KBRA's ratings spark debate over Jersey Mike's future

In the United States, Kroll Bond Rating Agency (KBRA) announced on December 5, 2024, the assignment of preliminary ratings to Jersey Mike's Funding, LLC, specifically for its Series 2024-1 securitization. This transaction marks Jersey Mike's third securitization since the introduction of the master trust in December 2019. The development reflects the ongoing growth and evolution of Jersey Mike's business and its financial strategy as a prominent national sandwich brand. As of September 29, 2024, Jersey Mike's operates 2,919 restaurants across 50 states, Washington D.C., and Canada. The brand, which was founded in 1956, is known for its wide array of hot and cold submarine sandwiches. The robust performance of the franchise is highlighted by the approximately $3.7 billion generated in systemwide sales for the year ending September 29, 2024. KBRA's evaluation of Jersey Mike's existing financial instruments includes a thorough analysis of various credit considerations. They anticipated affirming ratings on the issuer's outstanding notes, including the newly introduced Series 2024-1 Notes, which indicates KBRA's confidence in the brand's creditworthiness and overall business model. The agency's methodologies and assessments involve sensitivity analyses and key ratings assumptions that impact the credit ratings for the company. The full report provides additional insights into how various factors could influence the ratings, offering a comprehensive view into the implications of this rating action. Factors assessed by KBRA likely include Jersey Mike's operational performance, market dynamics in the fast-casual dining sector, and potential risks associated with changing consumer behavior. This analysis underscores the importance of credit ratings in the financial markets, particularly for companies engaged in asset-backed securities.