Potbelly 2025 Q2 Earnings Mixed Performance as Net Income Dives 91.7%

Potbelly reported mixed results for Q2 2025, beating revenue expectations with a 3.4% increase to $123.71 million but missing on earnings. The company raised its full-year guidance, signaling optimism for continued growth. Management highlighted operational improvements and a strong franchise expansion strategy.

Revenue
Potbelly's total revenue rose to $123.71 million in Q2 2025, a 3.4% increase compared to $119.70 million in the same period in 2024. The growth was primarily driven by its sandwich shop sales, which contributed $118.40 million, while franchise royalties, fees, and rent income added $5.31 million. The performance reflected improved traffic and average weekly sales at company-operated locations.

Earnings/Net Income
Potbelly's net income fell sharply to $2.91 million in Q2 2025, down 91.7% from $34.92 million in the prior-year quarter. The decline was largely attributed to the prior year's one-time tax benefit. Adjusted net income, which excludes non-recurring items, increased to $2.9 million from $2.5 million, indicating operational improvement. However, the EPS dropped 93.1% to $0.08, marking a significant earnings miss.

Price Action
In the days following the earnings report, Potbelly’s stock price posted a 3.51% gain on the day of the report but fell 5.27% for the week and declined 9.08% month-to-date, reflecting mixed investor sentiment.

Post Earnings Price Action Review
The performance of a strategy to buy Potbelly shares immediately after a revenue-positive quarter and hold for 30 days has historically underperformed. Over the past three years, such a strategy returned -25.91%, far below the benchmark of -5.65%. With an excess return of -20.25% and a CAGR of -25.91%, the investment underperformed significantly. The maximum drawdown was recorded at 0.00%, suggesting the stock had likely already reached a low point at the time of purchase.

CEO Commentary
CEO Bob Wright expressed optimism about the company’s performance, noting strong revenue growth, positive traffic, and shop-level margin expansion. He credited the results to the execution of the company’s Five-Pillar Operating Strategy and reiterated a focus on menu innovation, digital investments, and cost control.

Guidance
Potbelly raised its full-year 2025 guidance, now expecting same-store sales growth of 2.0%-3.0% and adjusted EBITDA of $34 million to $35 million. For Q3 2025, the company projected same-store sales growth of 3.25%-4.25% and adjusted EBITDA of $9.0 million to $10.0 million.

Additional News
Potbelly continued its expansion strategy with the opening of eight new shops and securing 54 franchise commitments during Q2, bringing the total open and committed shop count to 816. The company also repurchased approximately 113,000 shares for $1.0 million under its three-year share repurchase program, with $16.5 million remaining available. These moves reflect management’s confidence in the brand’s long-term value and operational execution.