Next Step for Firehouse: Go International

November 28, 2012

© 2012 American City Business Journals, Inc. All rights reserved.

JACKSONVILLE — Within two to three years, Firehouse Subs Inc. expects to be in all lower 48 states and possibly overseas.

The Jacksonville-based submarine sandwich restaurant chain now has development agreements in all but 45 of its 210 markets nationwide, and those that remain are for smaller communities.

Don Fox, the CEO of Firehouse Subs’ franchising arm Firehouse of America LLC, expects to sell the remaining development markets in the next one to two years and is now seriously exploring the company’s options for Canada and beyond.

By the end of 2012, Firehouse will have 580 restaurants nationwide and in the U.S. territory of Puerto Rico. The company will grow by a record-breaking 100 units this year. By 2020, Fox expects Firehouse Subs to be a chain of 2,000 restaurants in both the U.S. and other countries.

Ron Paul, the president of the food industry research and consulting company Technomic Inc., said that getting to 500 restaurants for any chain is a milestone not many restaurants are able to obtain. Of Technomic’s top 500 largest fast-casual chains, only 52 have more than 500 restaurants.

“You’re in pretty rare territory if you can grow your restaurants beyond 500 units,” Paul said.

Fox said international growth is the next step for Firehouse as it continues to rapidly grow its national presence thanks, in part, to its franchising business model that keeps corporate costs down.

Franchising at Firehouse is done through area developers, who act as regional corporate executives. They operate at least one store that is used as the training store for the surrounding area. They also help find franchisees, provide support and services to the franchisees and manage compliance.

Area developers typically have their own staff, which cuts down on the need for as many new employees at the company’s Jacksonville headquarters. In return, area representatives earn one-third of the royalties collected from all the stores in their area, which averages out to about $14,000 per restaurant, per year.

Since former Jacksonville Jaguar Don Davey retired from the NFL in 2000, he has acquired 12 Firehouse franchises in the Orlando area with business partner Scott Anthony.

“I fell in love with the brand,” Davey said. “They always say do what you love, and I love Firehouse Subs.”

Davey, along with Anthony and Eric Erwin, recently bought one of the last remaining areas in the nation in Davey’s home state of Wisconsin, where 42 restaurants will eventually be built, eight to 10 of which Davey and his partners will own.

Despite the company’s business structure that keeps it lean at the headquarters, Fox said he expects to hire about four to six employees there per year as the company continues to grow. Those new positions will include business managers, marketing professionals and franchise administration staff.

But, Fox noted, the company will continue to grow in the same methodical fashion that it has done since it was founded by firemen and brothers Robin and Chris Sorensen in 1994.

“We have so much growth opportunity here, we have to make sure we don’t take our eye off the ball,” Fox said. “We want to make sure we make wise decisions; it’s very easy to make a very expensive mistake.”

Darren Tristano, an executive vice president at Technomic, said the company’s expansion goals are very feasible with the company leaders’ continued hard work.

A growing trend among consumers who have a taste for better sandwiches will also help, Tristano said.

Like the ongoing trend of better burgers, better sandwiches are those characterized by food experts as costing slightly more than fast food-grade sandwiches, but offering higher quality and fresher ingredients.

Firehouse, which markets its large quantities of high-end meats and cheeses, fits into that category, Tristano said.

“There’s always going to be consumers who want a better sandwich for a little bit more money,” Tristano said.