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Summary
Jersey Mike’s Subs (JMKE) went public on July 30th, 2026 at $23/share (middle of the range; $21 - $25), raising ~$1 billion despite being “10x oversubscribed.”
The company was recently acquired by Blackstone (BX) in the middle of January 2025 and was only sponsor-owned for ~18 months before hitting the public markets.
The company has done well to grow its overall unit base, increase AUVs, maintain positive SSS growth for the last ~20 years, and command >45% adjusted EBITDA margins as of 2025.
However, we think a lot of the success of JMKE has come from the demise of another large and well-known sandwich franchise: Subway.
Under its very brief private ownership via PE, BX had managed to lever the company up to $2.1 billion in debt before the IPO, increasing its annual interest expense by >2x, and pay itself ~$1.16 billion before even going public.
Before the IPO, BX reorganized the company into an UP-C structure with a tax receivable agreement (TRA), introduced a dual-class structure where they hold supermajority voting control, and an eventual earnout provision to the founder of the company to the tune of ~$250 million → creating a very favorable situation for pre-IPO investors.
This IPO seems to be another cash grab by BX — for which it made another ~$605 million in gross proceeds → total gross 2equal to ~$1.765 billion — into a hot IPO market where >13,500 PE-owned companies are struggling to be sold.
Additionally, there are certain nuances with the current Canada and U.K./Ireland master franchise agreements (MFAs) that, while still a high-margin net benefit to JMKE, have caveats attached to them that we think the street is not properly accounting for.
While the company is not currently ‘struggling,’ we believe that the large growth experienced during Subway’s demise might, for the most part, already be played out, and future growth will be more moderate than exponential.
The recent IPO seems to have been priced for perfection, and the risk/reward skews to the downside should our concerns become reality.
Disclaimer: Cedar Grove Capital Management (CGCM) is short Jersey Mike’s Subs (JMKE) at the time of publication.
To look at our previous work on either IPOs or Shorts, click the link here to access our table of contents.
With that, let’s get started.
Background
Jersey Mike’s Subs (JMKE), which was acquired by Blackstone (BX) in January of 2025, is a quick-service restaurant (QSR) concept that specializes in selling simple sandwiches and offering to serve them up “Mike’s Way” (preselected toppings).
Source: Company S-8.
With a simplistic store model, freshly cut meats right in front of your face (literally), and limited toppings, JMKE has grown its total units (of which ~99% are franchisee-owned) from 1,048 in 2015 to >3,250 by the end of 2025, increased its system-wide sales to > $4.2 billion, average unit volumes (AUV) to >$1.35 million, and rebounded adj. EBITDA margins after its post-COVID slump.
Source: Company financials.
Source: Company financials.
Source: Company financials.
Source: Company financials.
Source: Company financials.
At face value, it all seems to be good. All the charts above are trending in the right direction, and as proud eaters of Jersey Mike’s ourselves, we can understand why.
Apparently, so did IPO investors. JMKE was priced at $23/share (midpoint between $21 and $25), raised ~$1 billion, and allegedly was 10x oversubscribed!
However, when you look underneath, we’re not so sure that the trend can continue at the rate it’s leading on to be, and we liken the situation to when we called out Domino’s Pizza (DPZ) — free to read — back in April of 2024 for its overambitious growth plans and “narrative” it was selling to investors.
Below, we’ll highlight our issues with the company, its IPO, and why the risk/reward, in our opinion, is skewed to the downside.
Anyone Order a Flip?
First off, we’ve been involved with covering IPOs for a while now (see below) and understand, as former investment bankers, that most IPOs stand for “it’s probably overvalued.”
Each one has its own story, nuance, and skeletons in the closet, in the hopes that people won’t find them or, at the very least, can overlook them. Some are so bad that they serve you shit and call it caviar (see chart above). But this one is already different right off the bat for one very specific reason…
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