Potbelly Fuels Nationwide Expansion Through Increased Commitment from Existing Franchisees

Rhea-AI Summary

Potbelly Corporation signs four multi-unit development agreements with franchisees to add 18 new locations, showcasing strong growth and brand appeal.

Insights

Market Research Analyst

The announcement by Potbelly Corporation regarding the expansion of its franchise footprint through multi-unit development agreements is indicative of the company's strategic focus on growth and market penetration. The decision to expand by 18 new locations, with the help of current franchisees, suggests a strong franchisee confidence in the brand—a vital aspect when considering the sustainability of a franchise model.

The reinvestment by existing franchisees is a positive signal to potential investors, as it reflects a commitment to the brand and optimism about future profitability. This expansion strategy, coupled with Potbelly's Franchise Growth Acceleration Initiative, may enhance the company's competitive edge within the fast-casual dining sector. The emphasis on a diverse menu, multiple revenue streams and flexible store designs aligns with current consumer trends favoring variety and convenience.

For stakeholders, the short-term implications include potential increases in capital expenditures associated with expansion but could translate into long-term revenue growth and increased market share. The sustained double-digit same-store sales growth year-over-year is an encouraging performance metric that could be bolstered by the addition of new locations.

Financial Analyst

From a financial perspective, Potbelly's multi-unit development agreements signal a proactive approach to leveraging the brand's current momentum. The company's maintenance of category-leading average unit volumes (AUVs) is significant, as AUVs are a critical gauge of a store's revenue-generating capacity. High AUVs can lead to better economies of scale and operational efficiencies.

The company's investment in real estate innovation, with a focus on flexible store designs including drive-thrus and non-traditional formats, is a strategic move that could reduce overhead costs and adapt to changing consumer behaviors post-pandemic. This flexibility may also present Potbelly with opportunities to enter markets with varying real estate constraints, further diversifying their portfolio and reducing market-specific risks.

For investors, the expansion should be assessed in the context of the company's overall financial health, including cash flow statements and balance sheets, to ensure that growth is being managed without over-leveraging. The reinvestment by franchisees could also be a sign of a robust franchising model, which may attract new investors looking for franchise opportunities with a proven track record of success.

Real Estate Investment Analyst

The addition of 18 new Potbelly shops through franchise agreements has implications for the commercial real estate market, particularly in the mentioned locations. The move to expand in both new and existing markets highlights Potbelly's strategic site selection, which is crucial for the success of each franchise location.

The focus on non-traditional locations, such as a hospital and an army base, demonstrates an innovative approach to real estate that can capitalize on captive audiences and less saturated markets. These types of locations often have unique dynamics and can provide steady foot traffic, which is less susceptible to economic downturns than traditional retail spaces.

For real estate investors and developers, Potbelly's expansion plans may signal opportunities for partnership and investment in these areas. The brand's ability to maintain high AUVs and drive same-store sales growth can make Potbelly an attractive tenant, potentially leading to favorable lease terms and increased property values in the vicinity of new shops.

Iconic Neighborhood Sandwich Shop Signs Four Multi-Unit Development Agreements with Brand Franchisees to Add 18 New Locations to Pipeline

CHICAGO, March 5, 2024 /PRNewswire/ -- Potbelly Corporation (NASDAQ: PBPB), the iconic neighborhood sandwich shop, today announced it has finalized four multi-unit development agreements that will further increase the company's retail footprint. The growth will be led by current Potbelly franchisees, who are each expanding their current commitments with the brand. The agreements will bring a total of 18 additional shops in new and existing markets. These reinvestments add to the existing list of development commitments that Potbelly has signed since launching its Franchise Growth Acceleration Initiative in 2022 and is a testament to how well the Potbelly brand resonates with customers across markets.

"As soon as our franchisees open their shops, they experience firsthand the widespread appeal of the Potbelly brand," said Lynette McKee,CFE, Senior Vice President of Franchising. "This immediate success has been a driving force behind their independent decisions to reinvest in the brand and deepen their commitment to Potbelly. We are incredibly excited to continue strengthening our partnerships with these passionate franchisees and couldn't be prouder to have them as part of our growing network."

The four Potbelly franchisees who have signed new agreements with the brand include:

• Ron Asmar of RTA Restaurant Group, LLC added four additional shops to his commitment and will now bring a total of 18 new Potbelly locations to Tampa, Florida. Asmar's first shop is set to open in late spring/summer 2024.
  
  
• Shari Nasir and Imran Malik of Sugarland Investment Group, LLC have committed to add six additional shops to their growing portfolio of Potbelly locations in Orlando, Florida. The group opened its first shop late January 2024 and is now set to develop 12 locations over the next few years.
  
  
• Rob Wilbern of I'm A Wreck, LLC has committed to the development of four additional Potbelly shops in St. Louis, Missouri, adding to his five shop commitments in Springfield, Illinois. Wilbern opened his first traditional Potbelly shop in January and is developing a non-traditional location inside Springfield Memorial Hospital, which is expected to open in late March 2024.
  
  
• Shakti Patel of MSS Fort Liberty, LLC signed a multi-unit non-traditional franchise agreement to bring three shops to the Fort Liberty Army Base in Fayetteville, North Carolina in 2024. Patel has been a Potbelly franchisee since 2015 and currently has 3 operating locations in his portfolio.

Following the launch of its Franchise Growth Acceleration Initiative, Potbelly has continued to prioritize development with multi-unit operators. Over the past [18] months, the company has supercharged its expansion, maintaining category-leading average unit volumes (AUVs) and driving double-digit same-store sales growth year-over-year. Additionally, Potbelly has invested in real estate innovation to make flexible store designs available to franchisees, including inline, endcap, drive-thru and non-traditional formats. These key brand differentiators, along with a diverse menu and multiple revenue streams stemming from various dayparts and catering, have made Potbelly a promising investment for prospective franchisees.

To learn more about franchise opportunities with Potbelly, visit www.potbelly.com/franchising-why-potbelly.

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 more than 425 shops in the United States including more than 80 franchised shops in the United States. For more information, please visit 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 shop development agreement, the franchise partner's ability to benefit Potbelly, Potbelly's growth momentum and performance within the states of Florida, Illinois, Missouri and North Carolina and Potbelly's ability to successfully execute on its Franchise Growth Acceleration Initiative. 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. 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.

Contact:
Nate Rubinstein
Fish Consulting
956-893-9150
nrubinstein@fish-consulting.com 

 

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SOURCE Potbelly Corporation

FAQ

How many new locations will Potbelly add through the multi-unit development agreements?

Potbelly will add a total of 18 new locations through the four multi-unit development agreements.

Who are the franchisees that have signed new agreements with Potbelly?

The franchisees who have signed new agreements with Potbelly include Ron Asmar, Shari Nasir, Imran Malik, Rob Wilbern, and Shakti Patel.

What locations will Ron Asmar of RTA Restaurant Group, LLC be adding new Potbelly shops to?

Ron Asmar will be adding 18 new Potbelly locations to Tampa, Florida.

How many additional shops will Sugarland Investment Group, LLC add to their Potbelly portfolio?

Sugarland Investment Group, LLC will add six additional shops to their Potbelly portfolio in Orlando, Florida.

What type of franchise agreement did Shakti Patel of MSS Fort Liberty, LLC sign?

Shakti Patel signed a multi-unit non-traditional franchise agreement to bring three shops to the Fort Liberty Army Base in Fayetteville, North Carolina.