CMO Perspectives: Doug Reifschneider of Firehouse Subs

By positioning itself as a gourmet sandwich chain in the rapidly expanding fast-casual segment, Firehouse Subs has no shortage of competition trying to match its supercharged growth rate. That kind of ramp-up in unit count raises the degree of difficulty for Doug Reifschneider, the Jacksonville, Fla.-based chain’s vice president of marketing, but it is a challenge he welcomes.

According to the latest Top 100 report from Nation’s Restaurant News, Firehouse Subs grew its U.S. systemwide sales at the eighth-fastest rate, a 14.8-percent increase to $436.1 million, in its latest fiscal year. At the end of the latest year, Firehouse Subs also increased its unit count by 25 percent, to 712 locations.
 
“We’ve had a great run since late 2009,” Reifschneider said. “As we’ve grown, we’ve added new franchisees. The new guys who have been added the last several years think 5 percent to 10 percent growth in comparable sales is normal. So we’re tasked with trying to meet that expectation, which is neither easy nor usually sustainable.”

But that does not stop Reifschneider from trying. He spoke with Raising Cane’s chief marketing officer Clay Dover, a board member of the NRA Marketing Executives Group, about how Firehouse evolves its marketing to support rapid growth.

What is the biggest challenge of operating in a highly competitive segment like sandwiches?

The biggest challenge is the drive to constantly be better. We’re in a share-of-stomach battle and we compete with more than other sub shops. The quality of the meats and cheeses we use, coupled with our décor and our operations model of taking the order at the counter and delivering food to the table puts Firehouse squarely in the fast-casual segment of the business. But we are a sub shop too, so we compete against Panera Bread, Chipotle Mexican Grill, and Five Guys Burgers and Fries as much as we do against our sandwich brethren. We constantly strive to improve in order to be perceived better than the competition.

How does Firehouse stand out?

We stand out in three ways. First [is] our name and longstanding tagline, “Founded by firemen.” Chris and Robin Sorensen founded the business almost 20 years ago. They were both firefighters, and their dad, Captain Rob Sorensen, was on the Jacksonville Fire Department for 43 years.

Second, we use the highest quality meats and ingredients. All of our beef products — brisket, pastrami, corned beef and roast beef — are USDA Choice beef. We use whole-muscle turkey and ham. As a matter of fact, the secret ingredient in our honey ham is … honey.

Third, our franchisees live our mission statement every day. They carry on our commitment to and passion for hearty and flavorful food, heartfelt service and public safety.

How does Firehouse uphold the commitment to its communities through the Firehouse Subs Public Safety Foundation?

The foundation is the heart of Firehouse Subs. Chris and Robin, the founders, started the Public Safety Foundation in 2005 after taking a team to Mississippi to help Hurricane Katrina victims. We raise money in three primary ways for the foundation: by selling pickle buckets, placing coin canisters by the point of sale and asking guests to round up their bill.

We do other special events too. The money raised goes to public safety entities like fire, police and emergency departments for things like defibrillators, the Jaws of Life, thermal-imaging cameras or body armor. To date, we’ve made donations to 790 public safety entities in 41 states and Puerto Rico to the tune of more than $10 million.

What led to the brand’s “under 500 calories” menu, and how has it performed so far?

The leadership team at Firehouse Subs watches a lot of industry data. We’re very data-driven, and we saw comments as well as trends that consumers were starting to finally walk the talk of eating healthfully. What I mean by that is something Herman Cain said more than 25 years ago, but it still is true today: “Americans talk lean, but they eat fat.” We saw the tide shifting, so our founders developed the Hearty and Flavorful menu of six new subs and four new salads, all under 500 calories.

Velocity of sales for the menu started out slowly but has steadily gained traction. The new Hearty and Flavorful menu is less than 8 percent of sales … but it is growing. Part of our strategy was to use the new menu to gain the “veto vote.” As we advertised the menu, we didn’t really care if a guest ordered the new menu or one of our other hearty subs.

What's ahead in 2014

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How do you see health and nutrition evolving and impacting our industry over the next few years?

As a self-professed health nut, I work out six or seven times per week and try to eat healthfully. The operative word is “try,” and based on people I work with and the others I work out with, most of us have the same problem. We all live to eat. That’s great for the restaurant industry, because people use the occasion of breaking bread to socialize the old-fashioned way, face to face. Are health and nutrition more important to more consumers than they were 20 years ago? Yes.  Will it continue to grow in importance? Yes, but there will be some kind of equilibrium established. That said, I think most restaurants will need to offer some healthy options in the terms of lower-calorie, -fat and -sodium items to stay competitive.

Firehouse Subs was the first national chain to commit to the Coke Freestyle systemwide. What advice do you have for others?

It’s been a huge positive for Firehouse Subs. It set us apart from all our competition. In 2012, the year we introduced and advertised the Freestyle, our system sales grew 35 percent, and 2012 was the best year in the history of our brand for sales and growth. Freestyle was a big part of that success.

It works well because of our service system. Once guests order and pay at the register, they have four to six minutes before their sub will be delivered. That time allows the guests to fill their drink, grab their chips and sit down. But it may not be the best option for all quick-service platforms.

Where are you allocating additional marketing resources in 2014?

We added a fourth regional marketing manager earlier in the year. In 2015, we hope to increase the media budget for the system, and I hope to add at least one new digital marketing position and a person for merchandising, branding and catering. As you can tell, I’m still scoping the position, so time and business needs dictate where I land.

What marketing tactics or strategies excite you most right now?

The shiny new toy for most of us right now is social and digital advertising. We continue to use traditional advertising with success, but we’ve been experimenting with all sorts of other digital and social options. The great thing about digital options is the data and how precisely digital efforts can be targeted. The disappointing part of digital is cost. For a bunch of 1’s and 0’s, it costs more than I think it should.

I’m excited about our social media efforts and success. As a relatively small brand, we do well with engagement and sentiment scores in the social universe, and we usually score somewhere between No. 8 and No. 11 on the Restaurant Social Media Index.

What is your favorite quote?

My favorite is from Gen. George S. Patton: “All glory is fleeting.” Sounds like the restaurant business, right? We’re only as good as our last P&L.