Potbelly Corp. Q1 FY2025 earnings call

• Bob Wright highlighted a strong start to 2025 with system-wide sales growth, positive same-store sales, and strong profitability.
• Menu innovation: Introduced new signature sandwiches, sauces, Chili Mac, Banana Pudding Shake, and Prime Rib Steak Sandwich. Emphasized a 3-part value delivery: intrinsic value of core menu, everyday value layers (Pick Your Pair, $7.99 Skinny Combos), and promotional value via digital channels.
• Digital efforts: Digital business represented over 42% of total shop sales in Q1, up ~200 basis points year-over-year. Investments in consumer-facing digital assets and data analytics.
• Operational excellence: Improvements in management and associate staffing, turnover, and customer experience scores.
• Franchise growth: Delivered on opening at least 4 new restaurants in Q1, with 38 new shops expected in 2025 and at least 6 in Q2. Added 40 new shop commitments in Q1, total open and committed shops at 766.

System-wide sales for the first quarter of 2025 increased approximately 4.8% year-over-year to $140.7 million, with total revenue increasing approximately 2.3% year-over-year to $113.7 million. Company-operated shop revenue increased approximately 1.3% year-over-year to $109.0 million, while franchise revenue increased approximately 30.8% year-over-year to $4.7 million in the first quarter. Same-store sales growth was 0.9%, driven by a 1.1% increase in average check, partially offset by a 0.2% decrease in transactions. Shop level margins were 13.7%, an increase of 20 basis points versus last year. General and administrative expenses were 8.8% of system-wide sales, an increase of 20 basis points year-over-year.

• Full-year 2025 guidance: Same-store sales growth 1.5%-2.5%, unit growth of at least 38 openings, adjusted EBITDA ~$33M-$34M.
• Q2 2025 guidance: Same-store sales growth 1.5%-2.5% (including ~40 basis point drag from Easter shift), unit growth of at least 6 units, adjusted EBITDA $8.25M-$9.75M.

• Uncertainties related to economic policy changes, tariffs, and potential impact on supply chain and consumer demand.
• Risks associated with forward-looking statements, including significant uncertainties that could cause actual results to differ materially from projections.

Q: Jeremy Hamblin on same-store sales drivers A: Bob Wright discussed menu innovation, value efforts, and digital marketing as drivers.

Q: Alex Sturnieks on digital ordering and franchisee incentives A: Bob Wright talked about investments in consumer-facing digital assets and 50-50 incentive program for franchisees.

Q: Matt Curtis on inflation, pricing, and PDK rollout A: Steve Cirulis and Bob Wright discussed inflation expectations, pricing plans, and PDK rollout progress.

Q: Todd Brooks on innovation and Perks program A: Bob Wright talked about menu innovation process and future enhancements to the Perks loyalty program