Sub Shop Owner Jimmy John Weighs IPO but Isn't Sure He Has the Stomach for It
Jimmy John Liautaud is hiring. He isn't only searching for the right franchisees who want to start with a single location, sandwich makers to work in those restaurants, or people to help him on his quest for cleaner meats and more ripe tomatoes. This week, he wants a sign guy.
Mr. Liautaud, who opened his first Jimmy John's sandwich shop in 1983, saw his brand in a lighted sign at Monday night's Blackhawks hockey game. Another company owner might have been pleased enough seeing his or her company's name displayed in Chicago's United Center. But for Mr. Liautaud, it presented a problem.
"My messaging in there was so horrible, so bad," he said, referring to signs he said were put up five years ago. "I wasn't auditing it," he said. "The Hawks game was wrecked for me last night because my signage was so awful."
So he left the game early, before the Blackhawks won, and decided that he wants to hire someone who will go around and audit how the chain's signs look. "Every stadium has different quality of lit signs," Mr. Liautaud said.
Mr. Liautaud, 51, continues to think about whether to take his company public. He pays attention to details that indeed could get less attention if Jimmy John's has to begin answering to analysts and investors who dissect quarterly growth details and sales projections.
"We're exploring and I don't know if it's worth it. I don't know if I'm the right guy," Mr. Liautaud said in an interview with Ad Age, one of his first interviews with a major outlet after years of largely staying silent. "I don't know if I really have the stomach for it."
Mr Liautaud did not confirm whether or not the company will go public, a rumor that has been swirling for months. "Here's the beautiful thing about my situation: I own it, I control it, and I have no pressure and I have a lot of options."
"There's pros and cons to all the options. Right now, I do what I want when I want, how I want," Mr. Liautaud said. "As soon as I go to Wall Street, my customer -- all of a sudden I'm working for people that don't know me, they don't know how much I love what I do."
Some of his ideas, such as picking a franchisee who is young and has scraped together enough money for a single location over a guy with experience running 100 shops at another chain, are "so counterintuitive to a Wall Street investor," he said. "I'm so genuine about what I do and how I want to do it, and I get anxiety when I'm pressured from the outside."
While Mr. Liautaud has a strong, vocal presence, he calls himself an introvert and said he does not want to go "fighting battles or having people yell at me."
"You know what? There's a lot of things to weigh, and I'm weighing them."
Jimmy John's had 10 stores in 1994, when it began franchising. It put the brakes on franchising in 2002, when 70 of its 200 locations "were failing," ultimately fixing 63 and closing seven. Today, there are more than 2,300 Jimmy John's locations, and the vast majority are franchised.
"We could have grown faster. I could sell more franchises than I'm selling right now, but we're pretty deliberate about where we're going," Mr. Liautaud said.
He wants to continue "in fill," or add more locations in markets where it already operates, in order to be able to deliver to everyone where it advertises. For Jimmy John's, having more locations could lead to improved service and consistency, including shorter wait times, which ultimately could have people visiting more often.
"You'll use my brand more like an ink-jet cartridge refill. When your ink-jet empties you just refill it and you keep going on in your day," Mr. Liautaud said. "I want it to serve you in a way that is nondisruptive and feeds you what it is that you need for you to continue doing what you're doing."
Jimmy John's, as a private company, does not release detailed financial information. But Mr. Liautaud said it is growing, with plans for 300 new locations per year. No locations closed last year and in the past decade 37 have closed, he said. Average gross sales at stores open for all of 2014 were $903,938, up from previous years.
These days, Jimmy John's faces increased competition from a variety of chains, whether from other sandwich shops such as Subway, the inudstry giant; smaller players such as Potbelly, Jersey Mike's and Firehouse Subs; or the wider variety of restaurants with quick service.
"There's a lot of really good food today. I would say that 20 years ago my sandwich was a specialty sandwich and I'd say that today it's a commodity sandwich. And it better be good," he said. The company has long promoted its "freaky fast" delivery. "I think my service is better than my food. … I focus so much on the service."
While Mr. Liautaud has largely avoided public scrutiny, his name and photos of him pop up at times when there are protests against hunting. Recently, a petition circulated pushing him to stop participating in "trophy hunting" after the uproar over a dentist killing a lion known as Cecil.
"I'm a hunter; I love to hunt. And all the hunting that I do is legal and it is all within the law. We eat or use all the meat," Mr. Liautaud said. "When I get attacked for something that I do that is totally legal to do, it's really, really hurtful." He said he has given millions of dollars to wildlife conservation. He is also a farmer, with 5,200 acres in Illinois for corn and soybeans as well as other places where he grows everthing from berries to potatoes. He has also raised pigs and served them in pig roasts.
The company has used television commercials for years, but these days it has a bigger advertising budget. Franchisees pay 4.5% of sales into an advertising fund that is "just gigantic" and so the company will be spending more. "We'll continue to grow proportionately with our growth."
It hired Creative Artists Agency about 15 months ago to help tell the Jimmy John's story, especially as the company expands, both within existing markets and new parts of the country, such as the East and West coasts. "We have a whole series of really telling America what Jimmy John's is and who the people behind Jimmy John's are," Mr. Liautaud said of the spots, which began airing in recent weeks and feature actual Jimmy John's workers.
The spots have a more family-friendly tone than some of the older spots done by The Ad Store. One of the spots from a few years ago featured a trio including a man in a horse costume and a scantily clad woman. "We probably pushed it a little too far," Mr. Liautaud said of that spot, which he said he did not write. "It was pretty racy, for sure."
His stores and ingredients are changing in subtle ways, whether it's switching bulbs from halogen to LED or adding spouts where people can refill their own bottles with filtered, chilled water. Mr. Liautaud said he is also working on switching to more "natural" meats that are all free of antibiotics, hormones, nitrates, nitrites or chemicals. He said he wants the products to be as natural as they can be and still be safe. Still, while other chains promote their greener image, don't expect Jimmy John's to promote such changes in a big way.
"I'm not going to take my turkeys to Disneyland before I turn them into submarine sandwiches," Mr. Liautaud said. "It's really important to do things right and to do things clean. This earth is limited."
Mr. Liautaud said he is "not worried" about the recent announcement from the World Health Organization that red meat is probably carcinogenic and that there is sufficient evidence that eating processed meat can cause colorectal cancer.
"I don't know how to respond to it," Mr. Liautaud said. "I'm going all-natural. I'm working on it. I'm in the right direction and if the World Health Organization said meat kills then maybe all of us are going to die someday."