FDD Talk 2021: Jimmy John’s Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Jimmy John’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Jimmy John’s franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Jimmy John’s franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Jimmy John’s outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Jimmy John’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, highest, and lowest unit volume for the 1,604 Jimmy John’s Restaurants, comprised of 33 that Jimmy John’s affiliate owns and operates and 1,571 that franchisees own and operate, that operated for Jimmy John’s entire 53-week 2020 Fiscal Year and did not close for any significant periods during the 2020 Fiscal Year

• 2020 average, median, highest, and lowest unit volume for the 2,662 Jimmy John’s Restaurants, comprised of 42 that Jimmy John’s affiliate owns and operates and 2,620 that franchisees own and operate, that operated during Jimmy John’s 53-week 2020 Fiscal Year, including the 1,058 Jimmy John’s Restaurants that temporarily closed due to the global pandemic, weather, or protests during the 2020 Fiscal Year

• 2020 average unit volume during each fiscal period (12 periods) of the 2020 Fiscal Year (subject to the adjustment for the 53rd week of the last fiscal period) for all franchised Jimmy John’s Restaurants that were open and operating at some point during each period, regardless of when the Restaurant first opened for business

• 2020 average unit volume during each fiscal period (12 periods) of the 2020 Fiscal Year (subject to the adjustment for the 53rd week of the last fiscal period) for all franchised Jimmy John’s Restaurants that did not permanently close during the 2020 Fiscal Year

Section I – Background Information

20 Things You Need to Know About the Jimmy John’s Franchise

Launches Self-Delivery Service Through DoorDash

1.  In early December 2020, Jimmy John’s, building on Inspire Brands’ longstanding preferred third-party provider relationship with DoorDash, announced that it was adding more than 2,400 Jimmy John’s locations within DoorDash service areas to the DoorDash platform while continuing to fulfill all delivery orders with Jimmy John’s drivers.

2.  Jimmy John’s will use DoorDash Self-Delivery, a new offering for restaurants to generate demand and reach new customers through the DoorDash platform, while using their own drivers to fulfill deliveries. This is the first time Jimmy John’s has entered into a relationship with a third-party marketplace, enhancing the visibility and scale of its delivery operations.

3.  Jimmy John’s is a category leader in freshness, quality, and order and delivery execution, offering a best-in-class delivery experience across thousands of restaurants nationwide. As part of a broader brand evolution, Jimmy John’s has been focused on continuing to reach new guests and refining its channels and operations to meet customers where they are while maintaining the unique Jimmy John’s delivery experience.

4.  After a successful six-month pilot with 100 restaurants, Jimmy John’s chose to expand its relationship with DoorDash chain-wide, due to its industry-leading customer base, the strength of DoorDash’s existing relationships with other brands within Inspire’s family of brands, and its willingness to build a Self-Delivery model that could seamlessly integrate incremental DoorDash volume with Jimmy John’s existing delivery network.

5.  Darin Dugan, chief marketing officer of Jimmy John’s, said, “As a brand, we are relentlessly focused on reaching our guests on their terms. In DoorDash we found a third-party partner that shares this commitment and offers us the ability to further reach our consumers where they increasingly are – digitally. We are so thrilled about this relationship and the visibility to consumers it provides for our brand, both now and in the future.”

6.  The two companies, who share a strong commitment to providing a top-tier delivery experience, worked closely together to build an integration where Jimmy John’s can tap into DoorDash’s marketplace to reach new customers while driving operational efficiencies within its existing delivery platform. This includes building a direct POS integration with Jimmy John’s provider, Signature Systems, to minimize changes to in-store operations and ensure Jimmy John’s existing menus and store hours are synced with the DoorDash platform.

7.  Pickup at Jimmy John’s will also be available through the DoorDash platform, further enabling visibility to new customers across occasions. Jimmy John’s will also be available to subscribers of DashPass, DoorDash’s subscription program which offers members unlimited free delivery fees and reduced service fees on orders over $12.

8.  Sanjay Kotte, head of strategic partnerships at DoorDash, added, “With Self-Delivery, we set out to build a product that would enable Jimmy John’s, and other restaurants, to reach DoorDash’s customer base while complementing their own existing delivery operations. We’re excited that Jimmy John’s has selected us as the preferred marketplace to enhance its delivery growth and increase its scale through our leading consumer platform.”

Introduces New Brand Identity

9.  At the beginning of March 2021, Jimmy John’s announced that it was updating its brand identity. Jimmy John’s started 2021 by launching a national Big Game, “Meet the King” – its first in brand history. It focused on Jimmy John’s differentiators in the sandwich category: namely, speed and freshness, but with a comical vibe.

10.  Throughout the year, Jimmy John’s plans to roll out a number of consumer-facing elements systemwide. Included is a comprehensive visual identity launch and modernized logo, new in-store signage, merchandise, digital footprint, and more.

11.  According to Chief Marketing Officer Darin Dugan, “As part of a broader brand evolution, we’ve been focused on continuing to reach new guests and refining our operations to meet customers where they are. We are energized by the positive momentum of our brand and believe these enhancements to the Jimmy John’s customer experience will give guests more reasons to come back or try us for the first time.”

12.  ChangeUp, the marketing agency used by all of Inspire Brands’ restaurants, including Jimmy John’s, said that Jimmy John’s wanted to accelerate its “freaky fast” reputation, but do so by leaning into something that was always baked into Jimmy John’s DNA – quality. So ChangeUp started by identifying the heart of the company’s identity.

13.  It looked at Jimmy John’s initials, its medallion, and iconic super seal. How could ChangeUp simplify and codify the existing 40-plus logo variations used since 1983? Its solution was a cohesive collection with custom-crafted initials, wordmark, and medallion.

14.  In addition to the updated logo, ChangeUp also changed Jimmy John’s packaging and uniforms. Ryan Brazelton, executive creative director at ChangeUp, said:

• Typography – “Jimmy John’s had always been a typographically savvy and centric brand – due to its city roots – and we didn’t want to walk away from that. Back to the charm of the sandwich shop – they’ve always had accents of illustrations and script to have some fun – but there was no definitive feel. Building on that, we redrew the icons – the signature icon that had had a hint of humor in it – was the super seal. We looked back at the super seal’s first iteration and everything in between and took the best of it to recraft with the flying sandwich, thumbs up, etc.”

• Uniforms – “We didn’t want to change how employees might want to wear their T-shirts as street clothes. We pushed it further and showed that the uniforms could have that Jimmy John’s swagger (i.e., “Major Sandwich Flex” shirts), deliver the brand, and be something the employees can have fun wearing.”

• Packaging – “Unlike some brands that continuously change their packaging, Jimmy John’s packaging (much like their simplified and ever-present menu) is evergreen and high quality. It’s simple, sharp, and unmistakably Jimmy John’s. We ensured the materials, patterns, and identity were bold to evolve and dial it up.”

15.  On a final note, Brazelton said, “Jimmy John’s of 2021 has a fresh new pair of sneakers. They launched the new look with a Super Bowl ad, and the LTO launch is a compelling reason to have a new experience with the brand. They are confident, strong, and feeling like themselves, versus 2020 – a panic year for everyone. This is a Jimmy John’s who spent the time looking in the mirror to envision who they want to be, and they’re going to go get it.”

Company History

16.  Jimmy John’s was founded in 1983 by Jimmy John Liautaud in Charleston, Illinois. When Liautaud graduated from high school, his father gave him two choices: either join the military or start a business. Liautaud chose the latter and initially wanted to sell hot dogs, but his investment from his father was not enough. He decided to sell sandwiches and the original menu consisted of four items featuring hand-sliced meats and fresh-baked bread. By the end of the first year, Liautaud’s sandwich business turned a profit and by 1985, Liautaud had enough money to buy out his father’s share.

17.  Following the success of the first Jimmy John’s location, Liautaud opened two more locations around Illinois and he continued to expand the menu and grow the company. In 1994, the first franchised Jimmy John’s location opened in Eau Claire, Wisconsin and by the beginning of the 2000s, there were 100 stores in operation. The number of stores increased significantly over the next few decades and by 2017, there were over 2,700 locations around the United States.

18.  The year before, in 2016, Roark Capital Group agreed to acquire a majority stake in the company. As part of the deal, Liautaud retained 35% ownership of the company and he continued to serve as chairman of the board. A few years later, in 2019, Inspire Brands (affiliated with Roark Capital Group) announced that it was buying Jimmy John’s for an unspecified amount in a deal unanimously approved by Liautaud and the rest of the Jimmy John’s board of directors.

19.  Liautaud has since stepped down as chairman, but continues as an adviser to the brand. Today, there are Jimmy John’s locations all across the U.S. and Liautaud has expressed interest in expanding into Canada.

Entrepreneur’s Franchise 500

20.  Jimmy John’s ranked No. 72 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Jimmy John’s franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Jimmy John’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  2,700
• Outlets at the End of the Year:  2,750
• Net Change:  +50

2019

• Outlets at the Start of the Year:  2,750
• Outlets at the End of the Year:  2,738
• Net Change:  -12

2020

• Outlets at the Start of the Year:  2,738
• Outlets at the End of the Year:  2,658
• Net Change:  -80

Company-Owned

2018

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  55
• Net Change:  0

2019

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  52
• Net Change:  -3

2020

• Outlets at the Start of the Year:  52
• Outlets at the End of the Year:  43
• Net Change:  -9

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• These financial performance representations provide “AUVs,” or average unit volumes, for specific groups of Jimmy John’s Restaurants and specific time periods.

• “Unit volume” means the actual gross receipts of the Jimmy John’s Restaurants during the applicable time period, less sales tax and amounts for coupons and promotions.

• Jimmy John’s obtains the unit volumes for franchised Jimmy John’s Restaurants from weekly sales reports that franchisees submit to it. Jimmy John’s has not independently audited that information.

• Jimmy John’s has not made permanent, material changes to its franchise concept as a result of the COVID-19 pandemic.

Part 1 – 2020 Covered Restaurants (Restaurants Open for Full Year)

• On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The financial performance representations in Parts 1, 2, 3, and 4 reflect the impact that COVID-19 and other factors have had on the AUVs of Jimmy John’s Restaurants during Jimmy John’s 2020 fiscal year, from January 1, 2020 until January 3, 2021 (the “2020 Fiscal Year”).

• Because Jimmy John’s 2020 Fiscal Year contained 53 weeks, in order to show an accurate year-over-year comparison, the financial performance representations in this Item 19 exclude the unit volumes from the 53rd week of Jimmy John’s 2020 Fiscal Year.

• There were 2,705 Jimmy John’s Restaurants operating as of January 3, 2021. 1,604 of these Jimmy John’s Restaurants (the “2020 Covered Restaurants”), comprised of 33 that Jimmy John’s affiliate owns and operates (the “2020 Affiliate-Owned Covered Restaurants”) and 1,571 that franchisees own and operate (the “2020 Franchised Covered Restaurants”), operated for Jimmy John’s entire 53-week 2020 Fiscal Year and did not close for any significant periods during the 2020 Fiscal Year.

• This first financial performance representation reflects the actual historical average and median unit volumes for the 2020 Covered Restaurants, the 2020 Franchised Covered Restaurants, and the 2020 Affiliate-Owned Covered Restaurants for the 2020 Fiscal Year (subject to the adjustment for the 53rd week).

• The 2020 Covered Restaurants do not include the 1,058 Jimmy John’s Restaurants that temporarily closed due to the global pandemic, weather, or protests during the 2020 Fiscal Year, the 43 Jimmy John’s Restaurants that opened or resumed operations during the 2020 Fiscal Year, the 1 Jimmy John’s Restaurant that suspended operations during the 2020 Fiscal Year, or the 117 Jimmy John’s Restaurants that closed during the 2020 Fiscal Year (all but one of which were open for at least 12 months before they closed).

• Jimmy John’s included in the group of 2020 Franchised Covered Restaurants the 8 Jimmy John’s Restaurants that its affiliate owned, but which a franchisee operated (and for which that franchisee had sole responsibility for the Restaurants’ performance, including profits and losses) during the entire 2020 Fiscal Year.

All 2020 Covered Restaurants