Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Potbelly Corp (PBPB, Financial) achieved comp sales growth momentum exceeding initial expectations for 2024.
- The company opened 23 new shops in 2024 and added 115 units to its open and committed shop total.
- Adjusted EBITDA grew by 15% due to expanded shop margins and prudent corporate cost management.
- The relaunch of the perks loyalty program and significant menu innovation work were successful.
- Digital sales represented over 40% of total shop sales in Q4 2024, showing a 100 basis point increase from the previous year.
Negative Points
- System-wide sales for Q4 2024 decreased by 3.3% due to the impact of the 53rd operating week in 2023.
- Total revenue in Q4 2024 was 7.3% lower year over year, driven by the impact of the 53rd week and re-franchising.
- Company operated shop revenue decreased by 8% year over year in Q4 2024.
- Same store sales growth for Q1 2025 is expected to be impacted by approximately 150 basis points due to unusual weather conditions.
- Labor expenses increased slightly due to higher employee group insurance costs, offsetting some labor optimization efforts.
Q & A Highlights
Q: Can you elaborate on the 150 basis point weather impact on Q1 comp trends?
A: Steven Cirulis, CFO: The January period was hit by severe weather in key areas like Chicago and Texas. Without the weather impact, our same store sales would have been positive. As we move past the weather disruptions, we're seeing strong business momentum.
Q: How are the 2024 new units performing, and what is the expected cadence of openings for 2025?
A: Robert Wright, CEO: The new units are performing in line with our average shops in terms of sales and profitability. We expect the opening pace to build through Q2 and Q3, with a similar curve to last year. We're pleased with the performance and continue to refine our real estate and operational strategies.
Q: Are costs for the new prototype shops coming in as planned?
A: Robert Wright, CEO: While some regions face higher contractor costs, overall, costs are behaving like the average portfolio. We continue to provide oversight and support to manage these costs effectively.
Q: How is the digital sales and loyalty program impacting same store sales?
A: Robert Wright, CEO: Digital sales represented over 40% of total shop sales, up 100 basis points from last year. Our Potbelly Perks program continues to drive customer engagement and frequency, contributing positively to our top line.
Q: What is the expected impact of the franchisee incentive plan on development?
A: Robert Wright, CEO: The incentive plan is designed to encourage timely openings and long-term planning for larger franchisees. While it may not significantly impact 2025 development, it sets the stage for future growth and franchisee engagement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
