How Jersey Mike's Plans to Deal With SD's Retail Shortage

Sandwich shop Jersey Mike's is approaching critical mass in San Diego. But finding those last new locations is proving more difficult than keeping the toppings from spilling out of a sub.

Jersey Mike's Cathy Brown—both a franchisee with six of her own restaurants and an area director—already has 31 units in greater San Diego, and is desperately seeking 10 more. She tells us Jersey Mike's hopes to select and open those units in the next 18 months. “I'd like it to be sooner, but my only issue is real estate availability," she says.

And there's the rub. Prime retail space in San Diego is at a minimum. And Jersey Mike's spent a lot of time prior to entering the market in 2009 dividing trade areas based on its target demographics: consumers with above average income. And it seems to be working, as San Diego is Jersey Mike's best performing market for same-store sales in the country.

To reach critical mass, Cathy says Jersey Mike's is willing to be less traditional in its sites (usually spaces in Class-A grocery-anchored shopping centers near other fast-casual restaurants). For instance, of the two most recently opened Jersey Mike's, its Oceanside location converted a shuttered Dairy Queen that's in walking distance to the beach. And in order to locate a shop near Qualcomm's HQ, Jersey Mike's pre-leased a space in a small strip center that has yet to be developed. Jersey Mike's has tapped DTZ's Michael Burton to help in its ongoing search. “We're willing to pay a little bit more, real estate-wise. We wouldn't go in a C or a D center,” Cathy says. “We know where we want to be in town, and we go after that real estate.”