CHICAGO - Potbelly (NASDAQ:PBPB) Corporation (NASDAQ: PBPB), the well-known sandwich shop chain, has announced a multi-unit development agreement to open 15 new locations in the greater Atlanta area, marking the company's first foray into Georgia. The expansion is in partnership with Royal Restaurant Group (LON:RTN), a seasoned national franchise operator.
The agreement signifies a strategic move in Potbelly's long-term growth plan, extending its presence in the southern U.S. Bob Wright, President and CEO of Potbelly, expressed gratitude towards Royal Restaurant Group for their continued support in this expansion effort. The development, concentrated in central and northern Atlanta, is set to commence in January 2026, with plans to open three shops annually thereafter.
This new venture builds upon a previous 40-shop agreement signed in October 2023 between Potbelly and Royal Restaurant Group, which has already successfully opened four shops and is developing more locations across Ohio and Florida. The co-founders of Royal Restaurant Group bring over 60 years of combined industry experience, having held top positions at one of Wendy's (NASDAQ:WEN) largest franchise organizations.
Randy Pianin, Co-founder and CEO of Royal Restaurant Group, highlighted their commitment to customer service and anticipation of introducing Potbelly's unique offerings to Georgia's diners.
Potbelly aims to reach 2,000 shops in the coming years, with a focus on franchising at least 85% of these locations as part of its Franchise Growth Acceleration Initiative. The company is actively seeking qualified franchise candidates for further development in the Atlanta market and other U.S. locations, including parts of Florida, Tennessee, Texas, Ohio, Virginia, and Pennsylvania.
Potbelly, which began in Chicago in 1977, has grown significantly, operating over 425 shops across the United States, including more than 80 franchised locations. The company prides itself on providing fresh, customized menu items and friendly service in a neighborhood-focused environment.
The information for this expansion is based on a press release statement from Potbelly Corporation. The company's forward-looking plans are subject to various risks and uncertainties, and there can be no assurance that the initiatives will be successfully executed or that the anticipated growth and expansion will be achieved.
In other recent news, Potbelly Corporation has reported a steady rise in its Q2 2024 performance, with a 0.4% growth in same-store sales and an expansion of shop margins for the 13th consecutive quarter. The company's digital channels, including the Perks loyalty program, played a significant role, accounting for about 40% of total shop sales. The sandwich brand added four new shops in the quarter and plans to open at least 30 more this year.
Recent developments also show that Potbelly's franchise growth is accelerating, with 663 open and committed shops and 54 new commitments year-to-date. The company's Q2 revenues reached $119.7 million, with a net income of $34.7 million, boosted by a tax valuation allowance release.
However, the company observed a softer start to Q3, attributed to the timing of the 4th of July holiday and Hurricane Beryl. Despite these challenges, Potbelly remains confident about its future and is optimistic about its 2025 opening pipeline. The company has also introduced a new prototype store size of 1,800 square feet, which has been well-received and offers cost savings.
InvestingPro Insights
As Potbelly Corporation (NASDAQ: PBPB) embarks on its ambitious expansion into Georgia, recent financial data and insights from InvestingPro provide additional context to the company's growth strategy.
According to InvestingPro data, Potbelly's market capitalization stands at $247.65 million, reflecting its current position in the fast-casual restaurant sector. The company's P/E ratio of 6.89 suggests that it may be undervalued compared to industry peers, which could be attractive to investors considering the expansion plans.
An InvestingPro Tip highlights that Potbelly has shown a significant return over the last week, with a 10.12% price total return. This recent stock performance may indicate positive market sentiment towards the company's growth initiatives. Additionally, the strong return over the last three months, with a 20.91% price total return, aligns with the company's aggressive expansion strategy.
Another relevant InvestingPro Tip notes that analysts predict the company will be profitable this year. This projection, combined with the fact that Potbelly has been profitable over the last twelve months, suggests a solid financial foundation for its expansion plans.
For investors interested in a deeper analysis of Potbelly's financial health and growth prospects, InvestingPro offers 10 additional tips, providing a comprehensive view of the company's potential.
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