Dive Brief:

• Inspire Brands has entered an agreement Wednesday to acquire Jimmy John's for an undisclosed amount. Jimmy John's Board of Directors, including its founder and chairman Jimmy John Liautaud, unanimously approved the deal, according to a press release.
• The transaction is expected to close by the end of October. James North will become the president of the Jimmy John's brand reporting to Paul Brown, Inspire Brands co-founder and CEO. Liautuad will step down as chairman and become an advisor to the brand.
• After the transaction is completed, Inspire will be the fourth-largest restaurant company in the U.S. with over $14 billion in annual sales and 11,200 restaurants across 16 countries.

Dive Insight:

Inspire Brands is on an acquisition streak, acquiring its third company within the last two years.

Its strategy to acquire and build a multi-branded operation started in 2017, when Brown, then CEO of Arby's, partnered with the restaurant’s majority stakeholder Roark Capital, launching Inspire Brands in February 2018 when it closed its acquisition of Buffalo Wild Wings. It also completed an acquisition of Sonic in December.

The company's strategy of late, especially when it came to the Arby's/Buffalo Wild Wings acquisition, is to transition a single-branded company into a multi-branded organization, according to QSR Magazine. Even though each brand will have brand identification, they have access to expertise across multiple areas, including human resources, IT, customer personalization, communications and finance.

Jimmy John's is expected to benefit from Inspire's technology investment and integrated data and analytics platform, according to a fact sheet on the transaction emailed to Restaurant Dive.

Inspire also will provide the sandwich chain with access to product innovation, brand marketing, new restaurant development and better purchasing scale for supply chain and media buying. Jimmy John's, which grew 174% from 2010 to 2018 surpassing $2 billion in sales, also has already established its digital and takeout capabilities, developing expertise that could benefit Inspire’s other brands.

Restaurants and groups, in general, have been particularly active in buying companies to diversify and continue driving same-store sales during a time of sluggish same-store sales industrywide.

Huddle House bought Perkins mid-September for $51.5 million with plans to expand both brands as sister companies. The Cheesecake Factory bought Fox Restaurant Concepts for $353 million in late July as part of its diversification strategy, which included opening a fast casual concept Social Monk earlier this year. Elite Restaurant Group, which acquires distressed brands, and Jollibee, which has been using acquisitions to expand in the U.S., have also been active acquirers during the last two years.

Some restaurants have been selling off brands to become more centrally focused on their core business as well, especially if that company is under pressure by investors. Bloomin' Brands is currently under pressure to sell or spin off its brands and focus just on Outback Steakhouse. Del Taco and J. Alexander's are the latest to consider sales, meaning more consolidation is highly likely by the end of the year.