Jimmy John’s cash infusion
Steve’s breakdown: Jimmy John’s IPO could open up an opportunity to get in on this account which is a high flyer and has no AOR.
CHAMPAGNE, IL: Jimmy John’s Gourmet Sandwiches is preparing for an initial public offering, Reuters reported Tuesday, in a deal that would bring one of the fastest-growing, large-scale restaurant chains to the public markets.
The deal would value Jimmy John’s at more than $2 billion, including debt, according to Reuters.
In 2007, Jimmy John’s sold a stake of its business to the private-equity firm Weston Presidio. Eight years is long past the time when such firms typically look to exit an investment. Jimmy John’s had been exploring a sale of part of its business for months.
But in the current environment, the highest returns have come through public offerings. Numerous restaurant companies have gone public in the past few years, most recently Bojangles Inc., Shake Shack Inc., and The Habit Restaurants Inc. Wingstop Inc. and the Brazilian steak chain Fogo de Chao Inc., meanwhile, have filed IPO documents.
Such companies are receiving higher multiples from public investors than they would receive from other private-equity groups or strategic investors.
Jimmy John’s would give public investors a well-established brand in a popular restaurant segment — sandwiches — in which there is only one other publicly traded concept, Potbelly Corp., which went public in 2013. Its stock more than doubled on its first day of trading.
The chain is significantly larger than Potbelly, and is one of the 40 largest restaurant chains in the country, according to Nation’s Restaurant Newsdata.
Jimmy John’s has demonstrated consistent sales growth for years. It has been among the 10 fastest-growing chains in the U.S. for the past four years, according to NRN Top 100 data. The company is known for its irreverent advertising and a business model that emphasizes speed and delivery.
The company has had average systemwide sales growth of nearly 24 percent over the past five years, through 2014, according to NRN Top 100 data. In 2008, the company had estimated systemwide sales of $515 million. By 2014, that grew to $1.7 billion. Unit count over that time more than doubled, from 805 locations to 2,109 units. All but 38 of the locations are owned by franchisees.
A Jimmy John’s IPO would also give the public markets one of the restaurant industry’s most colorful CEOs: Jimmy John Liautaud, the chain’s founder, who started the company as a 19-year-old in 1983.
“I didn’t know about leading by example,” Liautaud said at NRN’s MUFSO conference in 2012, speaking about leadership. “I didn’t know it was the leader’s job to take the toughest tasks for himself and delegate the easiest ones to the people below you. I was the owner, working Monday and Tuesday and Wednesday and Thursday night, and I smoked pot and drank beer Friday, Saturday and Sunday.”
Liautaud has also made news for political statements, and has criticized his home state of Illinois. He once said he would move the company’s headquarters from Champaign, Ill., to Florida, after Illinois voted to increase the state’s income tax from 3 percent to 5 percent.
The state income tax increase “just pissed me off,” Liautaud said at theconference. “We so respect our money that we work so hard to earn, and we send it in, and they [Illinois lawmakers] puke it away. It hurts me.”