Dive Brief:
- Potbelly has signed development agreements with four existing franchisees who will add 25 new restaurants over the next six years, the company said Monday.
- These deals add to previous development agreements for 25 news units in Florida and Illinois over the next eight years.
- Potbelly launched a franchise growth initiative in March, and aims to become 85% franchised.
Dive Insight:
Potbelly, which currently has 400 company-owned and over 40 franchised units, plans to reach over 2,000 units over the next 10 years. It also wants to refranchise about 25% of its company-owned units, or about 100 units, by 2024.
“We believe, especially in our under-penetrated markets [that] putting those units in the hands of the developing franchisee is the best way to catalyze growth,” Potbelly President and CEO Bob Wright said during the company’s November earnings call. “Growth has always been our goal with refranchising.”
The company is aiming to reach a franchise unit growth rate of at least 10% through its shop development area agreements, Wright said.
The sandwich chain’s financials have improved in the last few years, which could help create additional operator interest. The company reported positive same-store sales for the last six quarters ending Q3 2022, with a 15% increase in the most recent period, according to the company's earnings release. Potbelly is also working toward annual unit volumes of $1.3 million, and during October achieved weekly AUVs that could translate into that amount, Wright said. The company expects to reach AUVs of $1.14 million to $1.16 million for the 2022 fiscal year, according to its Q3 earnings release.
As part of its efforts to franchise, Potbelly is increasing communication with prospective operators. By the end of the third quarter, the company had hosted four discovery days for prospective franchisees to help them understand the company’s growth objectives, how the business works and benefits to doing business with Potbelly, Wright said.
Potbelly will help franchisees find locations likely to have success. The company creates targeted trade area maps and highlights areas it predicts will see success, Wright said. This was particularly helpful for a franchisee in Florida, whose second location is in the middle of a trade area highlighted by the company. That location is experiencing high sales numbers above the national average, Wright said.
The company offers various restaurant designs, including inline, end cap, drive-thru and non-traditional locations, as well as technology that can enhance in-restaurant, takeout and delivery experiences, per the company.
