Financing

Potbelly has apparently started the year off more strongly than expected

The Chicago-based sandwich chain said its same-store sales and profitability will easily beat expectations this quarter.
Potbelly sales
Potbelly sales and profit margins are all coming in better than expected this year. / Photograph: Shutterstock.

Consumers’ return to urban markets continues to be a big win for Potbelly.

The Chicago-based sandwich chain on Monday said that its sales and profit margins are all better than expected so far this year.

Potbelly said same-store sales increased between 22% and 22.3% in the first quarter, according to preliminary results. That was higher than expected. The company said early last month that its same-store sales would rise between 18.5% and 20.5%.

Restaurant-level margins, a key metric of the profitability of individual restaurants, also came in better than expected at 11.5% to 12%, compared with 10% to 11.5%.

Potbelly expects record average-unit volumes in 2023 and said it now expects same-store sales to rise in the high single digits to low double digits for the full year. Average-unit volumes at the 400-unit chain was $1.1 million, according to data from Restaurant Business sister company Technomic.

The numbers were not quite enough to impress investors. The company’s stock was down slightly in after-hours trading on Monday.

Still, Potbelly has enjoyed strong sales of late, driven in part by workers coming back to the urban areas that are its strong point. But the company has also closed some weaker locations. Unit count declined 3% last year, according to Technomic. System sales last year rose nearly 19%.

“The strong momentum with which we exited 2022 extended into the first quarter,” CEO Bob Wright said in a statement on Monday.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

At Papa Johns, delivery shifts from its own apps to aggregators

The Bottom Line: The pizza delivery chain’s business with companies like Uber Eats and DoorDash is thriving while its own delivery is slowing. But this isn’t the beginning of the end of self-delivery, CEO Rob Lynch says.

Topics

How the shift to counter service has changed Steak n Shake's profitability

The Bottom Line: Sardar Biglari, chairman of the chain’s owner Biglari Holdings, details how the addition of kiosks and counter service has transformed restaurants.

Food

Grand Geneva Resort & Spa's 'Ouisconsin' croissants reflect the state's French legacy

Behind the Menu: Hyper-local Wisconsin ingredients and a three-day baking process turn out pastries that are in high demand by hotel guests.

Trending

More from our partners