Longtime Carl’s Jr. franchisee Michael Nelson said the world doesn’t need another sandwich concept, “but the world needs Mr. Pickle’s.”
Nelson, who with partners operates 54 Carl’s Jr. locations in California and other western states, bought Mr. Pickle’s Sandwich Shop from founders Frank and Michele Fagundes in late 2020 and is now working to take the Northern California favorite to new markets and significantly add to its current unit count of 64.
“I’m a sandwich guy,” said Nelson, a Carl’s Jr. operator for more than 30 years who also developed Subway restaurants in Arizona, taking that brand from 270 to more than 450 locations in the state. After “deep dive” due diligence on the likes of Jersey Mike’s, Jimmy John’s, Which Wich and others as a prospective franchisee, he decided to turn his attention to brand ownership when he learned the founders of Mr. Pickle’s were looking to retire after nearly 30 years.
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“Over-the-top service” is just one differentiator for Mr. Pickle’s, which Nelson said has raving fans “almost at the level of In-N-Out Burger.” The brand can also back up its premium positioning, he noted, because it sources quality ingredients such as whole-muscle meats, fresh-sliced vegetables and artisan breads. It’s Santa Maria tri-tip sandwich, for example, features tri-tip beef sourced from the California’s Santa Maria region.
Michael Nelson purchased sandwich brand Mr. Pickle’s in 2020 and the CEO is now pushing franchise expansion.
“We’ve got a product you’re not going to get anywhere else,” said Nelson.
The business model itself, meanwhile, needed some work, starting with the technology stack. Following visits with several longtime franchisees after finalizing the acquisition, Nelson said it was apparent they were frustrated with the outdated point-of-sale system and other elements. He responded with a “significant” investment in technology upgrades, including deployment of the Paytronix platform, which allowed the brand to rebuild its app, revamp its loyalty program and fully integrate delivery and online ordering.
“Life changed for us,” said Nelson, and more recently Mr. Pickle’s began rolling out a catering program as it also pushes customers to Mrpickles.com in a bid to improve margins for operators with direct digital orders versus third-party delivery.
Same-store sales are up 73 percent through the 36 months of Nelson’s ownership, with transactions up 40 percent “and we crested $1 million in AUV this year,” he said, referring to average unit volume.
“We feel we’ve got a concept that’s marketable now,” he continued, and Mr. Pickle’s is opening new locations in Arizona—Nelson moved the brand’s headquarters to Scottsdale—and California and signing new franchisees. The cost to open a Mr. Pickle’s Sandwich Shop ranges from $360,379 to $834,286.
Mr. Pickle’s has 53 franchise locations to go along with 10 licensed units and a company store.
One of those franchisees is Jason DeMayo, who through his Hungry Hospitality company inked a deal last year to open up to 20 locations across Los Angeles and the Fresno/Bakersfield areas over the next seven years. DeMayo, with friend and business partner Eli Illishah, also purchased the Mr. Pickle’s store in Fresno, California.
DeMayo said it was his father, Woody DeMayo, who put Mr. Pickle’s on his radar. A longtime franchisee of multiple concepts including Carl’s Jr., the elder DeMayo knew Nelson and, after seeing what he’d done with Mr. Pickle’s, decided it was the right fit.
“We were looking for something else to diversify,” explained Jason DeMayo, who years earlier had joined his father in the restaurant business to operate the family’s Wingstop restaurants, which will soon number six. “I cut my own teeth coming up in table service restaurants, and with Mr. Pickle’s, service comes first. Every guest is greeted with a warm ‘hello.’ To me, it just screams hospitality.”
Like Nelson, DeMayo touted the quality of the specialty sandwiches and said guests can taste the difference. Mr. Pickle’s, he continued, also retains a mom-and-pop feel at each of its locations but has the “professionalization of a proper franchise.”
“We have the tools of the big guys, but the soul and heart of the little guy,” DeMayo said. “Our plan is to come in and create a relationship with our guests and catering clients and not just be a sandwich shop.”
As Hungry Hospitality prepares to open its first new restaurant in the Van Nuys neighborhood of Los Angeles, DeMayo acknowledged the operating environment in California will become more difficult this spring when the state’s minimum wage for quick-service restaurant workers goes up to $20.
“It’s a daily discussion and it keeps me up at night, especially as April approaches,” said DeMayo. He’s evaluating labor needs and adjustments to training, along with menu price increases, and plans to assess sales and traffic in the months following the wage hike to determine additional steps.
“We’ve been preparing our team to ultimately run a little leaner,” he said. “We don’t want to sacrifice service, but to be able to grow, some steps are going to have to be taken.”
“I’m excited that our crew members will be making the money they deserve to, but I’m not excited for our customers, for the public, to have to deal with higher prices. That’s the reality,” he continued. “We’re staying confident that the demand for our product will supersede the challenges.”