News

Potbelly hoping to be the next 'Come-back Kid'

February 26, 2019

Potbelly Corporation reported Monday that its total revenues and company-operated, same-store were down for the fourth quarter as well as the full fiscal year. During Q4 — which ended  Dec. 30, 2018 — total revenues decreased 8.7 percent to $102.4 million from $112.1 million, and company-operated comparable store sales decreased 1.7 percent, adjusting for the impact of the 14th week, according to a company press release.  For the entire year, total revenues decreased 1.3 percent to $422.6 million from $428.1 million, and company-operated comparable store sales decreased 1.4 percent, adjusting for the impact of the 53rd week.

Although the company endured loss, CEO Alan Johnson told investors he was pleased with the performance considering the progress it made toward executing its turnaround plan.

"Our objectives for 2018 were to learn what it takes to positively impact same-store sales and learn how to drive industry-beating traffic trends — and I believe we accomplished these goals," he said. "Our traffic trends in the fourth quarter outperformed the broader Fast Casual industry within our markets for the second consecutive quarter. In addition, we are pleased to report that we achieved same-store sales and earnings for the full year ahead of our expectations."

Johnson called 2018 a year of transition for the brand that opened 17 shops but closed 23.

“While we achieved meaningful progress in 2018 and demonstrated that we can improve our same-store sales and traffic trends, we recognize that there is still much more work yet to be done to turn the business around," he said. " As we look to 2019, our main priorities are to generate positive same-store sales and to drive profitability. We are optimistic about our ability to continue to improve our same-store sales trajectory and are planning for positive same-store sales growth for the first time in a few years.'

Johnson said his optimism stems from three initiatives already in play:

1. A new menu, which was tested last year, and rolled out across the chain this month.
2. Delivery, which is now available in all shops along with expanded delivery windows in some areas.
3. A  larger investment in marketing to help brand awareness, attract new customers and retain more of them. 

"We remain committed to testing new ideas to improve our traffic and same-store sales trends in a way that builds the foundation for long-term sustainable profit growth," Johnson said.

2019 outlook

For the full fiscal year of 2019, management expects:

• 12-20 total shop openings and 12-20 total shop closures.
• Company-operated comparable store sales growth in range of 0.5 percent to 1.5 percent.