Jimmy John’s is debuting a bold new brand identity, some elements of which are shown here.
Last year was one of brutal lessons and accelerated evolution for franchises in the sandwich segment as weekday lunch traffic all but disappeared and brands that previously thrived at midday had to adapt. Some were more successful than others.
The troubles continued for Subway as franchisees closed more than 1,800 locations in 2020 and systemwide sales dropped by $2 billion; unfounded rumors of a sale and franchisee unrest followed.
At the other end of the spectrum, Jersey Mike’s pushed forward, growing by 190 net new locations as the company doubled down on updates to compete. The franchisor allotted $150 million to roll out company-funded remodels and technology upgrades that worked out to $75,000 per store. Jersey Mike’s doesn’t disclose financial performance information in Item 19 of its franchise disclosure document, but overall revenue grew by about 14 percent.
Smaller brands such as 115-unit Capriotti’s similarly pivoted, leaning into off-premises channels and virtual restaurants. The chain even acquired a secondary brand, Wing Zone, to compete and keep sales flowing. Regional player Goodcents, based in Kansas and with about 60 locations, announced its average unit volume increased nearly $40,000 to $783,377 for its top 50 percent of owners. The brand credited growth in online ordering, catering, delivery and drive-thru sales for the increase.
Jimmy John’s, meanwhile, was positioned well with its delivery business, but urban locations were hit hard and the company shuttered about 90 of its nearly 3,000 stores last year.
Under the Inspire Brands umbrella since 2019, Jimmy’s John’s is undergoing something of a transformation as it benefits from its parent company’s shared services platform and establishes an identity without Jimmy John himself.
Brad Garrett, aka “the King of Cold Cuts,” in the first Jimmy John’s Super Bowl commercial.
Jimmy becomes James as it evolves to compete
Jimmy John’s wasn’t exactly a scrappy little brand in 2016 when Roark Capital acquired a majority stake in the company. The then-2,400-location brand was doing $2 billion in sales and growing at double digits. At the time of the sale, however, founder Jimmy John Liautaud admitted the complexity of such a massive restaurant brand was overwhelming. As he said in interviews at the time, several big questions were emerging.
How do you wisely spend a $100 million ad fund? How do you support hundreds of franchisees across diverse markets? How do you innovate around consumer desires in a brand designed to be exceptionally efficient? It became clear the boundless energy and operational obsession of Liautaud wasn’t the answer. And so Roark rolled the company into its Inspire Brands and Liautaud, who sold his remaining stake, made way for James—James North that is.
Named president and CEO in 2019 after 20-plus years with Jimmy John’s, North is not one to whip himself into a frenzy about local sourcing as Liautaud did. But he’s the guy in charge of balancing that founder’s vision with the new, buttoned-up approach of Inspire, as he described in his even-keeled New Zealand accent.
“Jimmy built this incredible brand with his incredibly entrepreneurial energy and really focusing on the operations. I’m really excited to continue that legacy, but we’re able to benefit from being in the Inspire family while maintaining that entrepreneurialism,” said North.
James North
From the outside, it doesn’t look like a radical transformation. Jimmy John’s still makes and delivers a lot of sandwiches. Its DNA, though, is evolving. No more are decisions made via the founder’s proverbial gut check but instead via the deep bench of resources inside Inspire.
“I have resources today that we never had before,” said North. “We didn’t know what we didn’t know. We had this incredible founder who had this great taste and this great vision, but what Inspire helped to bring to the table was the data analytics. We were able to give our decisions more confidence.”
What exactly that looks like for the brand came in a one-two-three punch during the Super Bowl, when Jimmy John’s aired its first big-budget, big-game commercial, and its new chicken sandwich and new brand positioning all came in quick succession.
While the Smokin’ Kickin’ Chicken was not the first limited-time offer for the company, it was the first to go through the Inspire filter honed with its other brands such as Arby’s and Sonic Drive-In. Navin Sharma, chief commercial services officer at Inspire, said the LTO process is an art form for his division.
“We’ve done a lot of work on menu, how menus should be designed, how to launch new products and LTOs. Arby’s and Sonic do a lot of LTOs; Jimmy John’s has never done that before,” said Sharma. “We do consumer research and see what consumers want that we don’t have and run it through a screening process. Then we go into the product development process to work against those whitespace areas. We applied that same process to Jimmy John’s.”
The LTO inserted Jimmy John’s into the chicken sandwich game, and sales and reviews were positive. Sharma’s team helped the brand compete on culinary innovation, and brought focus to areas such as pricing.
Even at the scale of Jimmy John’s, analyzing how much a Pepe or the Smokin’ Kickin Chicken should cost was not someone’s full-time job. Sharma said even at Arby’s, it was basically half of a job for one person. Under Inspire, now with seven brands, there’s a dedicated and focused group looking at pricing models and advising franchisees how to price for their market.
A Smokin’ Kickin’ Chicken, the first Inspire-inspired LTO.
That group, said Sharma, shook things up at Jimmy John’s. “When you think about pricing you think about just raising prices—that’s not what we always do,” he said. “There were some sandwiches that people really liked but were a little expensive, some of the larger sandwiches. We drove those prices down and drove more sales. So, it’s a win-win for us and the consumer. It upended our traditional look at pricing.”
That was something Jimmy John’s could not do alone. Talk to any Inspire Brands exec and they’ll extol the power of shared services and lineup of savvy leaders. North said the latter is useful for big picture ideas and tactics, and support in HR, finance, development or legal all helped the brand.
“Every shared service department that we’ve been involved with has helped evolve us at different levels. But I think data analytics has taught us something that we’ve never looked at before,” noted North.
Shared services or multi-brand overhead isn’t new. Across the foodservice space, dozens of companies do the same thing, but as Jimmy John’s CMO Darin Dugan said, the Roark and Inspire combo takes it further.
“I think it’s fair to say that Paul Brown’s vision is new in the hospitality sector and in restaurants,” said Dugan, naming Inspire’s CEO. “It’s just one or two clicks deeper than we ever could have done as standalone brands.”
As for the Super Bowl commercial, that’s a demonstration of the power of scale.
“You can imagine given the spending power across the brands, we have some relative strength. That benefits every brand—we all get efficiency we didn’t see before,” said Dugan. “I think the Super Bowl was an opportunity that we really wanted to pursue and we needed to turn it around relatively quickly and we did with the power of Inspire.”
Dugan led the brand’s repositioning, its most visible change. The fun, irreverent deli feeling morphed into a bold new look for the logo, packaging and advertising. The locations will get a new look soon.
In the last two years, Jimmy John’s shed more than 100 locations, going from 2,800-plus in 2019 to 2,700 units at the end of 2020. That included more than 30 closures each in California, Florida and Texas.
Most of the closures, said Chief Development Officer Don Crocker, were data-driven decisions to ultimately strengthen the brand.
“We went through a little reasoning where we said it makes sense with some strategic closures. So, we’ve done some of that. COVID exacerbated a little of that,” Crocker said. “But it gave us a way to see where this maybe isn’t going to work and maybe it’s time to affect some of those closures.”
Crocker said 2020 was still a great year for signing deals, especially among large, sophisticated operators and those already within Inspire Brands. “We’re seeing a number of Inspire franchisees getting into other Inspire brands. That’s a new dynamic for Jimmy John’s,” said Crocker.
The 2,200 franchisees across Inspire trend toward larger, consolidation-minded operators looking to scale. They’re the franchisees every concept wants, and Jimmy John’s has an entrée to them.
In its newly filed FDD, Jimmy John’s listed 392 projected franchise openings as of December 31, 2020.
As North and the entire Jimmy John’s leadership team consider the changes and challenges of the past two years and the ones still to come, he said they’re embracing it all.
“There’s two ways to look at change. You can run from it or grab it by the horns and get after it, and I think our team did a great job of saying, ‘This is who we are and this is where we’re going,’” said North. “Change is hard but when you believe in the process, which we did, and when you have incredible resources that we didn’t have before, you’d be silly not to take advantage.”
May 27, 2021 at 07:24PM
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