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1. Company Snapshot

1.a. Company Description

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly sandwich shops.As of December 26, 2021, it had 443 shops in 33 states and the District of Columbia, which included 397 shops and 46 franchisees operated shops.The company was formerly known as Potbelly Sandwich Works, Inc.


and changed its name to Potbelly Corporation in 2002.Potbelly Corporation was founded in 1977 and is headquartered in Chicago, Illinois.

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1.b. Last Insights on PBPB

The recent 3-month performance of Potbelly Corporation was negatively impacted by the company's decision to resume building company-owned stores, deviating from its asset-light strategy. This move, announced in March, has led to a decline in the stock price despite beating Q4 FY 2024 EPS and revenue expectations. The company plans to open 20 company-owned restaurants annually starting in late FY 2025, complementing franchise growth and leveraging high-volume markets like Texas and the Midwest. This shift in strategy may raise concerns among investors, potentially weighing on the stock's performance.

1.c. Company Highlights

2. Potbelly's Growth Engine Accelerates with Strong Q2 Results

Potbelly Corporation's second quarter 2025 earnings report showcased the strength of the brand as its growth engine accelerates. The company reported system-wide sales growth of 6.7% year-over-year to $154.2 million, with total revenue increasing 3.4% year-over-year to $123.7 million. Adjusted EBITDA came in at $9.6 million or 7.8% of total revenue, driven by shop-level margin expansion to 16.7%. Same-store sales growth was 3.2%, including positive traffic, with a 1.1% increase in transactions and a 2.1% increase in average check.

Publication Date: Aug -18

📋 Highlights
  • Same-Store Sales Growth:: Achieved 3.2% YoY growth, driven by 1.1% transaction increase and 2.1% average check growth.
  • Adjusted EBITDA Performance:: Delivered $9.6 million in Q2, with full-year guidance raised to $34–$35 million (28.3%–29.1% of total revenue).
  • Franchise Development Pipeline:: 50+ franchise openings planned for 2026, alongside 10–20 corporate store openings annually to densify key markets.
  • Digital Sales Contribution:: 41% of total sales, reflecting growth from new website, mobile app, and loyalty program engagement.

Menu Innovation and Digital Investments Drive Growth

The company's focus on menu innovation, digital investments, and shop growth drove comp sales growth. The introduction of the Prime Rib Steak sandwich received positive customer feedback, and the launch of the new website and mobile app represented a key milestone in its digital transformation strategy. Digital sales accounted for 41% of business, with the company seeing growth across multiple channels.

Cost Management and Investments in Assets

The company's disciplined approach to managing costs led to year-over-year shop-level margin expansion. Potbelly is focused on investing in its assets, including remodels, which are showing promising returns. The company is also investing in technology, including a new point-of-sale system, which will be rolled out to all shops by the end of next year. As Bob Wright, CEO, noted, "Our commitment to the communities we serve is an underappreciated driver of our success."

Guidance and Outlook

The company increased its guidance for the full year 2025, anticipating same-store sales growth of 2.0% to 3.0%, unit growth of at least 38 openings, and adjusted EBITDA of approximately $34.0 million to $35.0 million. With visibility into 50-plus franchise openings next year, Potbelly plans to accelerate corporate openings to densify key company store markets.

Valuation Metrics

Based on the current stock price, Potbelly's valuation metrics suggest a P/E Ratio of 34.77, P/B Ratio of 6.11, and EV/EBITDA of 20.28. The company's ROIC stands at 6.34%, and ROE is 18.62%. With a dividend yield of 0.0%, the company's free cash flow yield is 1.94%. These metrics indicate that the market is pricing in the company's growth prospects, but there may be room for upside if Potbelly continues to execute on its strategic initiatives.

3. NewsRoom

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RaceTrac Completes Acquisition of Potbelly Corporation

Oct -23

Source: globenewswire.com

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$HAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Potbelly Corporation (NASDAQ: PBPB)

Sep -15

Source: prnewswire.com

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Potbelly acquired by convenience store chain RaceTrac for $566 million

Sep -10

Source: fastcompany.com

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Convenience store operator RaceTrac to buy sandwich chain Potbelly for $566 million

Sep -10

Source: reuters.com

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PBPB Stock Alert: Halper Sadeh LLC Is Investigating Whether the Sale of Potbelly Corporation Is Fair to Shareholders

Sep -10

Source: businesswire.com

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Potbelly acquired by convenience-store operator RaceTrac for $566 million

Sep -10

Source: cnbc.com

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Shareholder Alert: The Ademi Firm Investigates Whether Potbelly Corporation Is Obtaining a Fair Price for Its Public Shareholders

Sep -10

Source: businesswire.com

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Potbelly Sandwich Chain to Sell Itself to Convenience-Store Operator RaceTrac

Sep -10

Source: wsj.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Potbelly Sandwich Shop

Expected Growth: 4.83%

Potbelly Sandwich Shop's 4.83% growth is driven by increasing brand recognition, expansion into new markets, and a focus on digital transformation, including mobile ordering and delivery. Additionally, the company's efforts to improve menu offerings, enhance customer experience, and optimize restaurant operations have contributed to its growth.

Franchise Royalties and Fees

Expected Growth: 4.83%

Potbelly's 4.83% growth in Franchise Royalties and Fees is driven by increasing same-store sales, expansion of the franchise network, and higher average royalty rates. Additionally, the company's efforts to enhance the customer experience, invest in digital capabilities, and optimize menu offerings have contributed to the growth.

7. Detailed Products

Sandwiches

Potbelly offers a variety of toasted sandwiches, including classic favorites and seasonal options, made with high-quality meats, cheeses, and fresh produce.

Salads

Fresh, made-to-order salads featuring seasonal ingredients and creative combinations, topped with our signature toasty croutons.

Soups

Creamy, comforting soups made with rich flavors and wholesome ingredients, served hot and fresh in our toasty bread bowls.

Flatbreads

Thin, crispy flatbreads topped with flavorful ingredients and served as an appetizer or side dish.

Bakery

Fresh-baked cookies, muffins, and bread, made in-house daily, perfect for a sweet treat or as a complement to our meals.

Coffee and Drinks

Specialty coffee drinks, iced tea, and fresh-squeezed lemonade, made with high-quality ingredients and a touch of love.

Catering

Customizable catering options for events, meetings, and gatherings, featuring our signature sandwiches, salads, and soups.

8. Potbelly Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

While there are some substitutes for Potbelly's sandwiches, such as other fast-casual restaurants, the company's unique toasty sandwiches and soups provide some differentiation.

Bargaining Power Of Customers

Customers have some bargaining power due to the availability of substitutes, but Potbelly's strong brand loyalty and customer retention programs help to mitigate this.

Bargaining Power Of Suppliers

Suppliers have limited bargaining power due to the company's large scale and diversified supply chain, which reduces dependence on any one supplier.

Threat Of New Entrants

While there are some barriers to entry in the fast-casual restaurant industry, new entrants can still pose a threat to Potbelly's market share, particularly if they offer innovative products or services.

Intensity Of Rivalry

The fast-casual restaurant industry is highly competitive, with many established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 92.71%
Debt Cost 3.95%
Equity Weight 7.29%
Equity Cost 10.74%
WACC 4.44%
Leverage 1272.67%

11. Quality Control: Potbelly Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Potbelly

A-Score: 4.1/10

Value: 2.4

Growth: 6.0

Quality: 3.5

Yield: 0.0

Momentum: 9.5

Volatility: 3.0

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Red Robin

A-Score: 3.6/10

Value: 8.2

Growth: 1.4

Quality: 3.6

Yield: 0.0

Momentum: 7.5

Volatility: 1.0

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Portillo's

A-Score: 3.6/10

Value: 8.1

Growth: 5.0

Quality: 4.1

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

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ONE Group Hospitality

A-Score: 3.5/10

Value: 9.3

Growth: 6.4

Quality: 2.1

Yield: 0.0

Momentum: 2.0

Volatility: 1.3

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Good Times Restaurants

A-Score: 3.3/10

Value: 7.9

Growth: 5.2

Quality: 2.5

Yield: 0.0

Momentum: 1.0

Volatility: 3.0

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Kura Sushi USA

A-Score: 2.7/10

Value: 3.4

Growth: 6.0

Quality: 2.7

Yield: 0.0

Momentum: 1.5

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.12$

Current Price

17.12$

Potential

-0.00%

Expected Cash-Flows