- Potbelly has signed 192 new development commitments from September 2022 through 2023, the company said in an email to Restaurant Dive.
- Among the largest agreements it signed last year was a 27-unit deal with Potbelly founder and former CEO Bryant Keil and his son, Hampden Keil, that included the purchase of 12 existing shops in Maryland and a commitment to build 15 more in the state.
- These commitments are all part of the company’s Franchise Growth Acceleration Initiative that it launched in 2022 in an effort to become 85% franchised and reach 2,000 units over the next 10 years.
The sandwich shop signed its first refranchising agreement last March for eight units in New York with United One Group. That deal included a commitment to build 13 units in the next eight years. Since beginning its growth acceleration, Potbelly has signed deals to expand in New York, Maryland, Florida, Ohio, Washington, Arkansas, North Carolina, Tennessee and Texas, the company said. Many of these operators also have worked with Burger King, Dunkin’, Wendy’s and Wingstop, the company said.
With about 400 total units at present, including 75 franchises units, the chain would need to sell about 100 of its company-owned locations to reach its goal of 85% franchised when it reaches 2,000 in the future. CEO Bob Wright previously told Restaurant Dive that Potbelly uses refranchising as “a catalyst for growth.”
“We’ve done the work and we know we should have 20 units or more in a market where we only have four. We know we’re not going to be the ones to deploy the capital needed for developing that market, franchisees are going to do that,” Wright said. “So franchisees are going to want to own those four restaurants because it rounds out their ownership in the entire market, plus it gives them a base of operation as they begin to develop.”
Potbelly's largest franchise deals
The company has also focused on improving profits and margins for franchisees as part of a five-pillar strategy it launched in 2020. Potbelly ended Q4 2020 with same-store sales declines of 19.7% and average unit volumes of $1 million. For 2023, it reported a preliminary same-store sales rise of roughly 12% and average unit volumes around $1.3 million.
“We’re pleased with the continued momentum we’ve seen in 2023 in sales and traffic growth, margin expansion and franchise development commitments across the U.S.,” Wright said in the press release. “Looking ahead, Potbelly is prioritizing further expansion with experienced, multi-unit restaurant owner-operator groups, and we’re committed to realizing growth in new and existing markets where we’re confident the brand will continue to thrive.”
Part of that plan includes deploying Potbelly’s Digital Kitchen model in new units. This store model includes digital ordering tablets that the staff can use to process more orders in queues of customers during busy times. The company also launched a makeline specifically for digital orders using its second makeline, which was originally used to fulfill catering orders.