Jimmy John’s: A Freaky Fast Challenger Brand

At last count, Subway had 43,417 restaurants in 110 countries, which makes it the second largest fast food chain in the world behind McDonald’s. Subway is the biggest dog in the sandwich segment by a long shot. You’ll find Subway restaurants in your local strip center, shopping mall, gas station, and airport. Anywhere people are hungry, Subway is there. So, enterprising entrepreneurs would be forgiven if they took one look at Subway’s numbers and decided to go the other way. Who really wants to wrestle the gorilla, anyway?

Jimmy John’s took a shot at the category dominator, and while it would be a gross overstatement to suggest they’ve hobbled the beast, the company has built a tremendous sandwich business right under the giant’s nose. Jimmy John’s posted roughly $1.5 billion in systemwide sales in 2014 with explosive growth in recent years. How did a challenger brand like Jimmy John’s create that kind of success?

Company founder Jimmy John Liautaud credits the brand’s success to his lack of formal business education. He started the company in 1983 at the age of 19 instead of going to college. “The blessing was, I had no education, so I never knew how to make a business plan. So as a result, I couldn’t get loans, so I grew with my own cash. My naiveté ended up being a blessing in disguise, because I always lived below my means and did everything with cash,” Liautaud told Franchise Times in 2014.

Liautaud graduated near the bottom of his high school class, so it’s a fair bet he wasn’t voted “most likely to succeed” by his graduating classmates. Liautaud himself had all the markings of a classic underdog. Who can blame banks for staying away? They’re looking for pedigrees with sure bets, not young entrepreneurs with more ambition than education and experience.

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But his lack of business acumen made it easier for Liautaud to think like a challenger. Instead of dissecting and copying the strategy of the category leader—a classic business mistake—Liautaud charted his own path. In doing so, he found the white space left vacant by Subway and other purveyors of tasty meats and breads. There’s only so many ways to make a submarine sandwich, so he created differentiation through delivery.

Jimmy John’s delivers, and they deliver quickly. In fact, the company’s tagline, “freaky fast,” is rooted firmly in the brand’s key benefit of fast delivery. The rest is execution. It’s a challenger brand strategy that is elegant for its simplicity, and it’s a proven winner. The average Subway restaurant generates sales of $480,000 per year, while the average unit volume for Jimmy John’s is $878,000. That’s a nearly $400,000 advantage for Jimmy John’s driven entirely by delivery. Better still, Jimmy John’s delivery advantage is not easy for the category leader to replicate. Even if Subway decided they liked the idea, implementing delivery service would be extraordinarily disruptive for the company’s 21,000 franchisees. Foisting delivery on a mature system as large and complex as Subway’s would be a risky proposition at best and an unmitigated disaster at worst. It’s a safe bet Subway will let that sleeping dog lie just where it is.

As for Jimmy John’s, they’ve created a true advantage that will serve them well for many years to come. Jimmy John’s beat the competition at its own game by changing the rules. It’s a classic challenger brand strategy, but Liautaud probably wouldn’t call it that. After all, he’s an underdog who never went to business school.