Fresh from abandoning its Michel’s Patisserie brand, Retail Food Group (ASX: RFG) is filling the gap with the launch of US-born sandwich chain Firehouse Subs to the Australian market.

The Gold Coast-based RFG, which lifted its bottom-line profit by 74 per cent to $7.3 million in the first half of FY25, plans to open 165 Firehouse Subs outlets nationally over the next decade with the first scheduled to open in southeast Queensland later this year.

The move pits the brand directly against Subway, the market leader in the sub-style sandwich sector which the Connecticut-founded Subway pioneered in Australia more than three decades ago.

Firehouse Subs was established in Jacksonville, Florida, in 1994 by former firefighter brothers Chris and Robin Sorensen, and the franchise agreement with RFG marks the US company’s debut into the Asia-Pacific region.

The agreement with Firehouse Subs owner Restaurant Brands International (RBI), one of the world's largest quick service restaurant companies, is expected to see RFG open 15 company-owned restaurants in the next three years before expanding via franchises from year four.

While RFG is aiming to make Firehouse Subs the “number one sandwich choice in the country”, history shows that a successful brand in the US does not necessarily translate into success locally.

American fast-food entrepreneur Peter Cancro’s 2016 push to establish his burgeoning Jersey Mike's Subs business in Australia, partnering with Hungry Jack’s fast-food legend Jack Cowin, ended after a few short years. That’s despite the chain growing from 1,200 outlets in the US at the time to about 3,000 today.

In recent years, Australian KFC operator Collins Foods (ASX: CKF) also has struggled to gain momentum with another US fast food brand, Taco Bell, which saw revenue fall 2 per cent in FY24.

However, RFG notes that the sandwich market in Australia is estimated to be worth $1.7 billion, with CEO Matt Marshall declaring that Firehouse Subs will be a “tremendous addition” to RFG's stable of brands which includes Gloria Jean’s, Donut King, Brumby’s and Beefy’s Pies.

“Firehouse Subs is a key pillar of our ambitious growth strategy and we are confident consumers will be excited by the brand’s high-quality sandwich product together with an excellent guest experience,” says Marshall.

"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. We couldn't ask for a better partner than RBI, bringing global scale and new market entry expertise.”

The Firehouse Subs, with signature menu items such as the Hook and Ladder, Firehouse Italian, and the Firehouse Beef & Cheddar Brisket, has 1,300 stores in the US, Canada, Switzerland, Mexico, Albania and the United Arab Emirates. It also plans to open in Brazil later this year.

International expansion for the brand began last year after the business was acquired by Restaurant Brands International in December 2021. RBI has a portfolio of 30,000 restaurants in more than 120 countries generating sales of about $40 billion a year.

“We are excited to expand Firehouse Subs in the Asia-Pacific region, bringing our iconic sandwiches and rich brand heritage to Australia,” says Thiago Santelmo, the international president of RBI.

“This is made possible through our partnership with RFG, whose deep local expertise will be instrumental in delivering an outstanding guest experience.”

The agreement with RFG, and its rights to open and franchise stores after 2027, remain subject to the group satisfying a number of conditions.

RFG says it chose to partner with Firehouse Subs after 12 months of due diligence, adding that it had rejected other international brands in pursuit of “an opportunity which aligns with our core competencies”.

The expansion of the company’s brand portfolio follows an announcement last week that RFG is closing down its Michel's Patisserie chain with plans to convert its 19 existing stores to other brands in its portfolio.

RFG announced its plans to introduce Firehouse Subs today alongside its latest half-year earnings result, which was supported by a 24.7 per cent increase in underlying revenue to $66.5 million.

The company posted domestic network sales growth of 3.2 per cent to $257.1 million driven by RFG’s coffee, café and bakery brands. While the bottom line rose 74 per cent to $7.3 million for the six months to the end of December, underlying EBITDA was up 4.2 per cent to $16 million.

RFG shares were trading more than 11 per cent, or 21c, higher at $2.05 at 11,23am (AEDT).

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