Potbelly Corporation ((PBPB)) has held its Q1 earnings call. Read on for the main highlights of the call.
Potbelly Corporation’s recent earnings call painted a picture of robust growth and strategic advancements, despite a few challenges. The company demonstrated significant progress in system-wide sales, franchise expansion, and digital sales, all supported by successful menu innovations. Although there was a slight net loss and a decrease in transactions, the overall sentiment was positive, with improvements in shop-level margins and digital engagement offering a promising outlook.
System-wide Sales Growth
Potbelly Corporation reported a commendable increase in system-wide sales for the first quarter of 2025, with a 4.8% year-over-year rise to $140.7 million. Total revenue also saw an uptick, increasing by 2.3% year-over-year to $113.7 million. This growth underscores the company’s effective strategies in enhancing its market presence and revenue streams.
Franchise Expansion
The company made significant strides in its franchise expansion efforts, opening at least four new restaurants and adding 40 new shop commitments during the first quarter. This brings the total open and committed shop count to 766. Franchise revenue saw a substantial increase of approximately 30.8% year-over-year, reaching $4.7 million, highlighting the successful execution of its expansion strategy.
Digital Sales Growth
Digital sales have become a cornerstone of Potbelly’s growth, representing over 42% of total shop sales during the first quarter. This marks an increase of approximately 200 basis points compared to last year, showcasing the company’s ability to adapt to changing consumer preferences and leverage digital platforms effectively.
Menu Innovation Success
Potbelly’s introduction of new menu items, such as the Prime Rib Steak Sandwich, Chili Mac, and Banana Pudding Shake, was met with positive customer reception. These innovations contributed to the company’s sales growth, demonstrating the importance of menu diversification in attracting and retaining customers.
Improvement in Shop-Level Margins
The company reported an improvement in shop-level margins, which rose to 13.7% year-over-year. Additionally, adjusted EBITDA was reported at $5.5 million, surpassing guidance. These figures indicate Potbelly’s operational efficiency and ability to manage costs effectively.
Slight Net Loss
Despite reporting a slight net loss of $62,000 for the quarter, this was an improvement of $2.7 million over the prior year. This reduction in net loss reflects the company’s ongoing efforts to enhance financial performance and move towards profitability.
Decrease in Transactions
While same-store sales growth was driven by a 1.1% increase in average check, there was a slight 0.2% decrease in transactions. This indicates a need for strategies to boost customer footfall and transaction volume.
Forward-Looking Guidance
Looking ahead, Potbelly Corporation has reiterated its guidance for the full year 2025, expecting same-store sales growth of 1.5% to 2.5% and unit growth with at least 38 new openings. The company also anticipates adjusted EBITDA to be between $33 million and $34 million, reflecting confidence in its growth trajectory and strategic initiatives.
In summary, Potbelly Corporation’s earnings call highlighted a strong performance with strategic growth in key areas such as sales, franchise expansion, and digital engagement. Despite minor setbacks, the company’s forward-looking guidance suggests continued progress and optimism for the future.