Jimmy John’s on Delivering What Customers Want

Jimmy John’s has, arguably, long been ahead of its time.

Before the fast-food restaurant industry embraced quality and craftsmanship, the Champaign, Illinois.-based chain was touting its natural, house-made ingredients, fresh-baked bread and hand-sliced veggies. And, as consumer interest in delivery has accelerated in recent years, Jimmy John’s had long ago developed a high level of in-house delivery expertise.

Jimmy John Liautaud — fresh out of high school with a small loan from his father — founded the eponymously named chain in 1983 in a converted garage near Eastern Illinois University in Charleston, Illinois. Home to such popular sandwich creations as the Vito, the Turkey Tom and J.J.B.L.T., Jimmy John’s now boasts 2,800 locations across the country, and is known for its “Freaky Fast! Freaky Fresh!” tag line.

It has become a brand that is well-positioned for the demands of today’s consumers, according to industry observers, who said that may have been what stirred Inspire Brands, parent of the Arby’s, Buffalo Wild Wings, Sonic, and Rusty Taco restaurant chains, to acquire Jimmy John’s in October.

The acquisition comes just as Jimmy John’s has completed the rollout of a new loyalty program, introduced a successful new sandwich line and bolstered its focus on delivery.

The new loyalty program, called Freaky Fast Rewards, first launched in March and had signed up more than 1.6 million members as the market-by-market rollout was nearing completion in November.

“We have a very big base already of loyal consumers that are used to ordering online and through the app, so we've seen a really high conversion, and this has scaled much faster than we anticipated,” said John Shea, chief marketing officer at Jimmy John’s, in an interview with CO—.

The sandwich chain designed the loyalty program to entice consumers right from the start with the incentive of a free sandwich after their first visit. Consumers then continue to earn surprise rewards based on the number of times they visit a Jimmy John’s.

“It's been a really positive program for us and our customers,” said Shea.

The new sandwich line, called the Little John, offers what Shea described as “skinny, mini” versions of the chain’s traditional sandwiches, at the value price of $3. The line launched in October, backed with TV ads featuring a celebrity spokesman — the recording artist Lil Jon — and a free Little John sandwich for all Freaky Fast Rewards program members.

Shea said Lil Jon has long been a fan of Jimmy John’s, making the two a perfect fit for the promotion of the new sandwich.

“For us it was a natural,” said Shea. “We say there's never been a more obvious celebrity endorser than Lil Jon endorsing the Little John.”

The performer also helps promote the line at his live shows and on social media.

“It really has been a great partnership, and a fun one, too,” said Shea.

The new line of smaller sandwiches also plays into consumer trends around snacking and the shift away from traditional meals. Shea said the chain views the Little John as a “very multi-use sandwich,” which could satisfy someone with a smaller appetite as a meal by itself, or be used as a between-meal filler, or be ordered in pairs to give the customer two different sandwich varieties for about the cost of a single traditional sandwich.

“We're seeing a lot of pickup in after-school time — kids who might be grabbing it after school before a practice, and people who are grabbing them in between activities,” said Shea. “We're seeing a sizable traffic and sales lift since we launched the sandwich, so it's been really positive for us and our business.”

Now in the hands of ‘the smartest restaurant guys in the industry’

Jimmy John’s acquisition by Inspire Brands, which is backed by private equity firm Roarke Equity Group, should provide operational and management efficiencies for the Jimmy John’s brand and help pave the way for future growth, said Gary Stibel, founder and CEO of Westport, Connecticut-based New England Consulting Group.

“It's all upside potential for Jimmy John's, Inspire and Roark Capital,” he told CO—, calling the management team at Roark Capital and Inspire Brands “the smartest restaurant guys in the industry.”

“They have built a portfolio of brands that are second to none in the United States, and they've done it by being very smart operators,” he said.

The chain will benefit not only from Inspire’s scale, which should help reduce costs for everything from supplies to consulting services, but also from Inspire’s experience in a range of areas, from franchising to labor issues to real estate in markets where Jimmy John’s may have opportunities to expand, he said.

At the same time, Inspire Brands could benefit from Jimmy John’s expertise in delivery, which has always been key to the sandwich chain’s competitive positioning, Stibel said.

Shea noted that Jimmy John’s scores much higher among consumers for the quality and accuracy of its delivery services than the surging ranks of third-party restaurant delivery firms, touting an average delivery time of 18 minutes, well within the 30-minute window consumers demand. The brand, which generates about a third of its sales through delivery, has been doubling down on the promotion of this service by including references to delivery and online ordering in all of its marketing.

By further diversifying its portfolio of brands, Inspire also increases its opportunities to capture a greater share of consumer spending on dining out, according to Stibel.

“Nobody wants to eat lunch today where they ate lunch yesterday or where they're going to eat dinner tonight,” he said. “You need different brands in your portfolio in order to capture share of wallet among those people who frequent restaurants, either in the restaurant or when ordering for home or office delivery.”

Asked about the potential for cannibalization among the growing network of restaurants in the Inspire Brands portfolio, Stibel said the size of the company will help it withstand any potential competitive pressures that its brands place on one another.

“With cannibalization a fact of life in the overpopulated restaurant landscape, it is far better to be among a group of cannibals than trying to avoid the inevitable alone,” he said.

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