About two and a half years ago, Potbelly launched a reconfigured menu with mini-sized shakes and meal bundles. Not long after, the Chicago-based sandwich chain unveiled its “Shop of the Future” store design that reimaged the fast casual’s ordering process.
Both of those initiatives have both been scrapped.
In recent weeks, Potbelly rolled a new-new streamlined menu, removing some under-performing items and focusing on a platform of improved sandwiches in three different sizes (Skinny, Original and Big).
And a couple of in-process unit developments that would’ve followed the new store prototype have been halted.
“The desire was to create a better customer experience with cheaper cost of capital and better operating expenses,” Potbelly President and CEO Bob Wright, who joined the chain about a year ago, said. “It failed on all three fronts.”
It’s been a time of immense change for 443-unit Potbelly.
The chain had been struggling pre-pandemic but saw its sales and traffic nosedive during the crisis—particularly at its urban core locations, which have yet to recover. It said it might need to close up to 100 restaurants but trimmed that figure to a couple dozen, while also being the subject of bankruptcy rumors.
The company also has a virtually all-new C-suite of executives who joined Potbelly in the last year.
And it debuted a new app and website last month, both of which were custom designed for the chain and its customers.
That 2019 menu rollout simply didn’t work, Wright said.
“Frankly, it just failed,” he said. “It didn’t address everything that needed to be addressed.”
Under the 2019 menu, customers could order smaller sandwiches—but only as part of a meal bundle with a salad or side.
“That was something a little hard to comprehend, why you wouldn’t offer to sell something you already make,” he said.
Gone is Potbelly’s 10-ounce shake, three sizes of soups and more, which gets rid of some bowls, cups and lid SKUs, he said. The streamlined menu also paves the way for “the next wave of innovation,” Wright said.
Operationally, the new menu, which has gone through four phases of testing, has been a huge boon for labor, he said. Portioning has been streamlined with simple ratios used to create the three new sandwich sizes, shaving training time from two weeks to two days, Wright said.
“It’s because of the consistency,” he said. “Over time, with anybody’s menu, complexity creeps in and you’ve got a 1-ounce portion for one sandwich and a different portion for another sandwich. The portions are multiples of other portions. If you learn one, you know the others.”
Research showed that customers thought they weren’t getting a good value for their sandwiches. So, Potbelly added more meat and cheese to the builds on the new menu, making the Original and Big sandwiches about 20% larger than before. Offering the Skinny sandwiches across the full menu (and not just in a few different options as it had previously) provides a lower price point for entry, he said.
Potbelly instituted a “slight increase in price” on the two larger sized sandwiches, though he declined to specify the amount of the price jump. The chain upgraded some of its ingredients as well, including sourcing a higher-quality meatball and marinara sauce.
“It’s not proportional to the investment we made in the ingredients,” Wright said. “We are shouldering some of the burden on that value inclusion.”
He said he expects to recoup those cost of goods increases with the lower labor costs of the new menu and the greater throughput that will result from streamlined operations.