Jersey Mike’s (JMKE) stock has remained under pressure since its IPO earlier this year, but CEO Charlie Morrison is confident in the state of the sandwich chain.
The stock has fallen nearly 13% since it debuted on the New York Stock Exchange at $21 per share in late July. It fell to as low as $16.09 in early October and closed the month at around $18 per share.
“While the stock has been challenged, we think the shares are generally undervalued,” Morrison told Yahoo Finance. He added that the chain is aiming for “long-term sustainable” growth and has posted 20 consecutive quarters of positive same-store sales growth.
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In the third quarter, same-store sales rose 3%, driven by transaction growth and 9% unit growth, Jersey Mike’s reported this past Wednesday.
However, the company lowered its outlook for the year, and Morrison attributed the recent softness in September and October to lower consumer sentiment amid the “spike in interest rates and spikes in fuel prices.”
Morrison mentioned that Jersey Mike’s $100 million share buyback program announced this past week “showcases the confidence we have in the business.”
Leaning into catering
Catering and acquiring new customers seem to be the sandwich chain’s focus in the near term.
“Sandwiches are very portable,” Morrison said. “They’re used for lunch events all the time and we think Jersey Mike’s should be a leader in the catering side of the business.”
Catering sales have increased roughly 17% so far this year and make up about 4% of sales, up from 3% historically.
Some Wall Street analysts agree with the push: “We remain bullish on the long-term opportunity, as we believe Jersey Mike’s product is particularly well suited to the occasion,” TD Cowen analyst Andrew Charles wrote in a note to investors.
Late night hours?
Craving a sub at 12 a.m.? Jersey Mike’s may be open after dark in the future.
Morrison noted that while Jersey Mike’s primary customer skews older, younger customers, ages 18 to 34, make up a core part of its growing customer base.
“Our stores do close relatively early compared to most brands in the US, and as we approach this younger audience, we know that they tend to be more night owls than perhaps our typical customer base,” he said.
Jersey Mike’s closing times vary by franchisee and location, but most stores close around 9 p.m. or 10 p.m. Morrison, who previously served as the CEO of Wingstop (WING), could take a page out of the late night wing chain’s playbook.
“I was with Wingstop for many years, and we were open late and knew that younger audience really, really well and knew what they’re craving during that time frame,” Morrison said. “I don’t think alcohol needs to play into it to be successful, but I do think there is a real opportunity to still share of those occasions over time.”
Jersey Mike’s plans to test that approach for now before making any changes to its hours.
Follow Brooke DiPalma on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
