Jimmy John's sells majority stake, may be positioning for global expansion

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By Corilyn Shropshire, Chicago Tribune

CHICAGO — Jimmy John’s said yes this week to a capital infusion from an Atlanta-based private equity group, a deal that could position the Illinois-based sandwich chain for expansion into global markets.

The company said Thursday it sold a majority stake to an affiliate of Roark Capital Group, an investor in such big-name fast-food chains such as Carl’s Jr., Hardee’s and Arby’s. Terms of the deal were not disclosed.

The deal, according to industry watchers, is likely positioning Jimmy John’s to expand into global markets.

“There are certainly opportunities outside of the U.S., starting with Canada and then you look at London, South America and Mexico,” said Darren Tristano, president of Technomic, a food and beverage consultancy.

No changes to management are planned and founder Jimmy John Liautaud, who serves as chairman of the board, will “continue to help shape the company’s high-level strategic direction,” according to a news release.

President and CEO James North will continue to head day-to-day operations of the sandwich chain. Investment group Weston Presidio, which has held a minority stake in the business for 10 years, will exit.

Roark focuses on franchised and multiunit business models in the retail, restaurant, consumer and business services sectors. It also is an investor in Anytime Fitness, Arby’s, Atkins Nutritionals, Corner Bakery and CKE Restaurants, owner of Carl’s Jr. and Hardee’s. In 2014, founder and managing director Neal K. Aronson was ranked fourth on a Nation’s Restaurant News list of the 50 most influential people in the U.S. restaurant industry.

In an interview with the Chicago Tribune, Liautaud said that he and Aronson got to know each other over a couple of years and came to an agreement. “I’m still the single individual largest (noninstitutional) shareholder,” he said, adding that Jimmy John’s was ready for a “nonentrepreneur” to step in. “I’m a good operator, good with food and good with math,” said Liautaud. “I’m not a strategist and the company deserved that.”

Roark is known for helping once-struggling sandwich chain Arby’s shore up its image and bottom line. With Roark at the helm, Arby’s has had a “tremendous turnaround,” said Tristano, updating stores, strengthening the brand and luring back customers. “It’s making more money,” he said.

Jimmy John’s is still a good fit for the private equity firm, Tristano added, since it is a successful brand in need of an extra push (and money) to expand. The sandwich chain, which is a leader in its category, compliments Roark’s portfolio, which also includes McAlister’s Deli.

Aronson did not return requests for comment.

As for Jimmy John’s, Liautaud canceled plans to take the company public last year, which made a lot of business sense, according to Tristano. “When you go public, you have a whole new set of rules, you operate in a different way,” Tristano said. “In fact, many public chains are struggling,” he added.

In addition to honing its growth strategy, Jimmy John’s has another challenge to tackle — a lawsuit.

In June, the Illinois attorney general’s office filed a lawsuit in Cook County Circuit Court against Jimmy John’s, alleging the company imposes “highly restrictive non-compete agreements on its employees.” The suit is pending.

Liautaud in 1983 opened the first Jimmy John’s in Charleston, in east-central Illinois, after high school, with $25,000 from his father. He enrolled at Eastern Illinois University, only to drop out before finishing the first semester to grow his business.

Jimmy John’s has more than 2,500 locations in 43 states and $2 billion in systemwide sales, according to a company statement.

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