Potbelly is being acquired by a convenience store.
The Chicago-based fast-casual chain on Wednesday said it has agreed to a $566 million deal with the convenience-store retailer RaceTrac.
The Atlanta-based RaceTrac will pay $17.12 in cash for Potbelly. The deal is expected to close in the fourth quarter. The price represents a 32% premium off the value of the shares at close on Tuesday and a 47% premium off their 90-day trading average.
RaceTrac operates 800 locations across 14 states and is the 17th largest convenience-store chain in the U.S., according to Restaurant Business sister publication CSP Daily News. Assuming it is approved, the deal is a relatively rare acquisition of a restaurant chain by a convenience-store retailer, but one that illustrates the growing competitiveness between the two industries for prepared food.
Potbelly was founded 40 years ago and currently operates 445 shops, most of which are company-owned. The company generated $560 million in system sales last year, according to Restaurant Business sister company Technomic. Same-store sales grew 3.6% last quarter, bucking a generally weak trend for industry sales overall.
“RaceTrac’s strategic vision including their commitment to quality align perfectly with our mission to delight customers with great food and good vibes,” Bob Wright, CEO of Potbelly, said in a statement.
Potbelly has been focused on more franchise-led growth in recent years, he said. “With RaceTrac’s resources, we will unlock new opportunity for this incredible brand while staying true to the neighborhood sandwich shop experience that makes Potbelly special.”
The deal is a big one for RaceTrac, a family-owned business whose CEO, Natalie Morhous, won CSP’s Retail Leader of the Year award in 2023.
“We are proud of Potbelly’s legacy as a beloved neighborhood sandwich shop and are excited to expand our family of convenience-driven brands,” Morhous said in a statement.
The deal culminates a relatively strong year for Potbelly, which has seen improving sales momentum that has been reflected in its stock price. Shares have been up 37% this year before the deal was announced and 70% over the past 12 months. Its sale price will represent a high point since shortly after it went public in 2013.
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