How Jimmy John became a sandwich king

Jimmy John Liautaud, founder of Jimmy John’s Gourmet Sandwiches, is on a diet, he confessed to entrepreneurship students at the University of Notre Dame.

“I’m on a massive calorie-reduction deal right now,” he said during his talk at the university’s Mendoza College of Business on Oct. 9, 2012.

The admission came in response to a question about which Jimmy John’s sandwich he’d order if he walked into one of the chain’s restaurants today. He said he would probably order a turkey Beach Club Unwich (a sandwich without the bread) with no cheese or mayonnaise but with extra avocado and peppers.

He immediately added, “Now if it was chubby J.J., who really didn’t care and was having some fun, I’d have a No. 9 (Italian Night Club) with hot peppers and a little extra mayo, cut in half, and I’d take that home with a bag of salt-and-vinegar chips and a bag of barbecue chips and probably one of each cookie and see if I could hammer it all.”

The sandwich king was clearly having fun in his talk to the business college’s Entrepreneurial Insights course and lecture series, which is sponsored by the Gigot Center for Entrepreneurship. And the audience, which included local Jimmy John’s franchisees and employees (in uniform), ate it up.

Roaming the stage in worn jeans and a wrinkled, untucked shirt, the 48-year-old multimillionaire described how he got started in business in January 1983.
The prior year, he said, he had graduated second to last in his high school class at private Elgin Academy in Elgin, Ill., west of Chicago. He told his father, an Army veteran, that he wanted to start a Chicago-style hot dog stand. His father agreed to stake him $25,000 in return for a 48 percent interest in the business. The deal was that if the business failed, his son would not have to pay back the money, but he would have to join the Army.

The enterprise got off to a rocky start. Liautaud discovered that $25,000 wasn’t nearly enough to buy the equipment he’d need for a hot dog shop. But while visiting a friend at Southern Illinois University, he discovered a sandwich shop with only a few pieces of equipment: a refrigerator, a meat slicer, a  cash register and a beverage cooler advertising—and, he presumed, supplied for free by—Coca-Cola.

He switched from hot dogs to sandwiches, found used equipment he could afford, and opened his first shop in a garage in Charleston, Ill., home of Eastern Illinois University. At first, he said, he had two cousins helping him. They soon quit, leaving him on his own to operate the shop from opening to close.
When the college students left for the summer and business slowed, he said, he finally sat down and reconciled his bank statements. Then, as now, he paid all suppliers COD. He discovered that in five months, his beginning checking account balance of $1,000 had grown to $21,000.

He joked, “I was a millionaire, this was unbelievable.”

Liautaud said that by working alone he learned the business inside and out.

“I totally became in tune to what made that bank balance go down,” he said. “And I became in tune to my job running a sandwich shop. I found that I loved making sandwiches for people. I loved cooking for people. I loved giving someone a product and having them give me money and say thank you.”

Three years later, he bought out his father’s stake, with interest, and opened a second store. By age 30, he had earned his first million dollars in a single year, he said. 

Last year the privately held company—he owns all but a 33 percent stake that he sold to a private-equity firm in 2007¬—recorded $1.2 billion in sales, he said. Headquartered in Champaign, Ill., the company now has more than 1,200 shops, the overwhelming majority of them franchisee-owned. The chain employs more than 50,000 people, he said.

Liautaud told the crowd there’s no trick to business success. “Hard work and great execution are what really separate good from great.”
When he began selling franchises, he said, he thought could sit back and live easily off the royalties. But in 2000, he said, he had 100 shops and 65 were failing because they were in bad locations and lackadaisically managed.

“I didn’t realize that it was a fluke that I really loved to run restaurants, go in every day and bake bread and cook for people. I thought anybody who paid me that kind of franchise fee would love that.”

He said he realized the importance of extensively training new franchisees and following up with more training. He said he spends an entire day in one of his own restaurants every 30 days.

Liautaud offered a number of tips to young people for business success, including:

• “If you’re not working, get to work now and begin learning. If you’re waiting for the perfect job, somebody’s going to pass you by. Just get to work and get discipline under your belt.”

• “Get out of debt as soon as you can and live in reality. Every bill that comes into my office today gets paid today. I don’t owe anybody a penny. Live within your means. It’s a wonderful away to live.”

• “Arrive (at work) an hour earlier and stay an hour later … and work on Saturday every weekend. If there’s a kitchen in your work area, clean that kitchen up every time you see it’s not right. Volunteer for everything that you can. Even if your boss doesn’t notice what you’re doing, the dude or dude-ette (CEO) notices … because that’s how that person got to be in that position of power.”

Entrepreneurial Insights is a fall lecture series and course of Notre Dame’s Gigot Center for Entrepreneurial Studies. It features entrepreneurs, investors, innovators and business leaders who offer their experience and advice in areas critical to the creation of new ventures, the ongoing viability of existing business, economic growth and the betterment of society. For more information about the series or the Gigot Center visit http://business.nd.edu/gigot_center/

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