Inspire Brands struck another seismic deal Wednesday morning, becoming the fourth-largest restaurant company in the U.S. with the purchase of 2,800-unit Jimmy John’s. The companies engaged in an equity-swap transaction, but didn't disclose financial terms.
Following completion of the deal, expected by October’s end, Inspire Brands—the Roark Capital Group-backed umbrella company of Arby’s, Buffalo Wild Wings, Sonic Drive-In, and fast casual Rusty Taco, will operate more than 11,200 restaurants and $14 billion in annual system sales.
“Jimmy John’s has found the ideal home at Inspire,” Jimmy John’s founder and chairman Jimmy John Liautaud said in a statement. “Inspire’s long-term approach, culture of innovation and commitment to helping brands grow sets it apart from the rest. I couldn’t be prouder of the company we’ve built, and I can’t wait to see what Jimmy John’s is able to accomplish under Inspire’s leadership.”
With the move, Liautaud will step down as chairman of Jimmy John's and transition to an adviser role with the brand. James North will serve as president of the chain, reporting to Inspire CEO Paul Brown. North has been Jimmy John’s president since 2004 and its CEO for the last five years. He joined the company in 1998 when it had less than 100 restaurants. Liautaud opened Jimmy John’s when he was in college at Eastern Illinois University in 1983.
Roark first took a majority stake in Jimmy John’s in 2016. At the time, the sandwich brand was valued at roughly $2.3 billion when Roark’s stake included a minority share in the brand owned by private-equity firm Weston Presidio.
“Jimmy John’s is a great fit for the Inspire family,” Brown added in a statement. “What started in 1983 as a sandwich shop in a converted garage in Charleston, Illinois, has grown into a national, differentiated brand with a passionate fanbase. We are excited to welcome the Jimmy John’s brand to Inspire and look forward to working with their team and franchisees to help the company achieve its next stage of growth.”
Jimmy John’s has been one of the fastest-growing restaurant chains in the U.S. in recent years. The brand had system sales of $780 million in 2010. By 2018, it hit $2.1 billion, or 174 percent growth. There were 1,130 restaurants nine years ago, marking 148 percent growth to last year’s 2,803 locations.
Jimmy John's was the fourth largest sandwich chain in America at the end of 2018 in terms of U.S. systemwide sales (in millions), according to the QSR 50. It trailed just Subway ($10,410.34), Panera Bread (5,734.63), Arby's ($3,886.90), and Jimmy John's ($2,200.00). Jersey Mike's was next at $1,148.48. Jimmy John's added 48 restaurants in 2018 from 2017.
Inspire said its multi-concept model will enable Jimmy John’s to learn from and share best practices across its portfolio. And the sandwich chain, known for its delivery strengths, will “benefit from Inspire’s technology investments and integrated data and analytics platform,” the company said.
"Inspire will provide Jimmy John’s with greater capabilities in areas like product innovation, brand marketing, and new restaurant development, as well as stronger purchasing scale in areas like supply chain and media buying,” the company added.
Inspire was formed February 2018 following the closing of Arby’s Restaurant Group’s $2.9 billion purchase of 1,200-plus unit full-service chain Buffalo Wild Wings. That included Rusty Taco.
The company then closed a $2.3 billion deal for 3,600-unit Sonic Drive-In on December 7 of the same year.
Brown has previously said he wants to acquire 10 or so chains, each with about $4.5 billion in annual sales.