Wednesday unfolds as tasting day at Jimmy John’s headquarters, a ritual presided over by the founder himself, Jimmy John Liautaud, the quintessential Jimmy John’s owner. Dressed casually in an untucked shirt and jeans, he enters the test kitchen, ready to evaluate an array of culinary possibilities: ten sandwich varieties, six deli meats, potato chips, and cookies. Bread is the first item on the agenda. Liautaud brings a wheat baguette close to his nose, inhaling deeply. It passes the initial olfactory assessment. He then takes a bite, masticates it into a pulp, and promptly spits it out into the trash receptacle. “I don’t want all these calories,” he declares. “Look at me—I work hard and I’m already 300 pounds.” Despite the calorie aversion, the baguette gets the nod of approval, and Liautaud proceeds to sample a potential new white chocolate chip for his cookies. His verdict? “That chip sucks.” Out it goes, joining the bread in the bin.
At 54, Liautaud’s journey with Jimmy John’s began 35 years prior with his inaugural sandwich shop. Today, the franchise boasts over $2 billion in sales across 2,802 locations. However, the scale of Jimmy John’s now transcends the direct control of Jimmy John’s owner Liautaud alone. He now operates under the umbrella of Roark Capital, an Atlanta-based private equity firm that acquired a majority stake in 2016, valuing the chain at approximately $3 billion. Liautaud still holds an estimated 35% stake in the company and possesses a net worth of $1.7 billion, a testament to the deal and his diverse investments, including Illinois farmland and a share in e-cigarette producer Juul.
While the early days saw Liautaud as the sole decision-maker, his current role is centered on food and brand culture. Though he retains the title of chairman, Liautaud acknowledges the shift in power dynamics: “[Roark] can choose to listen to me or choose not to listen to me. They can do whatever they want.” The sale to Roark, which also holds significant interests in Arby’s and Buffalo Wild Wings, among other restaurant chains, placed Jimmy John’s owner in partnership with a firm markedly different in style. Liautaud describes himself as emotionally transparent, “I wear my heart on my shirtsleeve,” a contrast to the typically reserved nature of private equity. Despite a nondisclosure agreement, his candid nature remains apparent. He is known for his colorful language and self-proclaimed titles like Sandwich Savant.
Image of a Jimmy John’s restaurant exterior, showcasing the brand’s storefront.
Roark, named after the protagonist of Ayn Rand’s The Fountainhead, embodies a corporate gravitas. While Jimmy John’s owner thrives in the public eye, Roark is known for its discretion, rarely engaging with the media. Neal Aronson, Roark’s founder, in a brief email exchange about working with Liautaud, simply described it as “Fun . . . exciting.”
The future will reveal how Liautaud navigates his redefined role and how his personality integrates with Roark’s corporate culture. The partnership’s resilience is yet to be fully tested, especially given Liautaud’s assertive personality and recent sales trends. Jimmy John’s same-store sales have experienced a decline in the past three years, suggesting a need for strategic adjustments. For now, Jimmy John’s owner Liautaud expresses contentment. “I feel very blessed. I don’t think there are words for it,” he reflects.
From Powdered Milk to Billion-Dollar Empire: The Genesis of Jimmy John’s
Liautaud’s life has been marked by periods of instability. His early years were financially constrained. His mother, Gina, an immigrant from Lithuania, was an elementary school teacher in Illinois. His father, James, a veteran turned entrepreneur, faced bankruptcy twice during Liautaud’s childhood. “I remember drinking powdered milk. Powdered milk sucks,” Liautaud recounts emphatically.
“My early years in life were an utter failure,” he admits. “I graduated second-to-last in my class in high school, and I was a fat kid.” However, by his graduation, his father had achieved success with a plastics-molding company. He provided his son with $25,000 in seed capital to launch a business, contingent on its success within a year, or else Liautaud would enlist in the Army. Initially considering a hot dog stand, the cost of equipment led him to a more affordable sub shop concept, set up in a converted garage. The first Jimmy John’s opened near Eastern Illinois University in 1983, a day after Liautaud’s 19th birthday. Ownership was split, with Jimmy John’s owner holding 52% and his father 48%.
To build clientele, Liautaud targeted college students, offering personal deliveries to dorms for a nominal 25 cents per sandwich. (Delivery remains a core service for Jimmy John’s, typically with a $2 flat fee.) He maintained an arduous 18-hour workday, learning business finance practically. “I watched what makes the bank balance go up and what makes it go down,” he explains. “Well, when I wrote the payroll checks, the bank balance went down.” Within months, he optimized staffing by staggering employee arrival times, achieving small but significant savings. In his first year, Jimmy John’s generated $154,000 in sales, with a net profit of $40,000, shared with his father. The following year showed slightly improved figures, after which Jimmy John’s owner bought out his father’s stake for the initial $25,000 loan plus interest.
Expansion followed, with a second location near Western Illinois University in 1986, and then to Champaign, Illinois, which became Jimmy John’s headquarters. Marketing efforts were unconventional, featuring ads with headlines like “PARTY” and the peculiar “NO ZITS.” By 1994, Liautaud’s ten stores were generating $1 million in gross profit on approximately $4 million in revenue. That same year, Jimmy John’s began franchising, primarily in Midwestern states, to accelerate growth.
Simplicity became a hallmark of the Jimmy John’s model. The menu, featuring six meats, three breads, and provolone cheese, differentiated it from competitors and controlled food costs. Jimmy John’s owner also implemented rigorous standardization across all restaurants, from kitchen layouts to equipment placement. “Pilots that use checklists typically live longer than pilots that don’t,” he analogizes, emphasizing the importance of consistency.
Strategic Partnerships and Evolution of Ownership
In 2005, Liautaud decided to diversify his assets by selling a portion of the company. “I knew that if I could make $2 million a year, no matter what happened to Jimmy John’s, I could live my entire life,” he stated. He chose Weston Presidio, a Boston private equity firm, finalizing an agreement after a partner visited him in Champaign. In 2007, Jimmy John’s owner sold 28% of the business, netting $130 million post-taxes. He distributed $250,000 checks to his first three employees and invested significantly in farmland and municipal bonds, aiming to live off the interest.
Business continued to thrive for several years, but the increasing scale brought new challenges. Liautaud found it difficult to manage the company’s rapid expansion. By 2014, Jimmy John’s had surpassed 2,000 locations, and operational oversight became overwhelming. “I felt like I was running out of bandwidth,” he confessed. “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?’ ” To address this, Jimmy John’s owner appointed James North, a long-term employee, as the chain’s first CEO.
Around the same time, Weston Presidio sought to divest its Jimmy John’s stake. Liautaud considered an IPO but ultimately decided against it. “I pulled the IPO because I didn’t want to be a public company,” he explained. “I just couldn’t manage serving Wall Street.”
Instead, Liautaud pursued investment from another private equity firm, seeking not only to facilitate Weston’s exit but also to gain an experienced partner. He engaged an investment banker to solicit bids from leading firms, including TPG, KKR, and Roark Capital. According to Liautaud, all were interested, but Neal Aronson of Roark Capital distinguished himself by focusing on personal aspects rather than solely financial metrics. “I knew I needed a big brother,” Jimmy John’s owner concluded.
This connection deepened when Liautaud hosted Aronson at his farmhouse outside Champaign in the summer of 2016. Over cheeseburgers and fine wine, they and their wives connected on a personal level. “[Aronson] is this big, clumsy, kind, beautiful soul.”
This personal rapport proved fruitful. In October 2016, Roark acquired Weston’s stake, reportedly yielding a 16-fold return on their initial investment. Liautaud also sold a majority of his stake. The deal resulted in 14 Jimmy John’s employees, including Jimmy John’s owner’s secretary, becoming millionaires through stock options.
Roark Capital Era and Future Directions for Jimmy John’s
Roark Capital operates from a prominent skyscraper in Atlanta, overseeing a vast portfolio that includes Arby’s, Buffalo Wild Wings, Carvel Ice Cream, Cinnabon, Carl’s Jr., Hardee’s, and Jamba Juice, managing over $10 billion in assets.
Jimmy John’s represents a significant investment within Roark’s portfolio, requiring substantial attention, particularly given recent performance. Same-store sales have declined annually since 2014, including a 3% drop in 2017, as noted by Liautaud. A contributing factor is the increased competition in delivery services. Jimmy John’s, once unique for its delivery model, now competes with online platforms like Seamless, Postmates, and Grubhub, which offer delivery from a wider range of competitors. The sandwich industry is also experiencing heightened competition from major chains like Subway, Jersey Mike’s, and Firehouse Subs.
Jimmy John Liautaud, the owner of Jimmy John’s, diligently taste-testing products in the headquarters kitchen.
David Henkes, a senior principal at Technomic, suggests that market saturation has contributed to recent slowdowns. However, he anticipates a turnaround under Roark’s management, drawing parallels to Arby’s revitalization after Roark’s investment in 2011. Arby’s transitioned from an underperforming chain to an industry leader, achieving seven consecutive years of same-store sales growth.
Changes are already evident at Jimmy John’s. In October 2017, John Shea, formerly of Gatorade, was appointed as the company’s first chief marketing officer. Roark is also leveraging data analytics to monitor customer satisfaction, menu item popularity, and restaurant traffic—a significant shift for Jimmy John’s owner, who admits, “I don’t even know how to spell ‘data.’ ”
Franchisees, who operate 98% of Jimmy John’s locations, are optimistic. In the past year, 148 new restaurants opened, predominantly by existing franchisees, with 737 more in development. The relatively lower cost of opening a Jimmy John’s franchise compared to other fast-food chains, coupled with Roark’s expertise, is appealing. Jeffrey Fort, a multi-unit franchisee in the Midwest, notes, “Jimmy just concentrates on the art of the restaurant, which is the culture and the brand. Roark brings the analytics and the data.”
Life in the Fast Lane: Jimmy John’s Owner Today
Rain slicks the roads in Champaign, Illinois, as Liautaud drives his $300,000 McLaren at high speed. “I’m just gonna give you a little sample of what these machines can do,” he says, accelerating to 138 mph.
The McLaren is just one of 50 vehicles in Liautaud’s collection, amassed since 2005. His acquisitions include a $2.2 million Ferrari LaFerrari Aperta, one of only 209 produced, acquired in November 2017 after a three-year wait. Jimmy John’s owner stores his collection at Jimmy John’s headquarters. “When there’s a super-rare car, I always try to buy two,” he mentions.
This is the current lifestyle of Jimmy John’s owner. Freed from the day-to-day stresses of managing a vast marketing budget and complex data analysis, he now focuses on product quality and brand presence. When not in the test kitchen or visiting store openings, he might be aboard his 200-foot yacht, Rock.It, traveling to destinations like Ibiza and Monaco, or at one of his residences. In October, he was deer hunting in Canada with pro wrestler Brock Lesnar, a Jimmy John’s sponsor. In December, he shared via text from Italy, embarking on a “salami tour in search of the greatest salami in the world!!”
Whether Liautaud’s high-octane lifestyle will impact the business long-term, and how his partnership with Roark will evolve, remains to be seen. However, for now, Jimmy John’s owner seems content with his current arrangement. “I’m in an incredible position,” Liautaud concludes. “[I] built it up until I couldn’t do it anymore, and brought in a partner that I felt could help me. That’s really the story of Jimmy John’s, and here I am. I brought a lot of people along the way.”
This story appears in the December 31, 2018 issue of Forbes. Subscribe
