Jersey Mike's Subs Inc. Q3 FY2026 earnings call

• Same-store sales growth accelerated to 3% in Q3 from 2.3% in Q2, driven primarily by transaction growth rather than price increases.
• Digital sales mix increased approximately 100 basis points to 43%, progressing toward the long-term target of 60-70%.
• Catering sales surged 17% year-to-date, reflecting strong demand for high-margin channels and morning day-part utilization.
• The brand successfully broadened its customer base, with significant improvements in purchase consideration among consumers aged 18-34, women, and Hispanic consumers.
• Loyalty program registrations grew 21% year-to-date, though the active database remains relatively small (7-8 million active users) compared to peers.
• Menu innovation included a successful summer chicken salad LTO, the relaunch of Mike's Hot Italian, and a new mini sub bundle at $7.99 to drive value perception while protecting franchisee margins.
• Net unit growth was approximately 9%, with 80 new stores opened in Q3, bringing total system count to 3,456. New store openings are generating higher Average Unit Volumes (AUVs) than the prior year class.
• International expansion continues with 41 stores in Canada and an upcoming first UK location. The company has identified 14 priority international markets.
• The transition from the area director model to an internally staffed support model contributed $9 million to adjusted EBITDA growth year-over-year.

The transcript does not provide a breakdown of financial performance by specific product segment. System-wide sales were $1.2 billion, up 11% year-over-year. Total revenues grew 10% to $209 million, and adjusted EBITDA grew 20% to $125 million. The company does not report segment-specific revenue contributions in this release.

• Full-year same-store sales growth is expected to be at least 2.5%.
• Net unit growth is projected to be at least 8% for the full year.
• Adjusted EBITDA growth is expected to be at least 20% for the full year.
• Fully exchanged diluted share count is estimated at approximately 318 million.
• Advertising expenses are expected to exceed advertising revenues by $5 million for the full year, moving toward breakeven on ad spend over the long term.
• Q4 net interest expense is forecast to be approximately $25 million.

• Consumer confidence remains challenged, with temporary softness observed late in the third quarter, although management views this as short-lived.
• Macroeconomic factors, including inflationary pressures on commodities like wheat, pose potential risks to food costs, though the current basket remains stable.
• Interest rate fluctuations could impact franchisee financing, though management notes low development costs ($500k+) mitigate this risk.
• Execution risk associated with transitioning to a corporate-led organization and changing primary food distributors.
• International expansion carries execution risks related to partner selection and establishing brand awareness in new markets.

Q: Analyst asked about digital marketing milestones and when hyper-personalized capabilities will be fully operational. / A: Management stated they are in early innings, shifting ad spend from <1% to ~20% digitally. With only 7-8 million active loyalty users, building the database is a multi-quarter journey. They expect meaningful impact from one-to-one marketing as they convert more customers into the active database over time.

Q: Analyst asked about fourth-quarter same-store sales guidance and media spend trends. / A: Management expressed confidence in hitting guidance despite late-Q3 industry softness, attributing strength to traffic growth. Digital spend remains consistent, but Q4 sees an uptick due to NFL and sports playoff TV media investments.

Q: Analyst asked about the rationale behind the new mini-bundle promotion and commodity cost impacts. / A: The $7.99 mini-bundle was introduced to address consumer confidence issues while remaining margin-friendly for franchisees. Food costs have remained stable or improved despite macro challenges, allowing the company to maintain premium positioning without heavy discounting.

Q: Analyst asked about accelerating store development pace and the impact of rising interest rates on franchisees. / A: Management highlighted a pipeline of 1,600+ stores and strong franchisee sentiment to accelerate development. Interest rates are not seen as a barrier because unit development costs are low (~$500k), allowing many projects to be funded via cash flow rather than external financing.

Q: Analyst asked how Walmart entering restaurant delivery might affect Jersey Mike’s aggregator strategy. / A: Management indicated no immediate plans to partner with Walmart, stating their sophisticated digital and first-party delivery strategies are sufficient for growth. They will remain thoughtful and evaluate the economics before committing to such partnerships.