- **Revenue Momentum**: 3.2% same-store sales growth, 8 new shops opened, and 54 franchise commitments drive accelerated growth.
- **Digital Dominance**: 41% of sales via digital channels, with 140 basis point year-over-year expansion.
- **Franchise Expansion**: 2025 guidance raised to 38+ openings, with 364 signed deals in pipeline.
- **Profitability**: Adjusted EBITDA up 13% to $9.6 million, shop-level margin at 16.7%.
- **Innovation**: Prime Rib Steak sandwich and digital platform upgrades fuel customer engagement.


**【Management Opening Remarks】**
- Adiya Dixon emphasized forward-looking statements and non-GAAP measures, setting the stage for the financial and operational updates.

**【CEO Summary Section】**
- **Revenue Growth**: Same-store sales increased 3.2% year-over-year, driven by 1.1% transaction growth and a 2.1% average check increase. Digital sales represented 41% of total shop sales, up 140 basis points year-over-year.
- **Shop Expansion**: 8 new shops opened in Q2 (ahead of expectations), with plans for at least 38 openings in 2025. Franchise commitments reached 54 new shops, bringing total open and committed shops to 816.
- **Menu Innovation**: Launched Prime Rib Steak sandwich and Hot Pepper potato chips, with additional menu tests in progress. Digital platform upgrades (e.g., one-click ordering) improved customer experience.
- **Franchise Strategy**: Accelerated franchise growth through incentives for early openings, with 8-year maximum development timelines for area agreements.
- **Community Impact**: Highlighted Potbelly's Summer of Service initiative, including partnerships with food banks and community events.

**【CFO Financial Commentary】**
- **Financial Performance**: Q2 2025 system-wide sales of $154.2 million (+6.7% YoY), total revenue $123.7 million (+3.4% YoY). Adjusted EBITDA of $9.6 million (+13% YoY), driven by 100 basis point shop-level margin expansion to 16.7%.
- **Expense Management**: Food/beverage costs improved 80 basis points, occupancy costs down 30 basis points. General & administrative expenses rose 50 basis points due to bonus accruals and consulting costs.
- **Guidance Update**: Raised 2025 same-store sales growth to 2.0%-3.0% (from 1.5%-2.5%), unit growth to at least 38 openings, and adjusted EBITDA to $34.0-$35.0 million (from $33.0-$34.0 million).

**【Q&A Highlights】**
- **Franchise Pipeline**: 364 signed deals in pipeline, with 50+ openings visible for 2026. Corporate openings (10-20/year) focused on high-margin, low-construction-cost markets.
- **Menu Pricing**: 2.7% gross price increase offset by 0.6% mix decline, with no immediate plans for further price hikes.
- **Remodels & Technology**: 5 remodels completed, testing PDCX (POS/kitchen display) systems. Digital sales growth driven by app/web enhancements and loyalty program engagement.
- **Competition & Consumer Trends**: Digital customers spend 10%-15% more than counter orders. Low-income consumer pressure minimal due to $8-$9 meal pricing sweet spot.


Potbelly Corporation (PBPB) Q2 2025 Earnings Call Transcript

- **Q1 Growth Surpasses Expectations**: 4.8% system-wide sales growth, 0.9% same-store sales, and 42% digital sales penetration highlight strong execution.
- **Menu Innovation Drives Engagement**: Prime Rib Sandwich and new menu items like Chili Mac and Banana Pudding Shake resonate with customers, supporting 13.7% shop-level margin.
- **Franchise Expansion Accelerates**: 40 new shop commitments in Q1 and 38+ openings planned for 2025, with pipeline exceeding prior-year levels.
- **Digital Dominance**: Potbelly Perks loyalty program and digital investments drive 200 basis point increase in digital sales share.
- **Profitability Resilience**: Adjusted EBITDA of $5.5 million despite macro challenges, with cost control measures maintaining margins.

**【CEO Summary Section】**
- **Strong Q1 Performance**: System-wide sales grew 4.8% to $140.7 million, with same-store sales up 0.9% driven by menu innovation and digital growth.
- **Menu Innovation Success**: Launch of Prime Rib Steak Sandwich, Chili Mac, and Banana Pudding Shake boosted customer engagement and sales.
- **Digital Dominance**: Digital sales represented 42% of total shop sales, up 200 basis points year-over-year, supported by Potbelly Perks loyalty program expansion.
- **Franchise Expansion**: Added 40 new shop commitments in Q1, bringing total open and committed shops to 766, with 38+ new openings planned for 2025.
- **Operational Efficiency**: Shop-level margin improved to 13.7%, up 20 basis points, with cost control measures maintaining profitability despite macro challenges.

**【CFO Financial Commentary】**
- **Revenue Growth**: Total revenue of $113.7 million (+2.3% YoY), with franchise revenue surging 30.8% due to 26% increase in franchise units.
- **Profitability Metrics**: Adjusted EBITDA of $5.5 million (4.9% of revenue), despite a 2.8% YoY decline due to prior-year settlement benefits.
- **Cost Management**: Food costs improved 110 basis points, offsetting labor and occupancy expenses increases.
- **Share Repurchases**: $1.1 million spent on 117,000 shares under the 3-year buyback program.
- **Guidance Reaffirmation**: 2025 targets include 1.5-2.5% same-store sales growth, 38+ new units, and $33-34 million adjusted EBITDA.

**【Q&A Highlights】**
- **Sales Growth Drivers**: Menu innovation, digital marketing, and value offerings (e.g., $7.99 Skinny Combos) sustained momentum despite Easter timing headwinds.
- **Franchise Momentum**: High-quality franchisees driven by unit-level economics and brand strength, with pipeline for 2026 stronger than 2025.
- **Tariff Impact**: Minimal expected impact on build costs, with focus on long-term growth despite macro uncertainty.
- **Pricing Strategy**: Mid-single-digit price increases quarterly, targeting 3%+ gross price growth for 2025.
- **Capital Allocation**: $30 million allocated to tech upgrades, facility modernization, and remodel tests for ROI optimization.

Potbelly (PBPB)-7 May 25-2025 Q1 Earnings call transcript

- **2024 Growth Milestones**: 23 new shops, 15% EBITDA growth, 40% digital sales penetration.
- **2025 Ambitions**: 38+ openings, 1.5-2.5% comp sales growth, $33-34M EBITDA.
- **Menu Innovation Success**: New pork sandwiches and sauces drove customer engagement, with Q4 same-store sales +0.3%.
- **Franchise Expansion**: 115 pipeline additions, 38+ openings guided, with new incentives for large developers.
- **Weather Impact**: Q1 2025 comps down 1.5-0.5% due to Midwest and Texas weather, but strong post-weather momentum.
- **Cost Control**: 30bps shop margin improvement, 100bps G&A reduction YoY.


**【CEO Opening Remarks】**
- **2024 Performance Highlights**: 23 new shop openings, 115 units added to pipeline, 15% adjusted EBITDA growth, and menu innovation driving sales momentum.
- **2025 Growth Strategy**: Focus on comp sales growth through menu innovation and digital assets, accelerated unit openings (38+ new shops), and cost control for balanced growth.
- **Menu Innovation Success**: New pulled pork sandwiches, spicy sauces, and Craft Refresher beverages drove customer engagement and sales mix improvements.
- **Digital Growth**: Digital sales represent 40% of total shop sales, up 100bps YoY, with Perks loyalty program enhancing customer retention.
- **Unit Development**: 23 new shops in 2024, 115 pipeline additions, and 38+ openings guided for 2025. Company-operated shops to densify high-performing markets, with 20+ annual openings by 2026.

**【CFO Financial Summary】**
- **Q4 2024 Results**: System-wide sales $142.6M (-3.3% YoY), total revenue $116.6M (-7.3% YoY). Adjusted EBITDA $9.7M (8.3% of revenue), +30% YoY.
- **Key Metrics**: Same-store sales +0.3% (above expectations), shop-level margin 16.0% (+30bps YoY), G&A 9.1% of sales (-100bps YoY).
- **2025 Guidance**: Same-store sales 1.5-2.5%, unit growth ≥38 openings, adjusted EBITDA $33-34M. Q1 2025 EBITDA $3.5-4.5M, with 150bps weather impact.
- **Inflation Outlook**: 2.2-3% food inflation, 2% labor inflation, with 60% of 2025 commodity costs locked in.

**【Q&A Key Takeaways】**
- **Weather Impact**: Q1 2025 comps down 1.5-0.5% due to Midwest and Texas weather, but underlying demand strong post-weather.
- **Unit Performance**: New shops performing in line with portfolio average, with focus on prototype cost efficiency ($650K/1,800-2,200 sqft).
- **Menu Pipeline**: Excitement over innovation pipeline, with tests underway but no specific timing disclosed.
- **Franchise Incentives**: 50-50 royalty fee split for on-time openings, and new large developer program to accelerate multi-unit growth.
- **G&A Management**: 2025 G&A expected to increase slightly in dollars but improve leverage with sales growth.


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