RaceTrac Acquires Potbelly for $566 Million in Convenience Store Expansion Move.

RaceTrac, a convenience store operator, is acquiring sandwich chain Potbelly for $566 million. Potbelly operates primarily as a fast-casual restaurant with 424 shops in 31 states and the District of Columbia, offering a range of menu items including hot sandwiches, salads, soups, and desserts. The acquisition will expand RaceTrac's offerings and presence in the food service industry.

RaceTrac, a convenience store operator, has announced the acquisition of sandwich chain Potbelly for $566 million. The deal, which is expected to close in the fourth quarter, will expand RaceTrac's offerings and presence in the food service industry.

Potbelly, founded in Chicago in 1977, operates 445 restaurants across the U.S. The company said the acquisition will help it reach its goal of quadrupling in size to 2,000 locations. Potbelly's CEO, Bob Wright, stated that RaceTrac's resources will unlock new opportunities for the brand while maintaining its neighborhood sandwich shop experience.

The acquisition comes as inflation hits restaurant chains hard, leading to takeovers. Sandwich chains and restaurants have struggled in recent years, with the pandemic driving consumers to eat at home. However, Potbelly's profits have been rising, and its franchised businesses have shown strong growth. Now, inflation is impacting restaurants as they pay more for ingredients and customers tighten their belts.

RaceTrac, founded in 1934 and family-owned, operates more than 800 locations in 14 states. The acquisition is an all-cash deal at $17.12 per share. RaceTrac Chairman and CEO Natalie Morhous said the company is eager to expand its stable of brands.

The acquisition follows a trend of consolidation in the restaurant industry. Dave's Hot Chicken was acquired for $1 billion by a private equity firm, and Subway was snapped up for nearly $10 billion by the same firm. These acquisitions reflect the industry's response to inflation and changing consumer behavior.

The acquisition is expected to close in the fourth quarter, and Potbelly shares jumped 32% to $17.03 following the announcement.

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