Dive Brief:
- Potbelly finalized a multi-unit development agreement and its first refranchising deal in New York City, the company announced Monday.
- United One Group acquired eight Potbelly locations in the city and committed to opening 13 new locations in the next eight years.
- This partnership is part of the company’s franchise growth initiative. The chain aims to become 85% franchised and reach 2,000 units over the next 10 years.
Dive Insight:
The sandwich shop still has a long way toward reaching its franchising goal, which also includes refranchising about 25% of its company-owned stores. At the end of last year, the company had 384 company-owned units versus 45 franchised units.
The company is making progress. It secured 51 commitments during the last half of 2022, Potbelly President and CEO Bob Wright said during a March earnings call. The company also reported strong performance across its portfolio, with improvements in suburban, central business districts (CBDs) and airport locations, Wright said. CBDs, in particular, are near pre-pandemic levels, which should help United One Group’s future development plans in New York City.
Potbelly’s overall metrics have improved, with store-level margins up 14.2% during the fourth quarter and ending the year at 10.5%, Wright said. Same-store sales were up 18.5% with improvements in traffic alongside operational and marketing initiatives.
“Despite the economic pressure on small business, including climbing interest rates, we are very pleased with the momentum towards becoming a primarily franchise-focused organization and have a robust and expanding pipeline of highly qualified franchise candidates to support this critical growth initiative,” Wright said.
United One Group is also an experienced franchise group with experience in the Manhattan region and real estate market, according to the press release. UOG’s team, which is led by CEO Paramjit Josan and Chief Development Officer Manny Sigh, has over 75 years of combined restaurant experience and has developed and operated fast casual, QSRs and sandwich-specific brands, among others.
