Last year, the Potbelly sandwich chain sold 33 company units in an effort to kickstart new franchise growth for the mostly company owned fast-casual brand.
It appears to have worked.
On Thursday, the company said it can now mute the refranchising effort after successfully attracting new and existing franchise operators to grow the sandwich chain. This year, only one company unit was refranchised, and Chief Financial Officer Steven Cirulis said that effort is now being de-emphasized as franchisees pick up the ball.
The plan was part of President and CEO Bob Wright's Franchise Growth Acceleration Initiative, which includes the goal of reaching 2,000 units with at least 85% of those being franchised.
On Friday, the chain announced six new development agreements signed since July that will bring a total of 32 shops in six states with both new and existing partners. Among them is an expanded agreement with Potbelly founder Bryant Keil, who with his son last year announced plans to return to the brand as an operator.
In addition, existing franchisee Royal Restaurant Group has signed an agreement to bring 15 units to Atlanta, a new market for the brand. Development there is scheduled to begin in January 2026.
Royal already has a 40-unit agreement, signed in October 2023, which included the purchase of four company units in Ohio and 36 new shops there and in Florida.
In total, Potbelly said it has 86 franchise shop commitments. Potbelly ended the quarter with 345 company owned and 90 franchised locations.
Eight new company shops opened during the quarter. This year Potbelly expected to add a total of 24 to 26 shops, though the impact of the hurricanes in the Southeast might slow development.
For the third quarter, the chain reported total revenues down 4.7% to $115.1 million.
Same-store sales at company units were down 1.8% for the third quarter, which included a 3.8% decline in traffic offset by a 2% gain in average check boosted by 4.4% in pricing.
Wright blamed the traffic decline in part on the hurricanes in the southeast and the Democratic National Convention in Chicago over the summer.
He said the chain, however, saw comparable sales improvement at the end of the third quarter and into the fourth, driven in part by the introduction of a new Smokestack Pork and Mac sandwich, featuring pulled pork in a barbecue sauce.
The pulled pork is a permanent addition to the menu, also appearing in two new signature sandwiches scheduled to debut Nov. 11: a Cubano and a Sweet Heat Barbecue Pork.
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