Chris Holden

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How Jimmy John’s Has Changed Since Being Taken Over By Roark Capital

by Chris Holden - November 19th, 2019.
Filed under: Enterprenuer.

Jimmy John Liautaud used to be the chief executive officer of Jimmy John’s, which he founded in 1983 at the age of 19. He has gradually moved out of his day-to-day role at this sandwich chain and is now the chairman of the board of directors.

He also continues in his role as taster-in-chief, personally inspecting new recipes before they are rolled out to the chain’s 2,802 locations.

Also Read: Jimmy John Liautaud – Owner, Founder, Chairman @ Jimmy John’s Gourmet Sandwiches – Overview | Crunchbase

He now answers to Roark Capital, a private equity firm that he sold a majority of his shares to in 2016. He still owns 35% of Jimmy John’s.

Between that and other investments, he is worth an estimated $1.7 billion. While he is the chairman, his agreement with Roark Capital means they can listen to him or not as they choose.

He is an affable person used to speaking his mind, usually loudly and with some swear words thrown in. How this will work with Roark Capital remains to be seen.

Roark Capital is a staid, quiet firm that will only speak to the press on rare occasions. However it works out, Jimmy John Liautaud seems to be at peace with the deal and however things will shake out.

When deciding what type of restaurant to open, he thought a hot dog stand would be what he opened. After checking into the cost of the equipment, he pivoted to opening a sandwich shop in a converted garage instead. His father gave him the seed money to start Jimmy John’s and they initially split the company with Liataud owning 52% and his dad 48%. A year later, he bought out his father’s interest.

Jimmy John Liataud had $154,000 in revenue the first year and a bit more than that in the second. Three years later, he opened another location by Western Illinois University.

He next opened a location in Champaign, which is where the company is now based. He started to franchise his restaurant brand in 1994. 98% of Jimmy John’s locations are now franchises.

Sales at Jimmy John’s locations have slowed over the past three years. Jimmy John Liautaud is confident Roark Capital can turn that around. Other restaurant chains they successfully manage include Arby’s, Carvel Ice Cream, Buffalo Wild Wings, Hardee’s, Jamba Juice, Carl’s Jr., and others. They have more than $10 billion in assets under management.

Roark Capital is starting to make changes at Jimmy John’s. The company hired its first chief marketing officer in 2017. They are now using data to track everything such as in-store traffic, how popular each menu item is, and customer satisfaction. Liautaud says that using data isn’t anything he is equipped to do.

Read: Start and Grow Your Business: Guest Speaker Jimmy John Liautaud

Despite recent challenges, Jimmy John’s franchise locations have continued to open around the nation as franchisees are bullish. One thing that helps is that a new location costs between $300,000 and $500,000.

Other fast-food restaurants cost far more than this, such as burger chains where a location can cost $1.5 million. Liautaud now focuses on the art of the restaurants, while Roark Capital handles everything else.

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