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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.

"Customer loyalty comes from consistent experience. When you screw it up, you fire your customers."

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.

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