Hot Chain, Hot Growth
Firehouse Subs has a lot more going for it than an interesting story. And the story is unique: A couple of Jacksonville firefighters — brothers, even — opened the first restaurant in 1994, selling sandwiches (with names like ‘Hook & Ladder,’ which is the No. 1 seller) within a decidedly firefighter-themed restaurant environment. The concept was hot from the get-go, leaping to over 300 units in its first decade and now numbering near 900 mostly franchised restaurants.
What is most compelling about Firehouse Subs, however, is how it has combined an aggressive expansion plan with a methodical and analytical approach to growth. According to John Namey, VP Real Estate Services for Firehouse Subs, growth over the next five years will be primarily in franchised restaurants, and the 10-year plan calls for 2,000 units by 2020. “Meeting this goal will require opening an average of 225 restaurants per year through the end of 2019,” said Namey.
To do that, the real estate team must move quickly, while still carefully and thoroughly examining each market and each site. In 2009, Firehouse Subs brought in Buxton, the Fort Worth, Texas-based customer analytics firm, and charged Buxton with helping its real estate team to raise the bar on how trade areas and sites are evaluated and approved. By doing that, Firehouse Subs could ensure that the stabilized sales volumes of new restaurants would exceed that of the remainder of the system.
“Buxton has been a great partner in assisting us to meet our team’s goals,” said Namey. Firehouse Subs looks for high-visibility locations in trade areas that have potential for both lunch and dinner traffic. Viable trade areas should, according to Namey, include a strong retail and commercial business presence, along with other complementary restaurant brands. “In addition to high visibility, we look for locations with multiple points of ingress and egress and sufficient parking for our guests at peak meal time,” Namey explained. “A typical Firehouse Subs restaurant is between 1,600 sq. ft. and 2,000 sq. ft. and should have a minimum width of 20 ft.”
Buxton’s SCOUT platform has been key to Firehouse Subs’ successful growth. Since the primary responsibility of the real estate team is to support the franchise system in selecting the right sites in the right trade areas — which means that trade-area analyses and market-specific strategic plans are paramount — the Web-based SCOUT solution is used to target areas with characteristics similar to top-performing existing locations. SCOUT also counts core guests within defined areas, maps existing and potential locations, maps shopping centers, shows traffic counts, maps competitors, and maps or shows other data Firehouse Subs considers important to the trade area and site evaluation process.
“We also use SCOUT to better understand where our core guests are located, relative to a prospective trade area or site,” said Namey. “With SCOUT, we are able to identify how many guests that index well with Firehouse Subs live and work near a potential trade area or site. The program also helps us to understand how far [in drive time] work place and residential guests are willing to travel to eat at our restaurants. This analysis is performed on every trade area and site when considering whether or not it meets the criteria for a new Firehouse Subs restaurant.”
In addition to this virtual analysis, added Namey, every trade area and site are visited by a member of the Firehouse Subs real estate team to perform a “boots on the ground” evaluation. “The ability to conduct a detailed virtual analysis of the area prior to the visit makes our team much more efficient and productive when they are on site,” Namey said.