Make sure that Find My iPhone is set to put into lost mode when turned on. Right now the thief has fully powered off the phone but it will notify you and you'll get the location as soon as it turns on. As soon as you get the location, call the police and have them go there.
Unless the thief is extremely experienced in stealing phones or he decides to completely destroy the phone when he can't get in, you should be able to get it back eventually. The only way for the thief to get it back into factory condition and unlocked is by opening up the casing and modifying the phone's hardware (which is extremely difficult).
I had my iPhone stolen a couple years ago and though the thief powered off the phone, I had it set so that I got his location as soon as it powered on. The police were able to track down the thief and I got my phone back.