Firehouse CEO Predicts Coming Delivery ‘Shakeout’

As many chain restaurants face flat or declining traffic, Firehouse Subs bucked industry trends last year with gains in average unit volumes and overall traffic, which CEO Don Fox attributed exclusively to a thriving off-premises business. With a phalanx of headwinds blowing into the restaurant world, Fox predicted a coming shakeout between restaurant brands and their delivery partners because of financial arrangements he termed unsustainable.

Firehouse Subs, the 116th largest U.S.-based franchise system by sales, grew its traffic 4 percent in 2018, which Fox said is a “5 percent spread” compared with the wider restaurant industry. Without delivery, as well as a growing takeout business, the CEO said the chain would have lost sales, rather than growing during 2018.

Boosting off-premises channels is the company’s highest priority this year after its more than 1,100 U.S. locations executed several programs intended to improve the experience for diners that order ahead and pick up food, or have their meals delivered through third-party delivery services.

…Rather than pointing to an increase in delivery orders across the industry, Fox said the “real story” in his segment of the restaurant business is the decline of dine-in business due to a sea change in customer behavior. He stressed that his point of view isn’t just a matter of semantics, citing an example of one of its markets were comparable sales were up 8 percent year-over-year, but dine-in sales declined.

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