Jersey Mike’s Profit Falls a Third in First Public Quarter, But It’s Not All Bad

Jersey Mike’s Profit Falls a Third in First Public Quarter, But It’s Not All Bad

Thornton McEnery

Wed, September 9, 2026 at 6:21 PM GMT+3 3 min read

• NVDA -2.37%
• JMKE -2.24%

BREAKING NEWS

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here.

Like any solid Italian sub, Jersey Mike's had a perfectly respectable first quarter as a public company, right up until you get to the extra provolone scent of the profit line.

Revenue up 10% to $208 million, right where Wall Street wanted it. Systemwide sales up 10% to $1.21 billion. Guidance ahead of consensus for the year and the quarter. Eighty-three new stores, 3,378 in total. Charlie Morrison gets to say his traffic acceleration continued into the third quarter, and he's earned the victory lap, because same-store sales rose 2.3% on more people walking through the door rather than on charging the ones already inside a dollar extra for the same sub. Half of American fast casual is currently running that pricing trick and hoping nobody does the math on their transaction counts.

The immediate market math sent JMKE shares up more than 5% at Wednesday's opening bell.

Then the bottom line, where a third of the profit went missing. Thirty-seven million against $59 million a year ago, in a quarter where every single operating number moved in the right direction.

The missing money went to Blackstone's lenders. Interest expense ran $104 million last year, $30 million in a single quarter. The buyout also triggered a bookkeeping ritual called purchase accounting, which took the depreciation charge from $10 million to $96 million while nothing physically changed. Same stores, same slicers, ten times the write-down.

One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

This is what happens when a private equity firm buys a company using that company as the collateral. The sandwiches will be fine, but the earnings will look terrible for years anyway.

The IPO deck told everyone that Adjusted EBITDA margin jumped from 35% to 47% in two years, which reads like the work of a ruthless new management team. What it mostly reflects is that somebody took away Peter Cancro's credit card. Founder discretionary spending ran $263 million in 2024 against $653 million of revenue, so about 40 cents of every dollar coming through the door was funding whatever the guy who built the place wanted funded. The best line item is the $41 million aircraft, purchased on his behalf and handed over to him at closing, which is a hell of a way to leave a job. It's always nice for the IR team when they can disclose 12 points of margin expansion, achieved by no longer owning the founder's plane.

Meanwhile, the business Wall Street should actually be looking at doesn't appear in Wednesday's release at all. Roughly 590 people own 3,230 American Jersey Mike's between them. Each store runs about $515,000 to build and kicks back around $224,000 a year, a better than 40% cash-on-cash return, which is the sort of math that turns a guy with one store into a guy with 60. Ninety percent of the 1,600-store pipeline comes from owners buying their next one.

Wall Street will spend the next few quarters modeling Jersey Mike's interest expense. The franchisees will spend them counting money.