Photographer: Pat O'Malley for Bloomberg Businessweek

America’s Fastest-Growing Restaurant Is On a Roll

We apologize for the food-based pun.

For a restaurant chain trying to build a national brand based on quality and freshness, a strong association with the state of New Jersey is a mixed blessing. A reference to the Garden State can evoke pleasantries such as tailgating at a Bruce Springsteen concert or the whiff of something rotten—the Lincoln Tunnel, waste management, Bridgegate.

Despite the marketing challenge, Jersey Mike’s Subs, based in Manasquan, N.J., is, uh, eating away at market share across the country at a time when industry leader Subway is faltering. For the last three years, the trade publication Nation’s Restaurant News has named Jersey Mike’s the fastest-growing chain in America: The company had about 700 stores at the end of 2013 and now has more than 1,500 open or in development. Annual sales have grown from an estimated $402 million in 2013 to $675 million last year, according to Technomic, a research company.

Despite its rapid expansion, you may have never heard of Jersey Mike’s. The chain keeps a low profile in the media and only recently began advertising on national television. Even so, it’s hardly a hoagie arriviste; it traces its roots to a family-owned business, Mike’s Subs, which opened in the beach town of Point Pleasant in 1956. Peter Cancro, the owner and chief executive officer, landed a job at Mike’s as a teen in 1971. A few years later he bought the place. In the ’80s, Cancro changed the name and began selling franchises.

Jersey Mike’s grew gradually through the years, but a broader trend in American dining is driving its sudden proliferation, says Darren Tristano, Technomic’s president: the surging popularity of fast-casual chains. They offer quickly prepared, customizable meals that are slightly more healthy than traditional fast food and cost a bit more. The concept first shook up the hamburger industry when Five Guys Burgers & Fries and Shake Shack started luring away some customers from Wendy’s and McDonald’s. Tristano says the same dynamic is now roiling the pizza, chicken, and sandwich businesses.

Among other submarine slingers benefiting from the upheaval are Jimmy John’s and Firehouse Subs, Tristano says, all of which are expanding. In the meantime, Subway is struggling. In the past two years, according to Technomic, U.S. sales at Subway, the largest fast-food chain in the world, have fallen 3.5 percent as consumers have rejected its fast-food approach in favor of more artisanal breads, meats, and cheeses. In 2015 longtime Subway spokesman Jared Fogle went to prison after pleading guilty to sex crimes. “Our brand led the way for thousands of entrepreneurs to own and operate their own business around the world and for other brands to enter the sandwich segment,” a Subway spokesperson says.

The dining area inside a Jersey Mike’s has a nostalgic, seaside vibe—a surfboard here, a vintage boardwalk postcard there. Customers place orders with an employee in a blue apron standing over a manual deli slicer. The apparatus is at once functional—the meat on each sandwich is sliced to order—and theatrical, turning the act of hero making into a rhythmic procession of ham and salami, pepperoni and provolone, tomato and shredded lettuce. (Add olive oil, vinegar, and Italian spices, and you’ve got it “Mike’s Way.”) Hoyt Jones, president of the company, says slicing meat in front of lunchgoers is key to establishing Jersey Mike’s bona fides as a purveyor of superior, handcrafted subs, not a rote assembler of prepackaged foodstuffs. “The slicer is the quarterback of the store,” Jones says. “It’s a coveted position.” It also helps, he says, that the hot sandwiches are cooked to order on flat-top grills and not heated up in microwaves.

The resulting subs deliver livelier flavors than what you get at Subway. They’re also more expensive. Nationally, a regular-size original Italian with a fountain soda and chips goes for about $11. Josh Funderburk, the director for training, who joined the company 20 years ago, says the menu at Jersey Mike’s has changed only slightly since its inception. (Bologna sandwiches were removed.) Despite its growing success, the company tamps down the swagger. If you invert the preening, hot-tub splashing, ab-flashing attitude made famous on MTV’s Jersey Shore, you get the culture of Jersey Mike’s. “One of the sayings we have is, ‘Don’t spike the football,’ ” Funderburk says.

Across the country, seasoned fast-food franchise owners are scrambling to join the fast-casual wave. For about 20 years, Jim Denburg owned almost a dozen Domino’s Pizzas from New York to Amsterdam. Five years ago he sold his franchises and got into the better-burger business, opening up several Smashburgers. Recently, Denburg hooked up with Jersey Mike’s. Later this year, in Uniondale, N.Y., he’ll open the first of five sub shops slated to colonize the Long Island suburbs. Although the burger space has become crowded, Denburg says, he sees room to grow in the delisphere. “Americans love a great sub, and in most places the choices are limited,” he says. “Jersey Mike’s fills that void.” He recommends the roast beef.

The Rise of Jersey Mike's

1956  Mike’s Subs opens in Point Pleasant, N.J.

1971  Peter Cancro, 14, gets a job at the shop.

1975  Cancro buys Mike’s Subs for $125,000, helped by an investment from his high school football coach.

1978  The restaurant adds its first hot sub, cheesesteaks, to the menu.

1987  Cancro changes the name to Jersey Mike’s and begins franchising.

2007  The company hires as president Hoyt Jones, who’d spent more than 20 years at Domino’s Pizza.

2011  Jersey Mike’s receives federal trademark protection for “Mike’s Way,” proprietary terminology for one of its most popular topping combinations: sliced tomatoes, shredded lettuce, red wine vinegar, olive oil, and Italian spices.

The company begins its annual Month of Giving, raising $600,000 for 66 local and national charities.

2014  The company begins an ad campaign in 35  local cable-TV markets (tag line: “A Sub Above”).

Cancro buys a Manhattan condo for $15.7 million.

2015  Jersey Mike’s opens 197 restaurants, passing the 1,000 mark.

2016  The company will become an official sponsor of University of Notre Dame home football games on NBC.

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