Restaurant Brands International to Acquire Firehouse Subs

Oakville / CA. (rbi) Restaurant Brands International (RBI) and Firehouse Restaurant Group announced that they have reached an agreement for RBI to acquire Firehouse Subs for USD 1.0 billion in an all-cash transaction. The transaction offers significant long-term unit growth potential to drive attractive returns for all stakeholders and is expected to be immediately accretive to RBI’s diluted net earnings per share.

Firehouse Subs adds a strong and loved restaurant brand with attractive unit economics in a complementary category to RBI’s existing family of iconic quick service restaurant (QSR) brands, «Tim Hortons», «Burger King», and «Popeyes».

Founded in Jacksonville, Florida in 1994 by brothers and former firefighters Chris Sorensen and Robin Sorensen, Firehouse Subs is a brand built on decades of culture rooted in public service, creating hot and hearty subs piled high with the highest quality meats and cheeses and a commitment to saving lives through the establishment of the non-profit «Firehouse Subs Public Safety Foundation».

The brand is a strong and growing player within the USD 30 billion U.S. QSR sandwich category and since 2010 has increased its number of restaurants 3x to approximately 1,200 and its system-wide sales 4x to an expected approximately USD 1.1 billion for 2021. This momentum extends into 2021, with October year to date U.S. comparable sales versus 2019 of 20 percent. The brand benefits from a strong family of franchisees who own and operate 97 percent of the brand’s restaurants across 46 U.S. States, Canada and Puerto Rico. Firehouse Subs is expected to generate roughly USD 50 million of 2021E Adjusted Ebitda.

Firehouse Subs is frequently rated the #1 brand in its QSR sandwich category for food quality and has one of the strongest brand-love ratings in its category – driven by the Foundation that has now granted USD 62.5 million in essential life-saving equipment and other support to public safety organizations.

José Cil, Chief Executive Officer of RBI commented, «Firehouse Subs is a special brand with a talented team, impressive culture and community focus that resonates with guests and closely aligns with our core values at RBI. We see tremendous potential to accelerate U.S. and international growth at Firehouse Subs with RBI’s development expertise, global franchisee network and digital capabilities. We are excited to welcome the Firehouse Subs team to the RBI family and to continue our ambitious dream of building the world’s most loved restaurant brands.»

Don Fox, Chief Executive Officer of Firehouse Subs said, «At Firehouse Subs we are united in our commitment to and passion for hearty and flavorful food, heartfelt service, and public safety. Joining the RBI family of brands provides an energizing opportunity to assist more communities, not only across America and Canada, but around the globe. The donations we generate for our Foundation through our restaurants means changing and saving lives, so we can’t wait to accelerate our journey at home and around the world.»

Firehouse Subs Highlights

Differentiated, Purpose-Driven Brand: Supporting local communities is a core pillar of Firehouse Subs’ operating philosophy and a key differentiator for the brand in the sandwich QSR category. Firehouse Subs’ commitment to the communities where they operate is a leading reason guests choose the brand’s restaurants and has been a driver of overall positive brand metrics. The Firehouse Subs Public Safety Foundation has granted USD 62.5 million to public safety organizations across 49 states, Puerto Rico and Canada. For the third consecutive year, based on recent Technomic Insight consumer data, Firehouse Subs was named the No.1 brand in the restaurant industry that «Supports Local Community Activities.»

High-Quality Menu Offering Frequently Rated #1 in Food Quality in the QSR Sandwich Category: Firehouse Subs offers hearty, hot specialty subs featuring steamed meats and cheeses on a toasted sub roll. The brand rounds out its fulsome menu offering with chopped salads, chili and soups, signature sides, and local specialties with inspiration across its menu pulling from its namesake – with fan favorites such as the Hook & Ladder®. The brand has a strong focus on maintaining quality and consistency for its guests at attractive price points and has frequently been rated number 1 in both food quality and food taste and flavor across a number of consumer surveys in the U.S. QSR sandwich category.

Experienced Leadership Team with a Demonstrated Track Record: Firehouse Subs is led by a team of industry veterans with proven capabilities in operations, marketing, and development and a keen focus on franchisee profitability. Following the transaction, Firehouse Subs’ management team will continue leading the brand’s day-to-day operations, building on its proven track record of tripling unit count and more than quadrupling system-wide sales since 2010, while benefiting from RBI’s global scale, resources and digital capabilities to accelerate growth for years to come.

Strong Unit Economics with Compelling Paybacks: Firehouse Subs is expecting its 1,200 locations to generate total 2021 system-wide sales of approximately USD 1.1 billion, driving a compelling three and a half-year average payback period (based on company store performance). The brand is generating strong sales momentum in 2021, with 20 percent U.S. comparable sales versus 2019 year to date through October 2021.

Proven Brand Across 46 U.S. States, Canada and Puerto Rico with Significant Unit Growth Potential: Firehouse Subs has a proven, successful model with the opportunity to grow significantly across the U.S. and internationally. The brand’s already strong growth prospects are expected to be further enhanced by RBI’s robust franchisee network, development expertise and ability to accelerate global unit growth, increase overall brand awareness, and drive further improvements in unit economics, all of which will create a reinforcing cycle of growth. The concept has successfully traveled across 46 states and grown into Canada, which has strong AUVs that are generally above the system average.

Clear Digital Expansion Opportunities: Firehouse Subs has a solid digital foundation with a mobile app including mobile order and pay and loyalty capabilities, in addition to a strong delivery sales mix. The brand’s loyalty program boasts nearly 3.5 million subscribers, enrolling approximately 50 thousand additional customers per month and representing over 10 percent of transactions. This transaction would augment Firehouse Subs’ capabilities by leveraging RBI’s in-house tech-stack, engineers and continued investments in digital and technology to accelerate the brand’s digital transition.

Transaction Details

Under the terms of the agreement, RBI will acquire Firehouse Subs for USD 1.0 billion in an all-cash transaction. RBI plans to fund the acquisition through a combination of cash on hand and debt. The transaction is expected to close in the coming months subject to satisfaction of customary closing conditions and regulatory approvals. Following the closing of the transaction, Firehouse Subs will remain based in Jacksonville, Florida, and will continue to be managed by Chief Executive Officer, Don Fox, and Chief Financial Officer, Vincent Burchianti.


BofA Securities, Inc. and J.P. Morgan Securities LLC acted as financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison acted as legal advisors to RBI. Firehouse Subs was advised by TD Securities and Latham and Watkins.

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