Inspire Brands -- the Atlanta-based private equity firm that owns Sonic Drive-In, Arby's and Buffalo Wild Wings -- is acquiring the Jimmy John’s sandwich chain for an undisclosed price. When the deal closes at the end of October, Inspire will be the fourth largest restaurant company in the U.S., with $14 billion in annual sales from more than 11,200 restaurants in 16 countries.
The headline news in Champaign, Illinois, is that Jimmy John’s will continue to operate there, at least “for the time being,” Inspire spokesman Chris Fuller tells the News-Gazette’s Ben Zigterman in an email.
Jimmy John Liautaud founded Jimmy John’s in a converted two-car garage in Charleston, Illinois, in 1983; Champaign was the third of what is now more than 2,800 locations in 43 states. Liautaud had graduated from Elgin Academy High School the year before, second-to-last in his class.
“In 2016, Jimmy John's sold a majority stake in its business to Atlanta-based private-equity firm Roark Capital Group. In that deal, Liautaud remained the largest individual shareholder and became chairman of the board. In this deal, he will step down as chairman and transition to an adviser to the brand, Inspire said,” Zigterman writes.
The sale to Roark “helped make Liautaud a billionaire with an estimated current net worth of about $1.7 billion,” Giacomo Tognini writes for Forbes.
“I took this brand as far as I could. … the timing couldn’t be better,” Liautaud told Tognini yesterday. “Franchisees win, shareholders win, employees win. I like that deal.”
If you’ve never been to a Jimmy John’s, check out Irene Jiang’s photo essay about the only location in the New York metropolitan area for Business Insider.
“I went to Jimmy John's in Jersey City, New Jersey to see what it was like to eat there, and my experience convinced me that Inspire made a solid bet that’s going to pay off,” she writes.
“Everything I ate was cheap and delicious. The guys behind the counter were genuinely friendly and great at their jobs. I was so impressed by how hospitable they were to other customers, all while getting them their sandwiches at breakneck speed,” she concludes after assessing everything down to the “gargantuan” pickles.
James North, who has been with Jimmy John’s since he was 23, will remain president and CEO, reporting to Paul Brown, the cofounder and CEO of Inspire Brands since its inception in 2018.
“Paul Brown is one of the most talented guys I’ve ever met, he will take this brand to the next level,” Liautaud says. “Look at what he’s done at Arby’s.”
“Jimmy John’s is facing competition from newer sandwich chains including Jersey Mike’s Subs, Firehouse Subs and Cousins Submarines Inc. Subway remains the dominant player in the market and has expanded delivery through outside companies. Jimmy John’s has stuck to its own fleet of delivery couriers,” Heather Haddon writes for The Wall Street Journal.
Brown, whose background was in the hospitality business before becoming CEO of Arby’s in 2013, was “with Hilton Worldwide from 2008 to 2013, including a stint as president of brands and commercial services,” Sam Oches reportedQSR last December.
“Hotels, [Brown] says, were ahead of the restaurant industry by creating value from within a multi-branded structure,” Oches writes.
“[Brown] points to some specific ways each Inspire brand can benefit from the others: Buffalo Wild Wings, for example, has already explored loyalty programs and off-premises platforms like delivery, and can disseminate those lessons for the Arby’s business. Conversely, Buffalo Wild Wings can learn from operational efficiencies like speed of service and convenience that Arby’s has aced in the quick-service industry. Or, from a more nuts-and-bolts perspective, Inspire brands can collectively purchase better media in their existing markets.”
In a reverse move, meanwhile, a different billionaire is buying a restaurant chain from a private equity firm.
Tilman Fertitta, owner of the NBA’s Houston Rockets and Landry’s Inc., is paying Greenwich, Connecticut-based L Catterton $650 million for the outstanding shares of Del Frisco’s Restaurant Group and has also signed a deal to sell Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille, Micah Maidenberg reports for The Wall Street Journal.
“Houston-based Landry’s will pay between $300 million to $325 million for the Del Frisco’s operations, according to a person familiar with the matter. Landry’s owns dining concepts like McCormick & Schmick’s and Bubba Gump Shrimp Co.,” Maidenberg adds.
Finally, for those inclined to whip up their own meals in their own abodes, Food Network parent Discovery Inc. has struck a three-year deal with Amazon for a “a new monthly streaming service called Food Network Kitchen that will be integrated into Amazon'com's digital assistant, Alexa,” Wendy Lee reports for The Los Angeles Times.
“The $6.99-a-month service, which is set to launch in October, will enable subscribers to take live cooking classes through an app with such chefs and cooking stars as [Bobby] Flay, Rachael Ray, Molly Yeh and Alton Brown. Subscribers can use the app to text their questions, which may be answered by the instructor during the live show,” Lee writes.