Jimmy John Liautaud: The sub shop founder’s success story
The sandwich chain Jimmy John’s has become a staple for quick delivery, anytime-eats, and fresh subs. Over the past 37 years, back when Jimmy John’s was founded, the chain has grown enormously.
In 2019, Forbes reported $2 billion in sales revenue for the company across 2802 locations. Founder Jimmy John Liautaud has steadily grown the company, weathering good and bad, and coming out on top through innovation and perseverance. And the business’s milestones just keep accelerating.
Liautaud opened the first Jimmy John’s in 1983 in Illinois. The founder rented a converted garage in an alley that had once been a pizza joint. The good news was the rent was cheap and near a group of bars just off the campus of Eastern Illinois University, Liautaud, just 19 years old at the time, began personally delivering sandwiches to college dorms, charging students just 25 cents a sandwich. Any college student or alumni will recognize this scenario: ordering Jimmy John’s at any hour, day or night, and enjoying a prompt sub soon after.
18-hour days of running his sandwich shop taught Jimmy John Liautaud a working knowledge of finance, which he applied to grow the business even further. Liautaud grossed $155,000 in sales in just his first year of business. The second Jimmy John’s location opened in 1986 near the campus of Western Illinois University. Liautaud learned early on how to keep food costs down by simplifying the Jimmy John’s menu. This minimalism led to consistency and gave the restaurant a competitive edge over some of the other larger chains.
In 1994, Liautaud was overseeing a total of 10 shops. That same year, Jimmy John’s made its first $1 million in sales and sold its first franchise location. The growth kept up, and by 2002, Jimmy John’s had 160 locations. Here, a fork in the road presented itself. Of that 160 locations, 70 were on the brink of failing. Liautaud and his president, James North, personally traveled the country to work with each Jimmy John’s franchisee to help instill the company’s systems and procedures. This dedication paid off, and 63 struggling locations were turned around.
Perhaps the greatest practice Liautaud took away from the hands-on intervention of his restaurants is the institution of higher approval standards for selling franchise locations. Instead of altering or compromising the restaurant’s core business tenets – running a restaurant requires late nights and long hours, — that proved successful yet challenging, each prospective franchisee received the appropriate vetting and rigorous crash course on how to avoid burnout while operating a Jimmy John’s store.
This vetting process proved invaluable. Prior to this training method, Liautaud had been admittedly naive regarding the work ethic or lack thereof being brought by some unassuming franchisees. As Liautaud told the Franchise Times, “I couldn’t believe that people didn’t want to get up at 5 in the morning and bake bread. I was shocked. I didn’t know that I was the weirdo.” But eventually Liautaud did find other “weirdos” who shared his unwavering work ethic. In 2007, just a short five years after the hurdles of 2002, Jimmy John’s opened their 500th location. Then the company doubled its expansion rate just three years later, celebrating the opening of store 1000 in 2010.
In 2014, 1000 stores became 2000, and Liautaud prepared to take the restaurant public. While weighing the decision, he began scrutinizing his company and realizing that he enjoyed his autonomy — he did not want to answer to shareholders. He had already brought on an investor, Weston Presidio, in 2007. But seven years later, in 2014, it was time for Weston Presidio to cash out on their investment.
During his deliberations, Liautaud began receiving a flood of offers. Neil Aronson, Managing Partner of Roark Capital, had known Liautaud for a number of years and had been tracking Jimmy John’s meteoric success. Jimmy accepted Roark Capital’s bid, knowing they would be an ideal partner. Beyond his personal association with Aronson, Liautaud also knew that Roark’s specialties lay in the chain-restaurant and beverage industry. Arby’s, Corner Bakery, and Cinnabon are among the 64 franchised brands Roark has acquired. Liautaud was well-aware of the strength of Roark’s industry strategies but also trusted that their partnership would allow him the same freedom he had always enjoyed while running his business.
Liautaud sold a majority stake of Jimmy John’s to Roark Capital in 2016 and remained the single largest individual shareholder. In October 2019, Jimmy John’s and Inspire Brands, whose parent company is Roark, announced their merger. Jimmy John Liautaud is now an advisor to Paul Brown, Inspire Brand’s CEO.
Check out Liautaud’s Facebook page and website to learn more.
