Potbelly Advances Franchise Growth Acceleration Initiative with Strategic Refranchising in 2023

Rhea-AI Summary

Potbelly Corporation (NASDAQ: PBPB) is prioritizing refranchising, targeting conversion of approximately 25% of its corporate locations over three years. The brand recently signed a multi-unit deal in New York City, introducing 13 new shops and refranchising eight locations to United One Group, guided by seasoned executives. Potbelly aims for a 10% annual growth rate leading to 2,000 units in 8-10 years, with 85% of those being franchises. The brand highlights strong unit economics, high average unit volume, and double-digit same-store sales growth. The initiative aims to match new developments with refranchising opportunities to attract multi-unit franchisees, supported by Potbelly's experienced corporate team.

Positive

• Targeting conversion of 25% of corporate locations to franchises over three years.
• Signed a multi-unit deal for 13 new shops in New York City.
• Refranchised eight locations to United One Group, led by experienced executives.
• Aims for 10% annual growth leading to 2,000 total units in 8-10 years.
• Over 85% of planned units will be franchised.
• Reported highest average unit volume in its category.
• Achieved double-digit same-store sales growth.

Negative

• None.

Refranchising a Key Component of Multi-Unit Deal for New York City

CHICAGO, April 20, 2023 /PRNewswire/ -- Potbelly Corporation (NASDAQ: PBPB) ("Potbelly" or the "Company) has prioritized refranchising in 2023, aiming for approximately 25% of its corporate locations to convert during the next three years.

As a launching off point for the refranchising program, the brand recently signed a multi-unit deal for New York City, which calls for 13 new shops over the next eight years, and the refranchise of eight shops. Ownership of the shops has been fully transferred to United One Group ("UOG"), an experienced franchise group led by Chief Executive Officer Paramjit Josan and Chief Development Officer Manny Singh. Combined, the UOG team has over 75 years of restaurant experience, developing and operating fast casual concepts, quick service restaurants and sandwich-specific brands, as well as other hospitality-focused businesses, in the Manhattan region.

Beyond refranchising, the brand's U.S. growth plans through franchising call for significantly advancing its national footprint. Potbelly is focused on a 10% annual new unit growth rate by 2024, with accelerated expansion in the years to follow. The company has set a goal of reaching 2,000 total units in the next eight to 10 years, with at least an 85% franchise system. As Potbelly escalates its franchising initiative across the country, it is focused on awarding development agreements to talented multi-unit operators that have proven experience in developing and operating multi-unit restaurant and retail brands. The prioritization of franchise growth supports the brand's 'Traffic Driven' Profitability Strategic Plan, which includes recent Tech Stack rollouts, (the app, website and Perks Loyalty Program) and implementation of a new menu.

"We are zeroed-in on our growth goals, which includes a huge prioritization on refranchising," said Larry Strain, Chief Development Officer at Potbelly. "We have unique opportunities for multi-unit franchise groups. Based on recent interest from proven operators, it's clear that our business model, advanced operations and increasingly strong cash flow are resonating with the right groups."

Potbelly's expansion and refranchising plan comes as it boasts the highest average unit volume (AUV) in its category, an excellent sales-to-investment ratio, a seasoned leadership team with 100-plus years of combined experience and double-digit same-store sales growth. Plus, operators can benefit from the sandwich concept's flexible store designs, including inline, endcap, drive-thru and non-traditional locations, which are equipped with tech-enabled enhancements to foster in-store, take-out and delivery dining. These factors, along with a diverse menu and multiple revenue streams stemming from various dayparts and catering, all make Potbelly an attractive franchise restaurant investment.

"Our Franchise Growth Acceleration Initiative pairs new shop development with a plan to refranchise an ample amount of corporate shops, creating enormous potential for multi-brand franchisees ready to grow with a distinguished concept like Potbelly," said Bob Wright, CEO of Potbelly. "Forging partnerships with the right groups is essential to our growth and success. We're a well-built brand with an experienced corporate team ready to support franchisees and cultivate the brand further together."

Ideal franchise candidates should be able to meet the required financial criteria, have restaurant operations experience, strong entrepreneurial skill sets, focused and driven problem solving and enjoy working with others.

To learn about the Potbelly refranchising opportunity, visit https://potbelly.info/refranchising.

About Potbelly

Potbelly Corporation is a neighborhood sandwich concept that has been feeding customers' smiles with warm, toasty sandwiches, signature salads, hand-dipped shakes and other fresh menu items, customized just the way customers want them, for more than 40 years. Potbelly promises Fresh, Fast & Friendly service in an environment that reflects the local neighborhood. Since opening its first shop in Chicago in 1977, Potbelly has expanded to neighborhoods across the country, with 400 company-owned shops in the United States. Additionally, Potbelly franchisees operate over 40 shops in the United States. For more information, please visit our website at www.potbelly.com.

Forward Looking Statements

This press release may contain statements that might be considered forward-looking statements or predictions of future operations including with respect to the Company's ability to successfully execute its Franchise Growth Acceleration Initiative and development deals and its ability to successfully refranchise certain of its locations. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties including that it is unable to successfully execute its Franchise Growth Acceleration Initiative and that the Company is not able to achieve its planned expansion. Actual events may also differ from these expectations as a result of the risks identified from time to time in our filings with the Securities and Exchange Commission. We assume no duty to update these statements as of any future date.

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SOURCE Potbelly Corporation

FAQ

What is Potbelly Corporation's refranchising strategy for 2023?

Potbelly aims to refranchise approximately 25% of its corporate locations over the next three years.

How many new shops is Potbelly planning to open in New York City?

Potbelly plans to open 13 new shops in New York City over the next eight years.

What is the goal for Potbelly's total units in the next decade?

Potbelly aims to reach 2,000 total units in the next 8-10 years.

What percentage of Potbelly's units will be franchised?

At least 85% of Potbelly's planned units will be franchised.

What has been Potbelly's same-store sales growth recently?

Potbelly has reported double-digit same-store sales growth.