How Firehouse Subs Builds For The Future By Looking At Their Past

Firehouse Subs

Firehouse Subs is a business where the heritage and brand name are inseparable. Started in 1994 by brothers/firefighters Robin and Chris Sorensen, they came from a lineage of over 200 years of firefighter experience in their families. Today, there are 1,170 stores across the US, Puerto Rico and Canada. To learn more about this entrepreneurial journey, I sat down with Don Fox, the CEO of Firehouse Subs who joined the company when they had just 65 stores around 15 years ago. We talked about the importance of brand purpose, corporate community service, and even how the rise of delivery startups like UberEats and DoorDash are impacting the restaurant industry.

Dave Knox: Brand Purpose is an often talked about topic in Corporate American today and you have said before that the catalyst for Firehouses Subs' growth was really verbalizing the company mission statement. Why has the brand purpose been so important to the explosive growth of Firehouse Subs in recent years?

Don Fox: Let me start by expressing what the mission statement is, which is to carry on our commitment to and our passion for hardy and flavorful food, heartfelt service and public safety. Sometimes mission statements can seem bit with cliche-ish but they need to be tight and concise and memorable and repeatable and most importantly clearly understood by the people in the organization. And that is from top to bottom. Everybody, no matter what their role is, should approach every day with the thought that everything that they're doing in some way contributes to the success of that mission. And the mission helps keep you focused and you're not distracted by other things. As I tell the team, our goal every day has to be number one at those things that are in that mission statement. We have metrics and it is very important that we measure living up to those words.

Knox: Relating to that mission, heartfelt service and public safety are not common things you find in corporate mission statements but you bring it to life through the Firehouse Subs Public Safety Foundation. How did that start and why did it become such an important part of not just the Firehouse culture but now ultimately your Firehouse mission?

Fox: Giving back to the community has always been a central part of the brand's culture and that began with our founders and their efforts from 1994 to 2005 with third parties like Habitat For Humanity and Muscular Dystrophy Association. But in 2005 we did a relief effort out in Mississippi for Hurricane Katrina. The founders put together a team of about a half a dozen other people from headquarters and with the support of our vendors brought out of food supplies in a truck and took our Firehouse bus out there. 

From that experience was born Firehouse Subs Public Safety Foundation and its mission to purchase equipment that is vital to first responders either to help save lives or protect their own lives. We have fulfilled more than $44 million of grants. Our customers are vital to that. They contribute 65 to 70% of the funds that come into the entity and we contribute the balance along with our vendor partners. Our employees are great participants in it. It's a marvelous effort and it has become the heart of Firehouse Subs. In many respects, it is our reason for being. It's our bigger, more important purpose as a brand.  It was part of our DNA and our founders' DNA and wanting to help and give back and serve a greater purpose. 

Knox: One of the concepts core to Predicting The Turn is Second Order Consequences where a broader change in society or industry has cascading effects on a business. How have you seen this play out with the restaurant industry?

Fox: One thing I don't think gets talked about enough is the shift in traditional retailing and the ripple effect that has over into the restaurant industry. ECommerce, for retail now has grown to around 14% and that that shows how much room there is still to convert brick and mortar retailing over eCommerce. On one hand, people might look at that and say, "Well gosh, 14% still seems sort of low." But that 14% has a big impact then on restaurant traffic because traditionally, restaurant visitation has a very direct linkage to retail trips. Basically trips in general, people being out on the road, driving, traveling, there's direct linkage to restaurant visitation. And people need not look any further than the holiday shopping season to see the reinforcement of that.

In the restaurant industry, that period between Thanksgiving and Christmas is one of the highest periods from a seasonality perspective. Even though weather conditions aren't great for it, it doesn't matter. The bottom line is people change their behavior distinctly in that shopping period. They change their travel patterns and where they're going after work, how they're spending the weekends and restaurant visits get tied to those experiences. Well, as you start to erode those trips through the impact that eCommerce has and people ordering from home, now you've taken away traditional opportunities for our restaurant experience. So what do we see? Well, the seasonality that the restaurant industry experiences in that November to Christmas, Thanksgiving to Christmas window, is not what it used to be. It is much more marginalized. You don't see the seasonal bump to the same degree that you used to. It's having an impact in that time period, and really it's having an impact across the board the entire year.

Knox: The next thing I'd love to talk about is the restaurant of the future. How's that differ from the traditional units?

Fox: There are a couple of primary ways. One is, we've downsized the restaurant, recognizing that our dine-in business has dropped from 53% down to 38% of our business. We saw some opportunity to get some economy. Rents around the country have certainly not gone down over the years. Occupancy expense puts more and more pressure on the business, so if we can reduce some square footage, that can be a good thing for the business model. 

We also felt we had an opportunity to make the service system a bit more intuitive. Firehouse Subs is fairly unique in terms of queue line set up and it can be a bit confusing for new customers. And we also wanted to optimize it for off-premise to make take out transactions, whether the customer is picking them up themselves through our rapid rescue program or whether it's third party delivery people coming to pick up the restaurant. We want it to be as ergonomic and friendly as possible.

And then last but not least, we had some key opportunities to try to improve our kitchen efficiency. For our entire 25 years we've been dealing with I'll call a legacy production system that requires a lot of footsteps, the product being passed back and forth in the production area. It's not a matter of just one person making a sandwich, it's multiple people on any given sandwich. There was a lot of opportunities to streamline that and get better productivity.

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Firehouse Subs

Firehouse Subs is a business where the heritage and brand name are inseparable. Started in 1994 by brothers/firefighters Robin and Chris Sorensen, they came from a lineage of over 200 years of firefighter experience in their families. Today, there are 1,170 stores across the US, Puerto Rico and Canada. To learn more about this entrepreneurial journey, I sat down with Don Fox, the CEO of Firehouse Subs who joined the company when they had just 65 stores around 15 years ago. We talked about the importance of brand purpose, corporate community service, and even how the rise of delivery startups like UberEats and DoorDash are impacting the restaurant industry.

Dave Knox: Brand Purpose is an often talked about topic in Corporate American today and you have said before that the catalyst for Firehouses Subs' growth was really verbalizing the company mission statement. Why has the brand purpose been so important to the explosive growth of Firehouse Subs in recent years?

Don Fox: Let me start by expressing what the mission statement is, which is to carry on our commitment to and our passion for hardy and flavorful food, heartfelt service and public safety. Sometimes mission statements can seem bit with cliche-ish but they need to be tight and concise and memorable and repeatable and most importantly clearly understood by the people in the organization. And that is from top to bottom. Everybody, no matter what their role is, should approach every day with the thought that everything that they're doing in some way contributes to the success of that mission. And the mission helps keep you focused and you're not distracted by other things. As I tell the team, our goal every day has to be number one at those things that are in that mission statement. We have metrics and it is very important that we measure living up to those words.

Knox: Relating to that mission, heartfelt service and public safety are not common things you find in corporate mission statements but you bring it to life through the Firehouse Subs Public Safety Foundation. How did that start and why did it become such an important part of not just the Firehouse culture but now ultimately your Firehouse mission?

Fox: Giving back to the community has always been a central part of the brand's culture and that began with our founders and their efforts from 1994 to 2005 with third parties like Habitat For Humanity and Muscular Dystrophy Association. But in 2005 we did a relief effort out in Mississippi for Hurricane Katrina. The founders put together a team of about a half a dozen other people from headquarters and with the support of our vendors brought out of food supplies in a truck and took our Firehouse bus out there. 

From that experience was born Firehouse Subs Public Safety Foundation and its mission to purchase equipment that is vital to first responders either to help save lives or protect their own lives. We have fulfilled more than $44 million of grants. Our customers are vital to that. They contribute 65 to 70% of the funds that come into the entity and we contribute the balance along with our vendor partners. Our employees are great participants in it. It's a marvelous effort and it has become the heart of Firehouse Subs. In many respects, it is our reason for being. It's our bigger, more important purpose as a brand.  It was part of our DNA and our founders' DNA and wanting to help and give back and serve a greater purpose. 

Knox: One of the concepts core to Predicting The Turn is Second Order Consequences where a broader change in society or industry has cascading effects on a business. How have you seen this play out with the restaurant industry?

Fox: One thing I don't think gets talked about enough is the shift in traditional retailing and the ripple effect that has over into the restaurant industry. ECommerce, for retail now has grown to around 14% and that that shows how much room there is still to convert brick and mortar retailing over eCommerce. On one hand, people might look at that and say, "Well gosh, 14% still seems sort of low." But that 14% has a big impact then on restaurant traffic because traditionally, restaurant visitation has a very direct linkage to retail trips. Basically trips in general, people being out on the road, driving, traveling, there's direct linkage to restaurant visitation. And people need not look any further than the holiday shopping season to see the reinforcement of that.

In the restaurant industry, that period between Thanksgiving and Christmas is one of the highest periods from a seasonality perspective. Even though weather conditions aren't great for it, it doesn't matter. The bottom line is people change their behavior distinctly in that shopping period. They change their travel patterns and where they're going after work, how they're spending the weekends and restaurant visits get tied to those experiences. Well, as you start to erode those trips through the impact that eCommerce has and people ordering from home, now you've taken away traditional opportunities for our restaurant experience. So what do we see? Well, the seasonality that the restaurant industry experiences in that November to Christmas, Thanksgiving to Christmas window, is not what it used to be. It is much more marginalized. You don't see the seasonal bump to the same degree that you used to. It's having an impact in that time period, and really it's having an impact across the board the entire year.

Knox: The next thing I'd love to talk about is the restaurant of the future. How's that differ from the traditional units?

Fox: There are a couple of primary ways. One is, we've downsized the restaurant, recognizing that our dine-in business has dropped from 53% down to 38% of our business. We saw some opportunity to get some economy. Rents around the country have certainly not gone down over the years. Occupancy expense puts more and more pressure on the business, so if we can reduce some square footage, that can be a good thing for the business model. 

We also felt we had an opportunity to make the service system a bit more intuitive. Firehouse Subs is fairly unique in terms of queue line set up and it can be a bit confusing for new customers. And we also wanted to optimize it for off-premise to make take out transactions, whether the customer is picking them up themselves through our rapid rescue program or whether it's third party delivery people coming to pick up the restaurant. We want it to be as ergonomic and friendly as possible.

And then last but not least, we had some key opportunities to try to improve our kitchen efficiency. For our entire 25 years we've been dealing with I'll call a legacy production system that requires a lot of footsteps, the product being passed back and forth in the production area. It's not a matter of just one person making a sandwich, it's multiple people on any given sandwich. There was a lot of opportunities to streamline that and get better productivity.

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