Donut King’s owner Retail Food Group to bring Firehouse Subs stores to Australia

Retail Food Group, which owns Donut King, Brumby’s Bakery and Gloria Jean’s, is looking to take a bite out of the local $1.7bn sandwich market by rolling out Firehouse Subs stores.

Retail Food Group has signed a deal to bring US sandwich brand Firehouse Subs to Australia.

Retail Food Group boss Matt Marshall believes US sandwich chain Firehouse Subs will be able to wrestle market share from market heavyweight Subway to become the No. 2 branded sandwich store in Australia and take a bite out of the $1.7bn food category.

The food group, which also owns a portfolio of coffee, cafe and fast food chains such as Gloria Jean’s, Donut King, Brumby’s Bakery, Beefy’s and Crust, has inked a deal to bring the Florida-based Firehouse Subs to Australia with plans to open 165 Firehouse Subs stores over the next 10 years with the first store to be opened in south-eastQueensland in late 2025.

Mr Marshall, who has visited the home of Firehouse Subs in Jacksonville, Florida, and saw recently first hand the opening of its store in Zurich, Switzerland, said across the quick service restaurant (QSR) industry globally there is always a “natural hierarchy” of competition between brands – but in the Australian sandwich category this did not exist. And this was the great opportunity for Firehouse Subs.

“When you look across QSR, every major market leader has a clear number two, that’s in burgers, chicken, Mexican and Subway don’t,” Mr Marshall told The Australian on Wednesday after Retail Food posted a 20 per cent lift in interim revenue to $69.59m as net profit rose 73.8 per cent to $7.33m. No dividend was declared.

“So we believe, firstly, there’s a really natural hierarchy of competition there that doesn’t exist currently, that we can disrupt, along with the fact that the category is big and it’s growing. So that’s probably the category positioning.

“The operating model for Firehouse, after all of our due diligence, works really seamlessly, and we think it bolts in exactly to what our investment pillars look like, both operating and how we find the right sites at the right price.

“So I think it’s a really great opportunity for us to disrupt a really big, growing sandwich category with one big market leader.

“I am convinced that Australians have never tried anything like the quality and flavour of Firehouse Subs … this is a brand that is all about the highest quality sandwiches with exceptional service.”

Florida-based Firehouse Subs is coming to Australia.

Firehouse Subs was founded by brothers and former firefighters Chris and Robin Sorensen in Jacksonville, Florida, and it now has 1300 locations across North America, with plans to also open in Brazil. It offers a more premium sandwich than Subway, especially in terms of the meats and sandwich fillings.

Shares in Retail Food rallied 13 per cent on the Firehouse Subs deal and its latest financial results.

Retail Food revealed the performance of its various chains through the December half was impacted by the cost-of-living crisis as shoppers visited fast-food chains less but did spend up on more affordable coffee, cakes and baked goods.

The food chain owner said its Australian stores sales growth was driven by its coffee, cafe and bakery brands – Gloria Jean’s, Donut King, Brumby’s and Beefy’s which successfully traded through the challenging economic conditions. This was led by its Donut King stores, which number 203, and had 7.9m customers through the first half.

This portfolio of 492 coffee, cafe and bakery stores booked a total 3.5 per cent lift in sales to $187.2m, average weekly sales up 8 per cent but the customer count down 2.5 per cent as consumers visited shopping centres less but spent up when they did.

“I think the broader industry trends around foot traffic being down are common across the industry, and we can see that in the broader food service data, combined with where people see value and spending more, both through inflationary pressures in price, but also the basket.

“And I think the real win for us comes with our brands that are largely impulsive, especially in cafe, coffee, bakery and here we present well to the customer we’ve got a really good value proposition – we don’t have really expensive products – and they’re really cost conscious, consumes a lot of them. But when we convey value and we bundle, and we give value to the customer, we’re seeing growth through transaction values.”

New innovations across its store networks included a Valentine’s Day launch at Donut King and new premium “indulgence” donuts, a refreshed sides menu at its Crust pizza chain, new beverages at Gloria Jean’s and special flavoured hot cross buns at Brumby’s.

Sales growth at these coffee, cafe and bakery brands – which generates 72.8 per cent of group sales – was offset by a weaker contribution from its fast-food chains led by Crust pizza and Rack’em Bones ribs as the division’s sales fell 5.4 per cent to $69.9m, average weekly sales fell 3.5 per cent and customer count was down 6.8 per cent.

Retail Food reported a drop in Crust customers, in line with the pizza industry, as families continued to pull back on dining out or grabbing a pizza for home.

Originally published as Donut King’s owner Retail Food Group to bring Firehouse Subs stores to Australia