Submarine House saw same-store sales triple overnight
after converting to a bar and grill concept.
By Tim O’Connor, Knighthouse Media
In the eight years of the annual Super Duper Cheesesteak Challenge, the fastest anyone has ever devoured one of the 3.5-pound subs is a speedy 1 minute 29 seconds. That’s an impressive record worthy of the $1,000 grand prize, but even more remarkable than those swift teeth is what the contest has done for the people of Dayton, Ohio.
Since the competition’s inception in 2011, its host, Submarine House, has donated more than $200,000 to the community and local charities. In 2017 alone, the company raised $30,000 for Pink Ribbon Girls, an organization that provides free meals, housecleaning and transportation to treatment for women diagnosed with breast or reproductive cancers. “We’re very excited and proud of what this contest and fundraiser has turned into over the last eight years and each year we’re looking to make it bigger and better,” says Submarine House co-owner Brody Danner (seen above on the left with Jason Danner).
Doug Kidd opened the first Submarine House in 1973 near the University of Dayton. As a Philadelphia native, Kidd introduced an authentic cheesesteak to western Ohio, quickly becoming a favorite among college students and faculty. In 1978, patron Gary Danner, with help from Ron Utterback, became the first franchisee and six years later, Danner bought the franchise outright from Kidd.
Gary was content to keep Submarine House as a fast-food concept but his sons had bigger plans. Jason and Brody were hockey players at Ohio University and believed Submarine House could blend their love of sports and cheesesteaks. The brothers had always been interested in running a sports bar and after they purchased Submarine House from their parents in 2003 they had the opportunity to evolve the franchise.
In 2006, Jason and Brody rented the space next to the Submarine House location they owned and expanded it by 1,000 square feet. “You have all of your chicken wing and pizza sports bars, but I don’t know of many submarine sports bars,” Jason says. Guests at the sports bars stay longer, order more food and consume a greater number of drinks. “You’re appealing to a lot bigger market share when you add the dining room, the TVs and bar,” he continues.
The concept quickly took off and two other franchisees soon upgraded their locations to sports bars. Each saw revenues triple almost immediately and those locations are now doing four to five times the business compared to when they were purely sandwich shops.
The company now has three sandwich restaurants left over from when Gary led the company and six bar and grills, with three more in the works. Going forward, Submarine House will build only sports bar locations. “It was an easy decision for Jason and I,” Brody says. “We had no idea what to expect when we opened the first one but within a couple of months we knew we had a home run.”
As it has expanded its concept, Submarine House has also added to its menu. The company is still best known for its classic cheesesteaks – which make up 50 percent of food sales – but over time it has added craft beers, including the exclusive Bottom Dweller IPA produced by Hairless Hare Brewing Co., and refined its pizzas.
“Once we started the bar and grill concept we realized the opportunity of pizzas,” Brody says. Submarine House sold pizza before, but after morphing into a sports bar it revamped its thin crust recipe. Further, it began offering limited-time specialty pizzas and other items such as a pecan chicken salad and different cheesesteaks to give the menu more variety without making it overwhelming. “People enjoy having different choices when they come to Submarine House,” Jason notes.
Ultimately, Submarine Houses’ standards and processes are there to help its franchisees achieve profitability. “It doesn’t do anything for Jason and I to set people up for failure,” Brody explains. “The more we can set these people up for success the better off they will be in the long run and the better it will be for us and our company.”
Submarine House guides its franchisees through the entire process, from site selection to training and opening. “We’re there before day one,” Brody says. That support continues even after the location has opened. Submarine House’s corporate team helps negotiate food costs, keep labor costs down and will retrain employees on problem areas.
One of the areas ripest for profit or loss is in alcohol sales. In making the transition to the bar and grill concept, Submarine House knew it needed to help franchisees monitor their beer and liquor stock to prevent theft. It hired Bevinco, a bar inventory management group, to visit locations regularly to weigh liquor and draft beer inventories and measure it against the recorded sales to determine down to an ounce if anything is missing.
The checks, which occur once a week when a restaurant first opens and bi-weekly later on, ensure bartenders and servers aren’t doling out more alcohol than they should so that owners can maintain their profit margins. “We try to give our franchisees many different avenues and paths to help them be successful,” Jason says. “Any area we can show them something or give them a service to help them be successful, that’s what we’re here for.”
Training is a critical component to creating successful franchisees. Submarine Houses’ training program begins with the owner. The owner – and any managers that will run the operations – train at an existing Submarine House location, learning kitchen, back-of-the-house, dining room, bar and accounting functions.
Once it gets closer to opening, Submarine House sends a team, led by Operations Manager Craig Cyphers, to the new locations to teach all the new employees proper procedures and operations. From there, the restaurant holds a three or four night soft opening and invites the local community to participate in test dining experiences so staff can iron out the kinks in service and cooking.
At the end of that process, the owner and staff should be prepared for the day-to-day operations of the restaurant. Submarine House prides itself on finding immediate success and large crowds with every new location. “We’ve been very fortunate that any market we go into in the Dayton area and even Columbus, once we open those doors it’s a success,” Brody says.
Submarine House’s support continues even after the startup phase. “Once your business is open and your employees are trained, we don’t disappear,” he continues. “We want our franchisees to be as profitable as possible.” The company conducts quarterly in-person visits to franchise locations to make sure everything is running smoothly and restaurants are clean and it hosts regular franchise meetings to go over new products and systems or address issues.
On the marketing side, it has an advertising specialist, Tim Barngrover, and a designer and brand specialist, John Pattison, who develop marketing materials for TV, radio and print. It also has a promotional director, Kelsey Terhune, who handles the company’s social media accounts and promotional events.
Although Submarine House has solid support systems in place, there will always be times when a franchise owner needs to get ahold of someone immediately, which is why Brody and Jason give every franchisee their personal cell phone numbers. Further, because Brody owns a restaurant himself, the brothers understand the day-to-day challenges that face franchisees. “We feel we’re in this with them,” Brody says.
Owning a business may sound great, but Submarine House wants owners who are invested in learning the business from the inside out so that even when they hire a manager, they can ensure that manager is running the restaurant properly. “There’s no better way to manage and lead people than by showing them,” Brody says.
The ideal franchisee is someone who has experience in the restaurant industry and roots in their community. When a new location opens, one of the first things Brody and Jason encourage the owner to do is go talk to the local schools, the athletic directors and the police departments to see what programs or initiatives they can become involved with. During the recent prom season, the franchise Brody owns alone donated food to 12 different high schools’ after-prom events.
It’s a charitable gesture for the community, but one that ultimately benefits Submarine House. Parents and students who enjoyed a Submarine House cheesesteak or pizza as part of a prom event or girls varsity basketball party tend to come back and turn into regular customers. “We feel it is a benefit to us. The community is doing us a favor by allowing us to come into their town,” Brody says. “For us to pay them back for that, that’s the least we can do.”
In addition to individual owners, Submarine House is also open to working with larger, established restaurant groups that may want to open multiple locations in a single market. Those kinds of agreements could help Submarine House expand outside of Dayton and Columbus to other Ohio cities such as Cincinnati, Toledo and Cleveland, and neighboring states.
In 2014, the company celebrated its first market expansion with the opening of a Submarine House by franchisee Ross Holden in Hilliard, Ohio, a suburb of Columbus. Although only about an hour’s drive from Dayton, extending into Columbus represented the culmination of a lot of behind the scenes work. One of the things that sets Submarine House apart is its bread, which was made fresh every day in a Dayton commissary. However, the distance to Columbus created a significant logistical challenge and the company ended up switching to a new commissary in Columbus that could better supply its larger footprint. “That was crucial when moving to a new market, being able to have the same bread,” Brody notes.
Having overcome one major logistics hurdle, Submarine House is now better prepared for future growth. Unlike companies that want to expand by opening new locations as quickly as possible, Submarine House wants to take a more measured approach and ensure it has the right partners and locations. “We want to branch out and we want to grow smart. Brody says.
“We’ve had the luxury of not really having to advertise selling our franchise lately,” he continues. “We’re getting enough interest with people coming to us.”