Potbelly Corp., which said in May that it might need to permanently shutter up to 100 stores, has revised that projection and said it will close 25 to 30 restaurants. But the struggling chain said it is planning corporate layoffs to help make up lost sales.
The fast-casual sandwich chain, which released its Q3 earnings Thursday, said it had renegotiated 280 leases as of early this month.
Revenue for the quarter ended Sept. 27 fell to $72.1 million from $104.2 million the previous year, a drop of more than 30%.
Chicago-based Potbelly said it had developed a plan to reduce its costs by $3.5 million to $4 million, which includes staff reductions as well as the consolidation of franchise and company location support services into one unit. The chain did not detail the extent of the staff cuts, but said they were expected to be completed by the end of the year.
Potbelly had 406 company-owned units and 46 franchised ones at the end of Q3, down from 427 corporate units and 45 franchised stores the previous year. The chain reopened 14 previously closed restaurants during the quarter, with an additional 10 units slated to reopen in Q4.
Same-store sales for Q3 fell 21%. They rose a bit through October, declining 19.4%, the chain said. In Q2, Potbelly’s same-store sales were down 41.5%.
Restaurants achieved profitability in September and continued through October, including the payment of full rent.
But the chain’s stores, especially the 20% in the portfolio in central business districts, continue to have difficulties as many office workers remain at home. Those urban restaurants saw same-store sales drop 62% in Q3. Potbelly is reducing hours and closing some of those stores on weekends. The chain’s same-store sales would have been down 18%, with the exclusion of downtown restaurants.
A number of chains with heavy concentrations of stores in downtown areas, including Shake Shack, Corner Bakery Cafe, Le Pain Quotidien and more, have struggled during the pandemic as workers continue to stay home.
In July, Potbelly hired former Wendy’s executive Robert Wright as president and CEO. In August, the chain decided to accept a $10 million Paycheck Protection Program loan to help it stay afloat.
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