Q&A: FIREHOUSE SUBS CEO DON FOX ON THE DIRECTION OF THE BRAND AFTER ITS ACQUISITION
Q&A: Firehouse Subs CEO on the direction of the brand after its acquisition
The purchase of Jacksonville-based Firehouse Subs by the parent company of Burger King, Popeyes and Tim Horton in a $1 billion all-cash transaction in November showed how the quick-service chain has become a high-profile success story.
Firehouse was founded in 1994 by brothers Chris Sorensen and Robin Sorensen and grew from a single restaurant to more than 1,200.
After Toronto-based Restaurant Brands International Inc. acquired the company, CEO Don Fox, who has been with the company since 2003 and served as CEO since 2009, stayed on as CEO.
To get a better sense of how RBI has affected Firehouse's operations, why growth in new locations has slowed and lessons learned over his 19 years with the brand, the Business Journal sat down with Fox.
At a conference last month, one piece of advice you gave companies considering franchising was not to do it too early. When is the right time to franchise?
I think that there are certain tools that it’s important you have in place, that you’ve got your system standards well-developed, your procedures — I know that may seem a bit common-sense, but in the case of Firehouse, actually, those pieces weren’t in place. Your operating manual, your system standards, all that’s very important.
Most franchisees in systems are expecting that the franchisor is in a position to promote and develop a brand through marketing. That’s always a collaborative thing, the franchisee does own the business and it’s in their interest to self-promote within the guidelines of the brand, but you’re usually expecting the franchisor to deliver that as part of the package. So it’s very important as a franchisor that you have those materials, that collateral, ready to go before you franchise.
Those are very basic elements that any franchisor should have, but it is surprising sometimes to see that people get ahead of themselves. In the case of Firehouse, that happened. Fortunately, they realized it pretty quickly and were able to pull back in and regroup before any damage was done.
When you’re a food and beverage franchise, you need a lot of consistency across locations, so how do you adjust for the preferences and expectations of the regions you move into?
To the extent that you’re going to have any regional differences, sometimes you don’t know until you get there. So, down in the Southeast, sweet tea is the norm. You push into some parts of the country, and the idea of having brewed sweet tea would be almost foreign to people. It’s not going to sell in the same way.
Even think about what subs are called. Most of the country refers to it as “subs,” but in some places it’s “hoagies,” “grinders.”
International markets are a much more salient example. Right now, we only operate in the U.S. and Puerto Rico and Canada, but as we look into going into other countries, there are sometimes very stark cultural differences. In some places, you may not eat pork and you won’t have ham on the menu, or you need more plant-based things. I’ve heard some interesting stories about some countries where there’s an aversion to eating finger foods.
So it’s very important to become aware of those things and having resources that you’re working with that are local and in-country can really help develop the understanding of those things.
Throughout much of Firehouse Subs’ existence, growth in the number of locations was rapid. With only 58 locations being added from 2018 to the end of last year, why the slowdown? Does it concern you?
As you go through development in different markets, when you get more well-penetrated, it can be more of a challenge finding sites in some parts of a market. When you start at the outset, it’s a blank slate — it’s just easier because everything’s open. And then as the market gets mature, you’re infilling a bit.
And then with a brand like ours, where you’re primarily in leased properties, you’re somewhat dependent on there being existing properties to go into, finding compatible spaces that reach criteria, so development becomes a little bit subject to availability, as opposed to some concepts where you’re doing ground-up construction.
What have you learned about Firehouse’s performance in the market from working with Restaurant Brands International?
It’s very helpful for me in my leadership position to have a little bit more intimate benchmarking with the other brands, now my peers. I’m pretty well-connected in the restaurant industry, but everybody has certain limitations on what they can talk about. So, having that internal network has a lot of intangible value to it, shortcuts the learning process on certain things, certainly having shared resources helps from an efficiencies standpoint.
And I think a very motivating factor for me is that, being competitive as I am, I want to make sure that Firehouse is out-punching its weight. When we were acquired, we were 1/35thof the [RBI] system sales. And I was very proud of the fact that last year, we exceeded a billion dollars in sales for the first time, and no sooner had I crossed that threshold than at that moment I became 1/35th of the greater RBI universe. It was a little bit humbling. But also, it’s invigorating.