Interviews

Jimmy John's founder: Business owners unsure of the future

Jimmy John Liautaud on state of U.S. economy

 

This is a rush transcript from "Your World," October 15, 2012. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": A live look here on Sixth Avenue in New York City, just a block away from where we are at Fox.

Paul Ryan will be attending a very big fund-raiser, the Republican ticket making a big push for dough ahead of tomorrow night's big debate.

And my next guess is happy to oblige.

Jimmy John Liautaud is of course the founder and the CEO of the gourmet sandwich empire that bears his fine name, a big Romney backer.

Are you doing this Ryan event tonight or providing the food?

JIMMY JOHN LIAUTAUD, FOUNDER AND CEO, JIMMY JOHN'S: I am not doing the Ryan event tonight.

CAVUTO: OK.

But you know you are a big Romney backer. And you and I were chatting briefly during the break you thrived under Democratic and Republican presidents alike and opened up, what, a few hundred more stores just during the Obama years. So Obama's been good to you.

LIAUTAUD: Fine. Obama -- the last four years have been very good to us and the 26 years before that were also very good to us.

CAVUTO: What did you say? You were a 30-year overnight story.

LIAUTAUD: Exactly.

CAVUTO: But if he's been so damaging, you wouldn't have been able to expand like you have, right?

LIAUTAUD: Well, a lot of our -- 80 percent of our expansions come from current franchisees. So they have been in the system for a long time.

And with a system that is as healthy and viable as ours, that is what happens over time. It's exponential growth. But what's happening right now with the future, I have -- a lot of these franchisees, they're holding back because they're not sure what is really going to happen with ObamaCare, if in fact...

CAVUTO: You have a lot of hourly workers, right?

LIAUTAUD: About 60,000.

CAVUTO: So, like Darden, you heard what they're doing. They're going to cut down on those hours, workers, so they're not hooked into that overtime dilemma or the health care automatic provide...

LIAUTAUD: Exactly.

CAVUTO: Are you going to do the same thing?

LIAUTAUD: We have to do the same thing.

CAVUTO: Really?

LIAUTAUD: Yes. We're not doing it now, but we have to bring them down to 28 hours. Yes, we have to do that. There's no other way we can survive it, because we think it will cost us 50 cents a sandwich. That';s just the actual cost.

CAVUTO: Really?

LIAUTAUD: Yes, we do.

CAVUTO: What about just paying the penalty?

A lot of your competitors say, you know, down the road, Neil, we could see paying the penalty and sucking it up.

LIAUTAUD: Well, if you have 40 or 50 employees at a restaurant, and the penalty is $2,000, and you're going to pay $80,000 or $100,000 penalty, there goes the profit in your restaurant.

So it's very expensive to just pay the penalty as well. And I think we have to manage around it.

CAVUTO: How did you start? Like Mitt Romney, you didn't really need the government, but you hit up your parents for a loan, right?

LIAUTAUD: My parents lent me $25,000.

CAVUTO: What did they say? What did you sell them on?

LIAUTAUD: Well, I told them that I would be successful. And they said, well, if you're not successful, and then -- and you don't pay us back, you've got to give us two years in the Army. And I said, it's a deal.

And so I did it. And I made it happen. And my father actually owned 48 percent of the business for two years. And I finally bought him out, and I owned it myself in '85.

CAVUTO: He made a killing, didn't he?

LIAUTAUD: My father made...

(LAUGHTER)

(CROSSTALK)

CAVUTO: But that's actually been made fun of by the Democrats, by Joe Biden and Barack Obama, saying not all of us can approach our parents and get money.

LIAUTAUD: Hey, listen, I totally understand that.

I was absolutely blessed. And I'm really fortunate that my parents were there for me. And I hope that I can give back to society the way they have and the way -- I just -- I was very fortunate.

CAVUTO: In the meantime, you've made some news by saying, when it comes to Illinois; you might pull out to lower tax environments. Florida has come up. Texas has come up.

LIAUTAUD: Yes.

CAVUTO: Where does that stand?

LIAUTAUD: Here is where it stands. I don't mind paying the tax.

The tax -- it's OK to pay tax. And I'm very good with paying the tax. But we spend so much time and effort making that money. And I don't like the inefficiency in which it's spent. It's disrespected. When we're regulated and disciplined in time, when to send it in, how to send it in, but when they disrespect it the way they do it, with their inefficiencies and poor planning, it doesn't make me feel good about it.

I can go to Indiana, where Mitch Daniels is using his excess cash to build infrastructure.

CAVUTO: Well, where are you going to go?

LIAUTAUD: I don't know yet. I like Texas.

CAVUTO: Oh, you're playing one off the other.

LIAUTAUD: Well, we’re doing a little of that, but that’s normal.

CAVUTO: I see.

And you seem to feed the Romney staff with your sandwiches, right? Is that a given?

LIAUTAUD: Absolutely. I feed the Romney staff.

CAVUTO: Does he eat your stuff? Does he eat your stuff? He seems like a health nut.

LIAUTAUD: I think he eats it once in a while. But you know what? The Obama staff likes them too.

CAVUTO: Really?

LIAUTAUD: Yeah, they do.

CAVUTO: So you’re a fair and balanced food provider.

LIAUTAUD: There you go.

CAVUTO: Jimmy, thank you very, very much. Your sandwiches are legend. Very good to see you.

LIAUTAUD: Thank you for having me, Neil.

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