It’s no secret, this week’s episode is all about Jimmy John’s. I have often wondered, who is Jimmy John? Today we are going to dive deep into James John Liautaud and the sandwich empire he built. Warning! You may want some freaky fast delivery after listening to this show.
The Early Years: Who Is Jimmy John
James John Liautaud was born January 12, 1964 in Arlington Heights, Illinois to Gina and James Liautaud. His mother was a Lithuanian immigrant who came to America when she was 12. His dad was an entrepreneur who seemed to fail more than he succeeded. They filed for bankruptcy twice as Jimmy was growing up. Money was tight.
Jimmy wasn’t the best student and graduated 2nd to last in his class. By this point his father had a business in the plastics industry that was taking off and he made a deal with his son. He was willing to put up $25,000 in seed money for Jimmy to open a business. The only condition was if the business venture failed within a year, he’d have to join the army. Jimmy decided to take the money and started exploring how he was going to start his business.
Military or Business: The Ultimate Ultimatum
This is where the story gets interesting. Jimmy didn’t want to fail. With the threat of military service, and a desire to become a better student in business than he was in high school, he dove in head first and started doing his homework. He originally wanted to do a hotdog stand. However, his research over the summer showed him that $25,000 would not be enough money to open a hotdog stand and be profitable. The equipment was too expensive.
He found that he could buy premium meat from local grocery stores, bake bread at home and have a profitable business. It took him just a few days to perfect his bread recipe. Once he had the bread down, he could focus on the combinations that would make up his menu. He had family and friends taste his creations and settled on four original sandwiches to put on the menu. They were the Pepe, The Big John, The S&M, and The Vito Geneveso.
First Store Opens
The very first Jimmy John’s opened on January 13, 1983, in Charleston, Illinois. It was a garage where the rent was only $200. Jimmy bought used equipment and opened with the bare essentials, a small fridge, a chest freezer, an oven and a meat slicer.
The location was bad and the business was slow to take off. Jimmy would take sandwich samples door to door to get people interested in what he had to offer. He also started delivering sandwiches to nearby dorms at Eastern Illinois University.
Early Business Lessons
When learning about who is Jimmy John, it became apparent that he doesn’t like to learn the same hard lesson twice. He knew next to nothing about business. So he set out to learn basic finance principles on the fly. He said, “I watched what makes the bank balance go up and what makes it go down. Well, when I wrote the payroll checks, the bank balance went down.” He began to make some smart strategic changes with his staff. He’d stagger his employee arrival times by 15 minutes each shift. That allowed him to save a few bucks in labor each day. That really added up in the long term. In his first 12 months in business Jimmy pulled in $154,000 in sales and netted $40,000. He was profitable.
Jimmy split his profits with his dad. The following year sales were slightly better. This time he used the profits to buy out his dad’s share of the business with interest. He was now the sole owner of his budding sandwich empire.
Franchising and Explosive Growth
In 1986 and 1987, Jimmy opened his second and third locations. They were located in Macomb, Illinois and Champaign, Illinois. Within 10 years of opening Jimmy had opened 10 locations. He also began franchising to grow at an even more rapid pace.
In 2002, Jimmy John’s had 160 locations. 70 of those locations were failing. Jimmy stopped franchising for a period and focused on turning the failing businesses around. Ultimately 7 of the shops closed, but he was able to save the other 63.
He later reflected on that experience, “I learned a lot from that experience so I changed the rules for allowing people to buy into my system as a franchisee. I explained in detail how tough running a Jimmy John’s can be. I explained the long hours, the unforgiving weather, the late nights, the weekends, and all of the sacrifices that go along with the industry.” He continued, “I made it tough for people to get into the system.”
Freaky Fast Food
So how was Jimmy John’s able to set itself apart from Subway and other sandwich shops? They used premium meats that lacked artificial ingredients. They also use fresh produce in their stores. Jimmy is often saying it doesn’t cost much more to go first class, so just go first class. All of their ingredients are best in class.
The defining characteristic of a Jimmy John’s sandwich is that they are made incredibly fast. Jimmy claims that his employees can make a sandwich in 60 seconds.
I remember one time I was standing in line to order a sandwich at a local Jimmy John’s. A husband and wife were in front of me, and it was clear they had never been to a Jimmy John’s before. They were thinking that the process was like a Subway. You order a sandwich and then move down the line while the sandwich expert customizes your sandwich to your tastes. Before they were even able to finish paying, their sandwiches were done. The look of confusion was priceless. It was also fun watching them stumble through having the store unpack their sandwiches and make their customizations.
Jimmy John’s will happily customize a sandwich to your liking. Just make sure you order the sub with customizations mind at the outset. Otherwise you will be blitzed with a perfectly crafted sandwich before you even know what hit you.
Too Big to Handle
Jimmy Liautaud suffered the consequences of many successful companies. His empire became too big to handle. He was feeling burned out and unable to keep up.
In 2007 he sold off 28% of his business. That seemed to help things for awhile. However, by 2014, they had expanded to over 2,000 locations. He said, “I felt like I was running out of bandwidth. It was getting so big and so complex. In the marketing department I had a $100 million ad fund, and I’m like, ‘How do I effectively execute a $100 million ad fund?”
The answer? Sell off even more of the company. In 2016 Jimmy sold a majority of his business to Roark Capital Group. Jimmy Liautaud retained a 35% stake in his company. Roark manages stakes in Arby’s, Buffalo Wild Wings, Jamba Juice, Carl’s Jr., Hardee’s and more. They definitely know a thing or two about what it takes to succeed in the restaurant industry.
This deal has allowed Jimmy to focus on the culture of his restaurant and the brand. The other guys take care of everything else.
Final Thoughts on Who Is Jimmy John
As I’m wrapping up this episode, it is taking everything I have to keep from ordering some freaky fast delivery from Jimmy John’s. I loved learning the history behind one of my favorite sandwiches. It is also fascinating to me that a 19 year old fresh out of high school was able to build a sandwich empire and a net worth of over 1.7 billion dollars with just a humble $25,000 investment from his dad.
One last thought. Have you ever wondered what Jimmy John orders from Jimmy John’s? Jimmy’s favorite is a turkey tom with onion, vinegar and oil. However, if you are going to order it that way, he is adamant that you have to eat it quick. Otherwise it gets soggy. He’s also a big fan of their new spicy Italian sandwich. What is your favorite sandwich at Jimmy John’s?
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