Retail Food Group scales Firehouse Subs as property costs tighten

Woodall says drive-thru demand is strong but higher rents and build costs are challenging long-term site sustainability.

Retail Food Group’s 165-store Firehouse Subs rollout is putting site economics under scrutiny as competition for prime food locations lifts rents, build costs and landlord expectations across Australia.

Julie Woodall, Head of Property at Retail Food Group, said the property market is one of the most competitive the group has seen in years, with strong demand and limited supply for the best sites. That has pushed the company to consider non-traditional food locations, even when they carry higher build costs.

The group operates more than 650 sites across five brands, giving it flexibility when assessing new locations. Woodall said that portfolio can make Retail Food Group more attractive to landlords because it can match different brands to different sites.

Format selection is becoming more important. Shopping centres offer more predictable data for site decisions, whilst strip and standalone sites remain relevant for brands such as Brumby’s and Crust. Drive-thru demand is strong, but Woodall said higher rents and capital requirements can challenge long-term site sustainability.

For Firehouse Subs, the group has taken a partnership-led approach with landlords, including information sessions and tasting events to introduce the brand to the Australian market.

Site discipline is already shaping decisions. Woodall said Retail Food Group recently walked away from a prime CBD Firehouse Subs location that had strong visibility and sales potential because build costs made the unit economics unattractive.

“Really, the deal has to work long term, and having a strong due diligence process for new sites is absolutely key,” Woodall said.

Woodall said operators preparing to sign leases should seek legal advice because a short heads of agreement can become a much longer lease with long-term obligations.

For Retail Food Group, the opportunity is to scale Firehouse Subs in Australia. The risk is that a competitive property market turns expansion into uneconomic growth.