Jersey Mike's CEO Charlie Morrison Talks Trading Debut

**Charlie Morrison** (0:02)
Bloomberg Audio Studios. Podcasts, radio, news.

**Dani Burger** (0:07)
I am here with the Jersey Mike CEO, Charlie Morrison. Charlie, thanks for joining. Congratulations on listening today.

**Charlie Morrison** (0:12)
Thank you, it's a great day for Jersey Mikes.

**Dani Burger** (0:13)
I have to say, I don't envy any CEO that has to list in this crazy market we're living in right now. It has been quite volatile, and especially for a lot of your peers. I mean, Sweet Green down 4%, Shake Shack down 24% year to date, Wing Stop also, which you once led down 44%.
So why was, amid all of that, why was now the right time to IPO?

**Charlie Morrison** (0:31)
I think it's a great time to IPO, Jersey Mike. This is a brand that's been built over many, many years. We have a rich history of over 70 years. The last 20 years alone, the only brand that can cite 20 consecutive years of positive same store sales growth. We've been able to navigate the choppy waters over many, many, many times through our cycle. Even this year, year to date, same store sales continue to grow. We've seen sequential improvement from quarter one to quarter two, exiting quarter two at 2.3% same store sales growth, most of that driven by traffic. So, it's a great time to bring this brand to the market. We can deal with some of the challenges that are in there, but really, it's for the long term.

**Dani Burger** (1:07)
The fundamentals look good heading into this, but was there ever a banker that was thinking, hey, Charlie, maybe now is not the time, maybe we need to wait for calmer waters?

**Charlie Morrison** (1:14)
Not at all, not at all. They told you full steam ahead? Yeah, this is a brand that's really well built for the public market.

**Dani Burger** (1:19)
What about the pricing? Because shares have fallen initially down 8.7%.
They've come back, of course, now down only about 4%. What do you think of the pricing? Was the pricing off, perhaps? And that's why we're falling. Today, maybe valuation is a little bit too richly priced?

**Charlie Morrison** (1:33)
No, I don't think it has anything to do with the price. I think the market's been a little choppy over the last few days, trying to find its place. Again, we're not looking at today's price. We're not worried about this. We're worried about the long term and continuing to do what we do well, which is grow restaurants, grow our same store sales growth, continue to deliver great value for our shareholders, and we know they're going to win over the long term.

**Dani Burger** (1:51)
Let's talk about the long term, because now with IPO proceeds in hand, what do you want to do with them? What are the opportunities for growth that you're going to be pursuing?

**Charlie Morrison** (1:58)
Well, I mean, we're a brand that is an asset-like model. So we're a 99% franchise. We generate a lot of cash. We carry some debt.
We're using the primary proceeds just to pay down our debt a little bit, so we get down below four and a half times our EBITDA, and that's okay. Over time, we really will use our cash to return that capital back to shareholders, which is very much the common practice in a business like ours, and that will be the continued pace over time.

**Dani Burger** (2:24)
I know one of the growth strategies that you're pursuing is international expansion. You have big plans for the UK specifically.
I know the market. I lived there for a while, for about six years. They do eat at Subways, so they know sandwiches. Quality might vary there, but they love a Tesco's meal deal where they get a sandwich and a bag of crisps, as they would call it, for four pounds. How do you convince them, how are you certain that a British audience would like a Jersey Mike's?

**Charlie Morrison** (2:49)
Well, we know people all over the world enjoy sandwiches and sub sandwiches. Certainly, the market's been well established. What they don't know is the authenticity of how to really deliver a deli style sandwich the right way, the way we do it here in Jersey Mike's. That's been part of who we are for the last 50 years. It's exactly what we're going to bring to the UK. We're going to bring the brand in its full force to the UK.
And look, we have a hot sub option as well. So our cheese steaks, our hot subs, our other products will be anchored on the menu. And we're going to do it in a high quality way. People want that kind of quality and authenticity. Not for the Brits. I mean, one little thing maybe, we might bring salted beef to the protein mix and line up. We know that's a big fan favorite overseas in the UK.