How One Jimmy John’s Franchisee Battled Back

When Jimmy John’s franchisee Brandon Stewart closed lobbies systemwide in the early days of COVID-19, sales dropped 50 percent-plus. He felt hopeless. Also the president of Kensington Hill Partners, where he serves as a partner, owner, and operator at an additional 48 locations in Alabama, Georgia, and Ohio, Stewart wasn’t used to a loss of this magnitude—and one he couldn’t control.

But Stewart tried to stay proactive. He started with employee safety. The stores maintained salaries of all full-time employees. It found team members preferred to work an extra day per week, considered a “light work” day. Because of this, they were able to stay on payroll as before.

Stewart and his team at Kensington started a community initiative to feed healthcare workers in Birmingham. Pay it Forward Alabama raised more than $10,000 through special boxed lunches at-cost for the restaurant. This allowed Stewart to retain some additional staff as well.

Yet the key remained to think forward past pandemic gloom.

The company sourced masks from several sources to build supply. It instituted more flexible breaks so employees could get relief from wearing masks.

If anyone was uncomfortable working, or high-risk, they were allowed to stay on leave and keep their position. If the employee had health insurance, Stewart kept paying the premiums.

He adds their restaurants were among the early adopters of plastic barriers at ordering points. Each unit received a custom-made barrier for the register and drive-thru window.

Social distancing policies were put into place. These include:

Pre-shift wellness checklists completed before any employee is allowed to work.
Special glove usage for activities other than handling food.
A 27-point check-list to prepare stores to open to in-store dining.
A detailed deep cleaning checklist.

Stewart says the process took four weeks and they still had 10 of 58 Jimmy John’s venues to get through.

He took some time to chat with QSR about the initiatives so far, how he’s navigated the crisis, and what it’s going to take to accelerate on the other side.

Let’s start with the Pay it Forward Alabama campaign. How did this come about, and what were you able to achieve?

In the beginning of the quarantine, I began to feel hopeless. I don’t handle failure well, and my personality requires me to keep moving forward. Stopping was just not an option so I found purpose in charity during this time and we began giving food away to kids that may not have access to food outside of school lunches, no questions asked. We then decided to discount our box lunches for healthcare workers, allowing us to cover our food and labor costs but essentially eliminate profits on boxes sold. We knew that healthcare workers were very busy and putting their lives at risk, and we felt that we needed to do something. After some advertising efforts, community members began calling us to ask if they could buy lunches for nurses, so I realized there was an opportunity and partnered with a local non-profit to create a campaign to be able to solicit tax-deductible donations. It was win-win and “Pay It Forward” had a literal meaning. People were buying box lunches for healthcare workers that could potentially one day be the staff members helping if someone from their family fell sick.

Specifically, how did it help franchise stores retain staff?

We had raised funds that we could pull from to make large catering orders that we would not otherwise have received. Since our sales had been cut in half in some cases, these catering orders could double a store’s sales in a week. We were able to save jobs as a result and it was also a wonderful boost to morale.

Your restaurants were able to maintain salaries of full-time employees, despite widespread furloughs and layoffs throughout the industry. What was the secret?

We laid off about 50 percent of our team, almost all of which were part-time, in less than two weeks. That was a painful, emotional experience for all. As I started weighing salary cuts due to the immense profitability pressure, I felt for my team and the stress they were experiencing. The salaried leaders were working harder than they ever had before, and we were all feeling stressed about the unknown. Thanks to some advice from a colleague at Cornerstone Consulting, with whom we had been working prior to the pandemic, I decided to ask my team to work an extra day a week. The idea was that it made more sense to have our best people focused on as many shifts as possible instead of cutting salaries. I was so happy to be able to give my team a way to save their salaries. I made it clear I did not expect a “full” day, but simply be there for enough time to reduce the need for part-time employees. That allowed me to save a 20–30 percent cut and we ran better labor numbers than pre-COVID. We were even able to manage similar gross margins, despite having 50 percent less sales. Everyone was thankful, but I knew we could not work six days forever. We gave them their day-off back in June, as people began to show signs of fatigue. Times like that make you thankful for your team.

Shift to survival tactics, particularly PPE. What was your action plan across the restaurants just in terms of getting supply to staff members?

I tried to stay ahead of most on this subject by doing a lot of research and trying to pick up on as many pieces of advice I could. There are a lot of communication channels out there. Whether it was from Facebook, LinkedIn, news sources, webinars, or other media channels, I was paying attention. Whenever I heard something of interest, I pursued it immediately because I wanted to protect my employees and customers as soon as I could. For example, I had seen a colleague advertise a plastic shield for our register area, but when I reached out to the company, they had a two-week lead time. Considering we were only a week into the pandemic and the general thought was that this would last four weeks at the most, I could not wait that long. I found a local company that works with plexiglass and asked them design and make one for every store over the weekend. Sanitizer required an equal amount of creativity. We couldn’t find any, so I reached out to one of my promo supply vendors to see if he happened to have any, as I had seen them on keychains at some events and he sold me his stock. I was lucky to be a quick reactor because it gave my team confidence in safety.

"Customers expected to see a sanitized environment. If we needed to repaint a wall to look clean, we did it. We also pressure washed sidewalks and furniture."

Then, as a follow up, how have you made life more comfortable for employees wearing masks and facing other new realities?

We have asked our team to be good listeners. When someone comes to leadership with a problem, we need to be accommodating. Jimmy John’s is about being “Freaky Fast,” so it is against our nature to slow down, but I asked the team to allow for more breaks etc., and I made it clear that it was OK to accommodate. It’s hot, and masks are miserable, people need frequent, quick breaks that we have never really allowed before. I am currently working on financial independence resources as well. I think the economy is going to have a broad effect on our teams’ lives and I want them to be as prepared as possible. There is also a nice opportunity for those with jobs to create wealth.

Run through some of the policies and in-store procedures you implemented to meet COVID protocols, like high-traffic point cleaning and pre-shift wellness checklists.

We have a whole book we follow. First off, we did not open our lobbies until we completed a “back to operations” checklist with complete integrity. This included deep cleaning the stores and making sure we had proper PPE in place for employees and customers. This took many hours to complete, but we used it as a reset for the store. It took 4-5 weeks to complete in some stores. Jimmy John’s has seven rules we live by, even prior to COVID. No. 5 on that list says “Keep it Hospital Clean.” Describing our cleanliness goal as “Hospital Clean” is very impactful on what clean means to us. It really hits home today, but since we had already focused on cleanliness at such a high level, all we had to do was point out the importance of sanitizing services etc.

What are some highlights of the 27-point reopening checklist you have for in-store dining?

Acquired two different colors of gloves to make sure we handled food differently than registers and customer contact points. I wanted to make sure there was ZERO chance of an employee forgetting they had just handled cash and moving quickly to make a sandwich.

Most of it had to do with visible cleanliness. Customers expected to see a sanitized environment. If we needed to repaint a wall to look clean, we did it. We also pressure washed sidewalks and furniture.

Installed sanitizer in the lobbies.

Replaced employee uniforms.

What is your status today, especially as markets roll back reopenings?

We are 100 percent open. All of our stores have reopened for at least some hours of the day. Our sales are not at 100 percent, but our margins are hanging in there. We believe students coming back to campuses and people going back to work (in their office) would be the last two things we need to bet at 100 percent.

What kind of plan is in place if an employee tests positive for COVID?

We follow the CDC guidelines. In most cases, the store is shut down for another deep clean, and employees are notified that they may have been exposed. We have very strict guidelines, and in most cases, the pre-shift wellness interview catches anyone that may have not realized they were exposed.

Just generally, what kind of consumer behavior are you seeing these past few days? Do you see pent-up demand clashing with renewed concerns?

We are as confused as ever. Each bit of news has an impact on our business. I think some people want to eat in restaurants, but an overwhelming majority do not. We are celebrated when people notice our new cleaning and mask procedures and risk being chastised if an employee’s mask falls below their nose. There is NO room for error in this market.

Did you participate in the PPP or any government loan programs?

We did receive a PPP and I don’t think we would have been open without it.

Broadly, what changes did COVID accelerate that you believe will stick later on for your business?

Broad sanitation and cleanliness focus. I think consumers are pretty comfortable with delivery at this point, and I am personally excited that they have probably tried a lot of different things for delivery. You will probably discover a cold sandwich and kettle chips deliver much better than a hot sandwich with fries.

How long do you think it will take the industry to recover?

I believe it will take a long time for the industry to recover. There is no question it will end up being a mixed bag. For example, I think it will be years for full-service restaurants that have been closed or operating at a significantly reduced capacity. If landlords and banks help with forgiveness, however, it may be sooner. I think there will be a few winners in this crisis, but quick-serves who have lost 2-3 months of profitability or better, should be able to recover by fall of 2021, assuming fall of 2020 is somewhat normal. As we get closer to the fall, it is beginning to become more and more clear that this Fall will be anything but normal. This is going to be a long process and we must shift strategy to survive.

Do you think there could be growth opportunities stemming from the crisis?

I think there are always opportunities and I think an individual’s appetite for risk will largely determine the bet. I think trying to call the “new normal” today is extremely risky, but people will do that, and there will be winners and losers. You will hear about the winners, who happened to be very lucky in their assumptions, and be inspired by them. I think you rarely hear about the real losers, but some will undoubtedly make the wrong assumptions. Clearly, there will also be distressed company opportunities in the market, but I think there will be a gap in pricing expectations between buyers and sellers throughout 2020. The value of a drive-thru and efficient delivery has never been higher, and I expect ghost kitchen activity will increase during this downturn. If you happened to be setting up a kitchen based on lunch-time office traffic, however, you probably need to pivot or at least reduce expectations.