Revamped loyalty program drives sales at Potbelly

The sandwich chain said its fast-growing digital business is shifting customers away from third-party channels, with loyalty membership growing nearly 90% during the fourth quarter.
Potbelly's revamped loyalty program has been an early success, executives said. | Photo: Shutterstock.

A revamped loyalty program is fueling sales growth at Potbelly, the company reported Thursday.

The Chicago-based fast-casual sandwich chain has more than rebounded since the pandemic kept its audience of lunch-seeking office workers at home.

For the quarter ended Dec. 31, Potbelly reported same-store sales growth of 6.3% (12% for the year), driven largely by increased traffic. Prices will be about 3.3% higher during the first quarter compared to the prior year.

Total revenues increased by 4.7% to $125.7 million during the fourth quarter and by 8.7% to $491.4 million for the year.

“I feel like a broken record at this point, but again, this quarter, I’m proud to say that our strong sales results were driven primarily through traffic growth, demonstrating our ability to grow our traffic share within the fast-casual category,” CEO Bob Wright told analysts, according to a transcript from financial services site AlphaSense.

In January, Potbelly debuted an updated version of its Perks loyalty program. The reimagined offering allows members to earn rewards more quickly, with 12 different menu items available for redemption.

During the fourth quarter, loyalty program membership acquisition grew 87%. Potbelly’s digital business now makes up about 40% of sales, an increase of about 150 basis points over last year.

“Notably, we continue to see a shift in our digital business away from third-party channels and towards Potbelly-owned app, web and Perks-originated orders,” Wright said.

Increased marketing fund contributions from both company-owned and franchised shops will continue to fuel the growth of the loyalty program and Potbelly’s digital channels, executives noted.

Potbelly ended 2023 with 345 company-owned restaurants and 75 franchised locations.

The chain has “visibility into achieving” 10% unit growth this year, with the bulk of new store openings slated for the back half of the year, Wright said. It currently has signed commitments for 188 restaurants.

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