It had been 11 years since Firehouse Subs expanded its C-suite when Mike Hancock arrived in April 2022 from sister brand Tim Hortons. He elevated from chief operating officer to president the following spring. During that stretch, Hancock received a crash course in the fast casual’s potential. Namely, Firehouse was a brand where roughly half of its system of 400 or so franchisees were single-store operators.
Under the umbrella of Restaurant Brands International, which acquired Firehouse for $1 billion in December 2021, the chain embarked on its biggest incentive program in company history last year through a $20 million investment. Known as the “2023 Development Incentive Program,” operators who agreed to develop and open at least two new restaurants in 2024 and 2025 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. It was presented in the form of credits. So when operators committed to building stores and got close, they collected. Put in different terms, as opposed to a royalty or ad fund discount, Firehouse placed cash in the pockets of franchisees at the start of construction.
Hancock says Firehouse was oversubscribed within a month of launch. “Overwhelming interest from existing franchisees, which is amazing,” he says.
And now, it’s time for Phase 2. Alongside building its base from within (there remains an incentive program for current operators to earn $25,000 per store on two builds and $50,000 for three or more), Firehouse just introduced a wide initiative aimed at attracting new franchisees who are veterans or first responders—a nod to the brand’s roots and founders, firefighter brothers Robin and Chris Sorensen.
The “2024 Veteran and First Responder Development Program” earmarks $100,000 for restaurants one through three for new franchisees. Afterward, it’s $50,000.
On average, it costs $400,000 to $500,000 to build and open a Firehouse. Additionally, Firehouse says, it will continue to prioritize growth by piloting a new “operator to owner” initiative, a program that sets top-performing managers and operators on the path to franchise ownership.
Again, unlike a vast array of incentive programs in the industry, Hancock says, this one isn’t a credit against future payments. It’s up-front cash.
Hancock notes, currently, “probably less than 5 percent” of Firehouse’s franchisees hail from veteran or first responder backgrounds. “That’s the backbone of our business; our founders were first responders,” he says. “We do have some exceptional first responders in the system and they’re extremely engaged. Great guest satisfaction in the restaurants. They raise a ton of money for our foundation [since inception in 2005, Firehouse’s Public Safety Foundation has awarded more than $84 million in lifesaving equipment and resources to first responders and public safety organizations]. So we think it’s a win-win for everybody if we can bring some amazing first responders in.”
Firehouse expanded by a net of 22 stores in 2022. The prior year, it grew by 12 after retracting by two in COVID-shaken 2022. It’s not difficult to imagine the runway ahead.
Year-end 2022 domestic unit count
- Subway: 20,576
- Arby’s: 3,415
- Jimmy John’s: 2,637
- Jersey Mike’s: 2,397
- Panera: 2,102
- Firehouse: 1,187 (1,149 franchises and 38 corporate)
Average-unit volumes in 2022 were $924,000 and U.S. systemwide sales $1.154 billion. Both were higher than 2021, when AUV and systemwide sales clocked in at $909,000 and $1.044 billion, respectively. That AUV number, among direct sandwich peers on that list (Panera excluded) was second only to Jersey Mike’s $1.210 million. Jimmy John’s was $900,000 and Subway $510,000.
Hancock says 2023’s program positioned Firehouse for multi-year and sustained growth, a pace he believes the brand can wedge between 100 and 200 openings per calendar.
This just-announced incentive serves to keep Firehouse’s pipeline fresh and to inspire future development as well. It also keeps to the spirit of Firehouse and fosters one of the key reasons it’s become best-in-class for guest satisfaction across metrics like hot sandwiches, Hancock says.
Firehouse draws a good deal of parallels to Tim Hortons. Internally, the biggest might be its footprint of local and smaller operators. Tims typically averages about three or four stores per owner. Firehouse is closer to two-and-half. “You find that those folks who are in their restaurants day in and day out, they know their guests,” Hancock says. “They know their guests by name. They tend to have higher guest satisfaction empirically. And they tend to better in terms of supporting our foundation and raising more money because they’re personally more passionate about the cause. So as we think long term, we’re really ambitious in our growth. We think this is a brand that be much larger than it is today. And we’re proud to make it much larger. It’s such a special brand with such high community engagement.”
“But we think that growth is coming to come primarily from local operators,” he adds.
It’s a mindset that’s also begun to unfurl at RBI’s largest brand in Burger King, which recently acquired Carrols Restaurant Group for $1 billion and plans to refranchise stores to more local operators.
Essentially, Firehouse is coming at its whitespace from dual fronts: invest and empower high-performing local leaders to grow with the brand, while incentivizing first responders and veterans to join the movement. “We get to continue to drive our purpose and mission,” Hancock says. “We get to bring in awesome people who have done amazing things for our community already. It’s a huge incentive. There’s not many people giving out $100,000 per restaurant. I can’t think of anyone who is doing anything quite as aggressive for franchisees as we are to bring in first responders [and veterans].”
Without much debate, it’s a program that places Firehouse in the top echelon of paybacks in the industry when you consider the aforementioned cost to entry.
Hancock admits a financial lure might not be enough, however, to convince somebody to shift career trajectories into one of the most complex industries there is. But he doesn’t see that as a negative. Rather, operators who approach franchising hesitant and aware of the hurdles, tend to be the same ones who don’t overlook the day-to-day grinds necessary to be successful. The brand’s history of smaller operators has long nurtured a culture of training Hancock says is built to get local franchisees up and running. They go through multiple rounds of interviews and spend time in restaurants before signing on. “It’s a two-way street,” he says. “We’re evaluating them, but we want to make sure as we go through the process, they’re also evaluating us and their comfort level of working with us, as well as their comfort level of working in restaurants.”
Hancock adds he’s seen thriving operators from all backgrounds. It’s the tangibles that split lead operators from absentee ones, not whether or not they already know systems.
Either way, Firehouse has worked in recent months on a new model aimed to bump speed and streamline operations in the back that can fuel all of it.
First debuted last July in Jacksonville, Florida, it features a freshly designed kitchen layout, with an updated steamer and toaster equipment. Both aim at boosting service times and ensuring consistency. Franchisees have the opportunity to retrofit existing kitchens to the package.
The concept doesn’t adjust the look and feel of Firehouse from the outside—it’s still the “community design”—and doesn’t materially change square footage (although Firehouse is working on smaller units of late, with stores closer to 2,000 square feet and some even more in the 1,200 range). The Loretto Road opening is a bit smaller, but the kitchen upgrade works in any Firehouse build.
Hancock says the restaurant “has gone above and beyond our expectations of speed.” Average time improved and so did the long tail. He notes Firehouse has begun to scale out the test and will have several more this quarter, both franchise operated and company run. If franchisees find tangible success, “we’re going to start thinking long and hard about how this becomes something that’s ready for a further expansion, potentially,” Hancock says.
Whichever angle you take, though, the broad vision for Firehouse remains one of expansion opportunity, stateside and overseas—the chain recently announced a push into Canada with seven openings to bolster a footprint of about 70. Firehouse opened its first location outside of North America in 2023 in Zurich, Switzerland and, this year, has international stores slated for Mexico, the U.K., and the Middle East.
Hancock says corporate recently announced to its franchisee system a plan to double Firehouse’s footprint in five years. “We’re working to accelerate that, and we have a lot of momentum from existing franchisees,” he says. “We were fully prescribed to that [incentive] program. The next phase here is bringing in new franchisees. We’re very optimistic about the pipeline going forward.”
Being a part of RBI’s portfolio helps with some broader targets. Canada, for instance, has a slew of Tim Hortons’ operators who can link with Firehouse, which has been the case already. In the U.S., Hancock says, the goal first was to go to existing operators and franchisees. Now, for some new markets, it’s headed to external operators (the first responders and veterans). But, naturally, there are talks happening with internal franchisees who run Burger Kings, or Popeyes, who might be interested in getting into a sandwich segment that’s seeing some of the most robust growth of any field in America.
“Again, one thing that’s important for us is maintaining that local operator feel,” Hancock adds. “So even within the brands, we want to go to folks who are probably a bit smaller and have more experience being hands-on operators.”
They’re all critical ticks to win the sandwich arena, he says. Coming over from the beverage world and Tim Hortons, which is high-transaction count business in comparison, you have to get it right since guests don’t show up as frequently, Hancock explains. “The people are taking their time and energy to go out of their way to enjoy their lunch or their dinner with you,” he says. “The stakes are very high in terms of the expectations of friendliness by our team members. The expectations on food quality, people don’t want you messing up their lunch, just like any other business. But especially as they’re coming and getting a great Firehouse sandwich.”
