Dive Brief:

• Potbelly is preparing to more than double its franchise locations by 2024 as it expands into new markets, the company told Nation's Restaurant News. The restaurant is seeking experienced multi-unit operators in California, Alabama, Georgia, Florida, Colorado, Arizona and Washington State, specifically.
• The company has around 480 stores across its footprint, 50 of which are franchise locations. The sandwich chain closed eight underperforming restaurants during its first quarter. 
• Jeff Welch, Potbelly SVP of development, told NRN that the chain does not plan to refranchise. "We are not pursuing an asset light strategy like some other brands have done ... We don't have any debt at all on the balance sheet," he said. 

Dive Insight:

Potbelly's franchise aspirations aren't anything new — the company announced it would rely on operator-owned stores to expand nationally late last year — but its five-year goal is upping the ante. 

The Chicago-based restaurant chain is looking to put down more roots in U.S. metropolitan territories that still have "tremendous whitespace opportunity," then-CFO Mike Coyne told QSR in 2018. But despite this perceived opportunity, Potbelly may have to throw some elbows to gain market share as other sandwich chains flex their expansion muscles. Jersey Mike's, for example, was the fastest-growing U.S. restaurant brand in 2016, topping 1,000 stores and hitting $675 million in sales, according to Business Insider. Jimmy John's and Firehouse Subs are also gaining steam as the fast casual market grows more competitive. 

Subway, however, continues to shrink its U.S. portfolio, and shuttered more than 1,000 domestic restaurants last year — about twice more than originally planned. The sandwich giant is now at its smallest system since 2011. The company's franchisees have also accused corporate of punishing them for minor issues such as smudged glass to try and put them out of business and restructure its portfolio. 

Subway's retreat could provide a wider path to growth for Potbelly, but its tension with operators is a reminder of the risks that come with a franchise-heavy model. McDonald's, Jack in the Box and Papa John's have all suffered from franchisee frustrations of late.

Still, Potbelly has plans for growth that stretch beyond its expansion plans. Last year, CEO Alan Johnson launched a turnaround plan that included hiring new culinary innovation and marketing leads, which resulted in its new Pick-You-Pair menu feature in February. A new value-focused menu is a savvy investment, given the fact that limited-service chains are finding simply reducing prices isn't driving more traffic. It's unclear how competitive this offering will be in the coming months, since plenty of QSRs are rolling out similar offerings of their own. But if the deal boosts sales, this could help stave off franchisee frustrations and strengthen its growth plans.