Success Stories: Jimmy John Liautaud

Sometimes all the necessary elements for an individual’s success fall neatly into place. With seemingly little effort, luck plays the deciding role. That is not Jimmy John Liautaud’s story.

Liautaud’s success was hard-earned through determination and hard work. Today, Jimmy John’s 800-plus locations across the country offer delivery and dine-in services. The strong brand following is the result of discipline, sweat and a little irreverence, and Liautaud knows similar dedication is required of him and his franchisees to maintain growth.

“I’ve always liked food—a lot,” Liautaud says. In particular, he loved the American classic, Chicago hot dogs. After high school, 19-year-old Jimmy John Liautaud planned to open a hot dog stand. He struck a deal with his father— $25,000 to start a business or go into the Army. The elder Liautaud wanted his son to enlist, but agreed to lend him money while maintaining 48 percent ownership of the business.

In the summer of 1982 he set out to make his entrepreneurial dreams a reality. “I went on a hot dog frenzy,” he says. Visiting stands in the Chicago area, Liautaud researched equipment and vendors used by different proprietors. His goal was to learn from their best practices. But it didn’t take long to learn $25,000 wasn’t enough. “The best deal I could find was $40,000 for the equipment I needed,” he says. Unfortunately his dad’s offer of $25,000 was firm—no more.

In the following weeks, he stumbled on an idea for a more affordable business option. “We went into a shop where they were selling sandwiches and beer out of a cooler… with basically no equipment,” he remembers. Knowing he could do the same, he bought an assortment of premium meats at a neighborhood market and, because he was disappointed in the bread he found, he decided to bake his own. Liautaud enlisted family members as taste testers, who helped select the first four sandwiches on the menu.

Jimmy John’s Gourmet Sandwiches opened for business on Jan. 13, 1983, in a house with a less-than-stellar past—the garage had been converted into a pizza restaurant that had failed, the house had been a failed donut shop and the front a campus bar. “It wasn’t a great location,” Liautaud says. “I started to deliver, not because it was part of a business plan, but to get sales—to make up for my C location.”

Between Jimmy John’s delivery service and handing out free samples, Liautaud’s shop gained a foothold and turned a profit in its first year. After the second year, he bought his father’s 48 percent and became sole owner of a steadily growing business. But success didn’t come without challenges. Liautaud found out the hard way that his people-management skills were lacking. So much so that the two friends who’d agreed to help him run the store quit within a few months. To stay in business, he had to work from open to close seven days a week.

He also lacked a formal business education. Not knowing how to write a business plan kept him from going to the bank for loans to expand his business. Though limited funds might have slowed him down a little, he says operating on a cash basis helped him succeed in the long run.

“When my father told me to keep my business checkbook balanced every day and to pay COD, that was my MBA,” he says. Keeping a close eye on the numbers helped him better understand what made his business grow and what was simply costing him money. “You have to live in reality,” he says, “not in what might happen, but what is happening.”

Liautaud opened his second and third locations in 1986 and 1987, working at each store for a year to get them established. With an appreciation for Ray Kroc’s accomplishment with McDonald’s, Liautaud again followed best practices and began documenting every process in an effort to standardize the Jimmy John’s experience. “I wanted all my stores to be the same, to offer the same customer experience, whether I was there or not,” he says. “Customer loyalty comes from consistent experience. They learn to count on you. When you screw it up, you fire your customers.”

With his two new stores going well, Liautaud was eager for new opportunities. As much of a hands-on manager as he had been, he realized he needed to ask for help. At a business meeting in 1988, he met businessman Jamie Coulter, a then Pizza Hut Franchisee and later the Chairman, Founder and CEO of Lone Star Steakhouse and Saloon, Sullivan's and Del Frisco's. Coulter's mentorship helped propel Jimmy John's to greater levels of success. "He took me under his wing and taught me how to effectively run multiple units," says Liautaud, who continued opening new restaurants and sold the first Jimmy John’s franchise in 1994.

Still, Liautaud realized he could do better if he had greater real estate expertise. He sought to put his franchises in visible, high-traffic areas. But with little real estate experience, he says he was continually outbid on the top spots. “We were at a huge competitive disadvantage,” he says. “We were having difficulty finding and securing new locations. All we knew how to do was run the business and make money.”

So, he began looking at taking on a partner. After careful evaluation and narrowing his choices to five private-equity firms, he selected Weston Presidio, which purchased a 33 percent stake in the business in January 2007 and closed more than 100 real estate deals in the first year, Liautaud says.

Liautaud’s whatever-it-takes attitude helped him get his business off the ground, and that same entrepreneurial spirit is one he looks for in employees and franchise owners. To him, free enterprise—and the willingness and discipline to work harder than the next guy—is what business is about.

Through the years, he’s purposefully surrounded himself with like-minded people for a mutual benefit. As someone who earned his first $1 million in a year at 30, he says, “I love watching young people grow.” His young team of leaders—a 27-year-old COO, 31-year-old president and 34-year-old CFO—started out as restaurant employees.

At 44, Liautaud says the mark of success is not money, but “building a life with a great family and a few great friends.” With his wife, Leslie, and three children, he is determined to continue to build on his achievements by staying committed to doing the things that have taken him this far: making great sandwiches and running his business. “That’s all I do, and that’s all I want to do,” he says.