Inspire Brands executives have plans to buy 10 restaurant brands, and today the multi-concept operator got a bit closer to its goal. The latest acquisition is Jimmy John’s Sandwiches, which the company announced it had entered into an agreement to acquire. The financial terms of the transaction were not disclosed.
“This transaction appears to functionally transfer the business from one Roark entity to another,” said Sarah Gil Campbell, managing director and head of Stephens investment banking restaurant practice.
Roark Capital Group acquired a majority stake in Jimmy John's in 2016.
Atlanta-based Inspire, owned by Roark, was created in 2018 after Arby's Restaurant Group Inc. completed a $2.9 billion acquisition of Buffalo Wild Wings Inc. and renamed itself.
Inspire now owns Arby’s, Buffalo Wild Wings, Sonic Drive-In and Rusty Taco brands which total about 8,300 locations worldwide.
With Jimmy John’s, the combined Inspire Brand restaurant’s 2018 U.S. revenue is $3.8 billion.
“When Roark originally invested in Jimmy John’s it was because it was a well-performing, high growth concept offering great food and good value. I don't think that thesis has dramatically changed; Jimmy John's is still a terrific brand with a lot of runway,” Campbell said.
According to the NRN Top 200 ranking, Jimmy John's had about $2.1 billion in systemwide sales for the latest fiscal year. The brand added 48 new stores in fiscal 2018, ending the year with just over 2,800 U.S. units.
This deal brings together big sandwich players. Jimmy John’s is the third-largest sandwich chain in terms of systemwide sales. Inspire’s Arby’s is number two.
The biggest benefit here for Inspire Brands may be Jimmy John’s dominance in delivery, according to Gary Stibel, founder and CEO of New England Consulting Group.
Everyone wants what Jimmy John’s has figured out — how to make in-house delivery work. Jimmy John's is second only to Domino's in terms of delivery, he said.
The acquisition “gives everybody a technological advantage,” and Jimmy John’s institutional delivery knowledge will “spread across Roark’s different concepts like wildfire.”
Inspire is scooping up brands that have established. “A great franchisee is a rare bird,” he said.
These franchisees know their local area better than corporate and can branch out into new brands in their areas as Inspire acquires them.