Private Equity Investments In Restaurants Continues To Heat Up As Jimmy John’s Sandwich Shop Is Being Sold To Inspire Brands

Image result for Private Equity Investments In Restaurants Continues To Heat Up As Jimmy John’s Sandwich Shop Is Being Sold To Inspire BrandsThe largest Fast Casual sandwich brand will join the ranks of Arby’s, Buffalo Wild Wings and Sonic Drive-In as part of the Inspire Brands collection of restaurants. With over $2.1 billion in sales in 2018, Jimmy John’s is leader in the Fast Casual sandwich category well ahead of Jersey Mike’s and Firehouse Subs. The brand has differentiated itself through high-quality and “freaky” fast speed of service. As a pioneer in delivery, Jimmy John’s has increased has expanded to nearly 3,000 locations in the US.

Economies of scale have driven successful growth brands to sell their companies or investment shares to larger multi-brand operators like Inspire. The transaction allows stakeholders to step back and hand off the legacy of the brand to experienced, well-capitalized operators. In return, owners receive financial benefits for their hard work and roles that allow them to step back and enjoy life outside of day-to-day tasks. Investors can take advantage of greater food and beverage purchasing power which typically results in lower costs and increased profits. In addition, leveraging experienced staff for operations, marketing, purchasing and research and development allows a brand to reduce staffing by spreading the experience across all of their brands.

The sandwich market continues to remain competitive with fast casual operators feeding off more traditional quick service shops. The decline of Quizno’s and Subway locations and sales have provided market share increases to Jimmy John’s and others as younger consumers look for higher quality ingredients, bolder flavors and fast service platforms. Many GenZ consumers have grown up with Jimmy John’s and become customers based on their fast delivery platform. As fewer teenagers drive automobiles and look for restaurant quality food off-premise, single-sandwich delivery and small group purchases have driven the success and growth. 3rd party delivery platforms like UberEats, DoorDash and Postmates have created an increasing demand for affordable meals that travel with integrity and quality. Sandwiches fit today’s consumer need-states and provide strong lunch, snacking and dinner occasion supply.

With the addition of Jimmy John’s to the Inspire stable of restaurant brands, synergy can be built between Arby’s, Sonic Drive-In and Jimmy John’s. Meeting the needs of consumers with sandwiches has been the trademark of these brands and although their customers may have some competitive overlap, each brand takes a different approach to maintain and grow their market share. With off-premise sales through catering and delivery becoming more important to restaurant success, other Inspire brands can learn from Jimmy John’s fast-paced speed of service and continue to build on their own success. As I See It, more investments from private equity firms and multi-brand operators are coming and larger restaurant companies will maintain quite a differential advantage over the smaller chains. Success will come from big business and more nimble small chain and independent restaurants with mid-size operators losing ground.

[“source=forbes”]

Author: Eric