early returns — loyalty registrations up 22%, ad awareness up among Hispanic guests — suggest the approach is working.
The growth targets set by the company are ambitious, yet the underlying metrics are showing movement in the right direction. Sales from stores open at least a year are gaining momentum. Online sales are rising. The pace of new unit openings sits at 8%.
A strong online presence is what Jersey Mike’s believes will transform its familiar name into a destination that people visit often. The first time the company spoke about its results as a public entity indicates that wager appears to be working.
| Metric | Current Figure |
|---|---|
| Same-store sales growth, Q2 | 2.3% |
| Same-store sales growth, Q3 quarter-to-date | Above 3% |
| Digital share of sales mix | 43% |
| Loyalty registrations growth, year to date | 22% |
| Average unit volume | $1.4 million |
| Total units, end of Q2 | 3,378 |
| Stock price, midday Wednesday | $22.40 |
Source: nrn.com
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