If you stretch back to 2012, dine-in accounted for 52.4 percent of Firehouse Subs’ business. That was somewhat unusual in a sandwich segment dominated by takeout. During succeeding years, the contribution dwindled as industry trends shifted. By 2014, it was a shade under 50 percent. Two years later, dine-in mixed 46.5 percent. And on the doorstep of the pandemic in 2019, it was down to 38 percent.
Close to 90 percent of Firehouse’s sales in 2012 stemmed from a customer placing an order with a cashier at the point of sale. Right before COVID, the share of what the chain considered its “traditional channel of trade” slid to 75.3 percent as catering, online ordering, third-party delivery, drive-thru, and even phone orders, all grew.
This wasn’t a convoluted development or one tied specifically to Firehouse. From 2012–2019, fast casual showed a 5 percentage-point decline in dine-in sector-wide. More telling was a drop of 17 percent for a hefty collection of quick-service brands.
What changed wasn’t only consumer adoption, but also the introduction and refinement of tools to deliver omnichannel ordering, systems like streamlined apps and aggregator networks.
However, Firehouse now appears on the verge of taking what was an evolving reality and super-charging it. Parent company Restaurant Brands International chairman Patrick Doyle, the former Domino’s head who joined the company at the end of 2022, shared during an investor update Thursday that he, along with CEO Josh Kobza, challenged brand president Mike Hancock to make Firehouse “the first 100 percent digital [quick-service restaurant] in America.”
“I think it’s very doable,” he said.
Presently, 96 percent of Firehouse restaurants—RBI acquired the brand for $1 billion in December 2021—are in-line locations. “So it simply means, all we’ve got to do is rip out the front counter order point and replace it with kiosks,” Doyle said, “because our guests are either walking in or they’re ordering online ahead of time anyway. So it’s very possible.”
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Doyle then added he “thinks” RBI can get Firehouse to 100 percent fully digital in the U.S. and Canada by 2025. He said Hancock, a former Tim Hortons COO who came over to the brand in April 2022 before elevating to president the following spring, is eyeing 2026. “He’s nervous that I’m saying this,” Doyle quipped. “But the point is, I think it absolutely can be done. And regardless, you’re going to see us speed up our digital journey because it’s good for everyone involved.”
Firehouse’s transformation arrives alongside significant expansion and operational targets. Kobza said Thursday about two minutes and 45 seconds of guest wait time today at Firehouse is due to its steamers. And 90 seconds is related to the time it takes to toast bread. “We know this is too long,” he said.
Firehouse has been testing new equipment that can “significantly reduce wait times while enhancing our food quality,” Kobza noted. The new steamer cuts the time down to 45 seconds. A new toaster slices the figure in half, and is currently being piloted across restaurants in the brand’s homebase of Jacksonville.
Kobza recently toured stores with the equipment package and said average prep times dropped roughly 40 percent, “significantly increasing our potential throughput,” he said.
“We also know digital ordering can help improve service times, which is why that’s an important item that we’re focused on to make sure that we’re delivering a great digital experience to help drive more ordering through our digital channels,” Kobza continued.
Firehouse overhauled its existing app last summer with a focus on the user interface and experience. Following the relaunch, user ratings on the app scores improved by more than 100 percent to 4.8 stars (out of five).
“These improvements matter and they show up in sales,” Kobza said, adding Firehouse already has the highest home market digital sales mix out of RBI’s brands (Popeyes, Tim Hortons, Burger King), reaching nearly 40 percent in 2023. That was 20 percent before RBI bought the chain.
Part of this gap between concepts owes to the difference in formats at Firehouse (fewer drive-thrus). “But having a seamless user experience has also helped drive these incredible results,” Kobza said.
On the development front, Firehouse began the year with an aggressive development incentive aimed at new franchisees who are first responders or veterans. The brand promises $100,000 to help get started. This came a year after it unveiled a “2023 Development Incentive Program,” for operators who agreed to develop and open at least two new restaurants in 2024 and 2025. They received a DIP contribution of $50,000 per restaurant. It lifted to $75,000 if they signed on for two, and $100,000 for three-plus.
Kobza said there’s a clear path to accelerate net unit growth for Firehouse on the heels of these platforms. The chain closed 2023 with 1,265 restaurants, a year-over-year increase of 23 units. It’s aspirations now are to ramp up to 300 annual openings within five years. And a path to deliver “at least” 800 net new units by 2028.
“This has already been a great acquisition,” Kobza said. In the two years since, the average-unit volumes of Firehouse have lifted from about $900,000 to $1 million. “We’ve also set up the system for accelerated development by finalizing our area rep agreement buyouts and introducing compelling and sought-after development incentive programs,” Kobza said.
In the past couple of years, Firehouse expanded into Puerto Rico, Switzerland, and Mexico, with more on deck for 2024, including the UAE, Kobza said.
Firehouse’s domestic same-store sales moved up 3.8 percent in the fourth quarter and 4.2 percent on the year.
Thursday’s news came during a larger presentation for RBI that outlined a five-year growth plan—something the company historically hasn’t offered in the way of long-term guidance.
Kobza told investors the company expects to achieve a minimum of 40,000 restaurants, $60 billion in systemwide sales, and $3.2 billion in adjusted operating income by 2028. That will include average annual results over the next five years of 3 percent-plus comparable sales, 5 percent plus net restaurant growth, and 8 percent-plus systemwide sales growth, translating to at least 8 percent adjusted operating income growth.
Factored in will be Tim Hortons scaling up in the U.S. from about 600 stores to 1,000; 7,000 new international restaurants; and growing Popeyes from nearly 3,400 restaurants in 2023 to over 4,200 by 2028.
RBI also plans to get 85 to 90 percent of Burger King’s system to a modern image by 2028, driving incremental sales through remodels and effective marketing, executing the Carrols reimaging and refranchising plan, and improving guest experience through training and operational excellence at the restaurant.