Group 1 - Potbelly (PBPB) is a strong performer in the Retail-Wholesale sector, with a year-to-date return of 33.8%, significantly outperforming the sector average of 6.2% [4] - The Zacks Rank for Potbelly is 2 (Buy), indicating positive analyst sentiment and a favorable earnings outlook, with a 13% increase in the consensus estimate for full-year earnings over the past quarter [3] - Potbelly belongs to the Retail - Restaurants industry, which has seen a decline of about 4.1% year-to-date, further highlighting Potbelly's strong performance relative to its industry [5] Group 2 - Casey's General Stores (CASY) is another Retail-Wholesale stock that has outperformed the sector, with a year-to-date return of 30.2% [4] - The Retail - Convenience Stores industry, to which Casey's belongs, has a year-to-date increase of 8.2%, ranking 100 in the Zacks Industry Rank [6] - Both Potbelly and Casey's General Stores are recommended for investors interested in Retail-Wholesale stocks due to their solid performance [6]

Core Insights - Potbelly (NASDAQ: PBPB) continues to demonstrate strong performance, reinforcing its position as a top pick in the fast-casual restaurant sector [1] Company Performance - The latest quarterly results indicate that Potbelly is effectively competing in the fast-casual market, showcasing its operational strengths and growth potential [1]

Core Viewpoint - Potbelly (PBPB) has shown strong stock performance, with a 2.9% increase over the past month and a 38.2% gain since the start of the year, outperforming both the Zacks Retail-Wholesale sector and the Zacks Retail - Restaurants industry [1][2]. Financial Performance - Potbelly has consistently beaten earnings estimates, reporting an EPS of $0.09 against a consensus estimate of $0.08 in its last earnings report [2]. - For the current fiscal year, Potbelly is expected to post earnings of $0.23 per share on revenues of $476 million, reflecting a -23.33% change in EPS and a 2.9% change in revenues. For the next fiscal year, earnings are projected to be $0.30 per share on revenues of $498.2 million, indicating a year-over-year change of 30.43% in EPS and 4.66% in revenues [3]. Valuation Metrics - Potbelly's current valuation metrics indicate a premium, trading at 56.6X current fiscal year EPS estimates compared to the peer industry average of 19.4X. On a trailing cash flow basis, it trades at 17.7X versus an average of 11.7X for its peers [6]. - The stock has a Value Score of C, a Growth Score of A, and a Momentum Score of F, resulting in a VGM Score of B [6]. Zacks Rank - Potbelly holds a Zacks Rank of 2 (Buy), supported by a solid earnings estimate revision trend. This ranking suggests that the stock may have further upside potential in the near term [7].

Group 1: Earnings Performance - Potbelly reported quarterly earnings of $0.09 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, and showing an increase from $0.08 per share a year ago, representing an earnings surprise of +12.50% [1] - The company posted revenues of $123.71 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.99%, and an increase from year-ago revenues of $119.7 million [2] Group 2: Stock Performance and Outlook - Potbelly shares have increased approximately 17.7% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $119.1 million, and for the current fiscal year, it is $0.23 on revenues of $476 million [7] Group 3: Industry Context - The Retail - Restaurants industry, to which Potbelly belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - The performance of Potbelly's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - System-wide sales increased approximately 6.7% year over year to $154.2 million, with total revenue rising approximately 3.4% year over year to $123.7 million [20] - Adjusted EBITDA for the second quarter was $9.6 million, representing 7.8% of total revenue, reflecting a 13% year-over-year growth driven by improved shop level margin and disciplined management of G&A [20][22] - Net income for the quarter was $2.5 million, with adjusted net income increasing by $400,000 year over year to $2.9 million [23] Business Line Data and Key Metrics Changes - Company-operated shop revenue increased approximately 2.5% year over year to $118.4 million, while franchise revenue improved approximately 27.7% year over year to $5.3 million, primarily driven by an increase in franchise units [20] - Same store sales grew by 3.2%, attributed to a 1.1% increase in transactions and a 2.1% increase in average check, with gross price increasing by approximately 2.7% [21][50] Market Data and Key Metrics Changes - Digital business represented over 41% of total shop sales, an increase of approximately 140 basis points compared to the previous year [13] - The company opened eight new shops during the second quarter, exceeding the original expectation of six, and plans to open at least another eight in the third quarter [17] Company Strategy and Development Direction - The company focuses on menu innovation, digital investments, and shop growth to drive same store sales growth and enhance customer experience [8][12] - The franchise growth acceleration initiative is on track, with 54 new franchise shop commitments in the second quarter, bringing the total to 816 shops, which is over 40% of the long-term potential for at least 2,000 shops [18] - The company is committed to community service through initiatives like the Potbelly Summer of Service, reinforcing its brand identity as a community-focused business [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth, citing strong performance in same store sales and digital channels, despite external pressures on lower-income consumers [85] - The company raised its full-year guidance for same store sales growth to 2% - 3% and adjusted EBITDA to approximately $34 million - $35 million [24][25] Other Important Information - The company has implemented a new website and mobile app to enhance the customer experience, which is expected to drive further digital sales growth [14][92] - Food cost inflation is forecasted to be just shy of 2% for the third quarter, with the company locked in on its food cost baskets for the year [62] Q&A Session Summary Question: Insights on franchise openings and pipeline realization - Management indicated that the timeline for realizing franchise openings varies, with larger developers expected to deliver more units per year, while smaller agreements may take longer [33][36] Question: Corporate store openings and densification strategy - Management confirmed visibility into the corporate store pipeline, with plans to open up to 20 company units a year, focusing on markets with strong margins and lower construction costs [40][41] Question: Breakdown of same store sales growth - The 3.2% same store sales growth comprised a 1.1% increase in traffic and a 2.1% increase in average check, with a slight drop in mix [49] Question: Menu innovation timeline and testing - Management confirmed ongoing menu innovation testing, with plans to introduce new items based on customer feedback and research [56][59] Question: Visibility on food costs and tariffs - Management noted manageable food cost inflation, with a forecast of just over 2% for the back half of the year, and limited exposure to proposed tariffs [62] Question: Capital deployment strategy post-debt - Management emphasized a focus on investing in growth initiatives, technology, and share buybacks as part of their capital strategy [67][70] Question: Consumer behavior changes and competitive dynamics - Management observed pressure on lower-income consumers but noted that the majority of their traffic comes from higher income brackets, allowing for continued growth [84] Question: Differences in sales trends between mobile order and pickup versus delivery - Management reported no significant shift in sales trends between digital pickup and delivery, maintaining a focus on enhancing first-party digital channels [92][93]

Q2 2025 Financial Performance - Systemwide sales increased by 6.7% to $154.2 million[8] - Sandwich shop sales, net, increased by 2.5% to $118.4 million[8] - Franchise royalties, fees, and rent income increased by 27.7% to $5.3 million[8] - Same-store sales increased by 3.2%[8] - Adjusted EBITDA increased by 13.0% to $9.6 million[8] - Shop-level margin increased by 10 basis points to 16.7%[24, 43] Strategic Growth Initiatives - The company is executing against a five-pillar strategic plan focused on traffic-driven profitability and unit growth[5, 6] - The Franchise Growth Acceleration (FGA) Initiative aims to drive unit growth through franchise development agreements and new openings[30] - The company has 816 open and committed shops, marking progress toward a 2,000 shop target, a 23% year-over-year increase[33, 34] Financial Outlook - The company expects Q3 2025 same-store sales to grow between 3.25% and 4.25% and adjusted EBITDA to be between $9.0 million and $10.0 million[38] - The company projects 2025 same-store sales growth between 2.0% and 3.0%, and adjusted EBITDA between $34 million and $35 million[39]

[Cover Page and Filing Information](index=1&type=section&id=Cover%20Page) Provides essential filing details for Potbelly Corporation's Form 10-Q, including registrant information and common stock outstanding [Registrant Information](index=1&type=section&id=Registrant%20Information) Potbelly Corporation, an accelerated filer, reported 30,260,672 shares of common stock outstanding as of July 27, 2025 - Potbelly Corporation is an accelerated filer[3](index=3&type=chunk) Common Stock Outstanding | As of Date | Shares Outstanding | | :----------- | :----------------- | | July 27, 2025 | 30,260,672 | [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section provides an organized overview of the report's structure and content for easy navigation [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements and detailed notes on accounting policies [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased slightly, driven by cash and property, while liabilities decreased and equity rose Condensed Consolidated Balance Sheets (Amounts in thousands) | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $16,187 | $11,663 | | Total current assets | $36,994 | $33,201 | | Property and equipment, net | $54,391 | $50,533 | | Total assets | $265,241 | $263,146 | | Total current liabilities | $73,392 | $65,233 | | Long-term debt, net of current portion | $— | $4,000 | | Total liabilities | $204,144 | $205,198 | | Total equity | $61,097 | $57,948 | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues increased, but net income significantly decreased due to a prior year income tax benefit Condensed Consolidated Statements of Operations (Amounts in thousands, except per share data) | Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Total revenues | $123,709 | $119,697 | $237,390 | $230,850 | | Income from operations | $3,702 | $4,119 | $3,952 | $4,237 | | Net income attributable to Potbelly Corporation | $2,488 | $34,712 | $2,426 | $31,945 | | Basic EPS | $0.08 | $1.16 | $0.08 | $1.07 | | Diluted EPS | $0.08 | $1.13 | $0.08 | $1.04 | - Net income attributable to Potbelly Corporation decreased by **92.8%** for the quarter ended June 29, 2025, compared to June 30, 2024, primarily due to a **$31.3 million** valuation allowance release in June 2024[10](index=10&type=chunk)[102](index=102&type=chunk) [Condensed Consolidated Statements of Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity increased due to net income and stock-based compensation, offset by share repurchases Key Equity Changes (Amounts in thousands) | Item | Balance at Dec 29, 2024 | Balance at June 29, 2025 | | :-------------------------- | :---------------------- | :----------------------- | | Total Equity | $57,948 | $61,097 | | Net income | N/A | $2,914 | | Stock-based compensation expense | N/A | $1,827 | | Repurchases of common stock | N/A | $(989) | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased, while investing cash outflow rose and financing cash outflow decreased Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | YTD June 29, 2025 | YTD June 30, 2024 | | :-------------------------------- | :---------------- | :---------------- | | Net cash provided by operating activities | $22,366 | $3,850 | | Net cash used in investing activities | $(10,755) | $(8,460) | | Net cash used in financing activities | $(7,087) | $(20,856) | | Net change in cash and cash equivalents and restricted cash | $4,524 | $(25,466) | | Cash and cash equivalents and restricted cash at end of period | $17,002 | $9,071 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's business, accounting policies, and financial items [(1) Organization and Other Matters](index=8&type=section&id=Note%201%20Organization%20and%20Other%20Matters) Potbelly operates 340 company-owned and 107 franchised shops, with new accounting pronouncements impacting future disclosures - As of June 29, 2025, Potbelly operates **340** Company-operated shops and **107** franchised shops in the United States[16](index=16&type=chunk) - The company will adopt ASU 2023-09 (Income Taxes) in its 2025 10-K, impacting disclosures but not financial condition. ASU 2024-03 (Disaggregation of Incomes Statement Expenses) will be adopted in the 2027 10-K, with impact currently being evaluated[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [(2) Restricted Cash](index=9&type=section&id=Note%202%20Restricted%20Cash) Restricted cash, held as collateral for lease agreements, remained stable at $815 thousand Restricted Cash Reconciliation (Amounts in thousands) | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $16,187 | $11,663 | | Restricted cash, noncurrent | $815 | $815 | | Total cash, cash equivalents and restricted cash | $17,002 | $12,478 | [(3) Revenue](index=9&type=section&id=Note%203%20Revenue) Revenue from sandwich shop sales increased, while total contract liabilities saw a slight decrease Revenue Recognition (Amounts in millions) | Revenue Source | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------- | :------ | :------ | :------- | :------- | | Point in time | $122.0 | $119.1 | $233.6 | $229.7 | | Over time | $1.7 | $0.6 | $3.8 | $1.1 | Contract Liabilities (Amounts in thousands) | Item | June 29, 2025 | December 29, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Franchise fee liabilities | $8,184 | $7,163 | $1,021 | | Unredeemed gift card liabilities | $2,569 | $3,954 | $(1,385) | | Customer loyalty program obligations | $5,534 | $6,181 | $(647) | | Total contract liabilities | $16,287 | $17,298 | $(1,011) | [(4) Fair Value Measurement](index=10&type=section&id=Note%204%20Fair%20Value%20Measurement) Impairment charges of $0.2 million for Q2 2025 were recognized due to underperforming shops - Impairment charges for underperforming shops were **$0.2 million** for the quarter ended June 29, 2025, and **$0.5 million** for the year-to-date period[36](index=36&type=chunk) [(5) Earnings Per Share](index=11&type=section&id=Note%205%20Earnings%20Per%20Share) Basic and diluted EPS were $0.08 for Q2 and YTD 2025, a significant decrease from the prior year Earnings Per Share Calculation | Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Net income attributable to Potbelly Corporation | $2,488 | $34,712 | $2,426 | $31,945 | | Basic EPS | $0.08 | $1.16 | $0.08 | $1.07 | | Diluted EPS | $0.08 | $1.13 | $0.08 | $1.04 | | Weighted average common stock outstanding-basic | 30,192 | 29,926 | 30,041 | 29,903 | | Weighted average common shares outstanding-diluted | 30,811 | 30,714 | 30,785 | 30,842 | [(6) Income Taxes](index=11&type=section&id=Note%206%20Income%20Taxes) The company recorded an income tax expense of $0.7 million for Q2 2025, a change from prior year's benefit - Income tax expense was **$0.7 million** for Q2 2025, compared to a **$31.0 million** benefit in Q2 2024, due to the prior year's valuation allowance release on deferred tax assets[102](index=102&type=chunk)[119](index=119&type=chunk) Income Tax Expense (Benefit) (Amounts in thousands) | Period | Income Tax Expense (Benefit) | | :----- | :--------------------------- | | Q2 2025 | $665 | | Q2 2024 | $(30,982) | | YTD 2025 | $663 | | YTD 2024 | $(30,931) | - The valuation allowance against deferred tax assets was **$0.2 million** as of June 29, 2025, compared to **$0.1 million** as of June 30, 2024[40](index=40&type=chunk) [(7) Leases](index=12&type=section&id=Note%207%20Leases) The company terminated 3 leases YTD 2025, recognizing a gain, and operating lease income increased Lease Termination and Income (Amounts in thousands) | Item | YTD June 29, 2025 | YTD June 30, 2024 | | :------------------------------------ | :---------------- | :---------------- | | Leases terminated | 3 | 1 | | (Gain) loss recognized upon lease termination | $(595) | $110 | | Operating lease income | $2,094 | $1,960 | | Franchise rent income | $3,047 | $2,774 | [(8) Debt and Credit Facilities](index=12&type=section&id=Note%208%20Debt%20and%20Credit%20Facilities) Long-term debt decreased to zero due to Term Loan repayment, with a $30 million Revolving Facility now primary Long-Term Debt (Amounts in thousands) | Item | June 29, 2025 | December 29, 2024 | | :--------------- | :------------ | :---------------- | | Revolving Facility | $— | $4,000 | | Total long-term debt | $— | $4,000 | - The company repaid and terminated its Term Loan in February 2024, resulting in a **$2.4 million** loss on extinguishment of debt for fiscal year 2024[56](index=56&type=chunk) - A **$30 million** Revolving Facility, expiring February 7, 2027, is now the primary credit facility, used for general corporate and working capital purposes. The company is in compliance with all covenants[47](index=47&type=chunk)[52](index=52&type=chunk) [(9) Capital Stock](index=14&type=section&id=Note%209%20Capital%20Stock) The company repurchased 112,850 shares for $1.0 million in Q2 2025, with 727,891 warrants remaining outstanding Stock Repurchase Program (Amounts in thousands, except shares) | Period | Shares Repurchased | Aggregate Cost | | :-------------------------- | :----------------- | :------------- | | Q2 2025 | 112,850 | $1.0 | | YTD June 29, 2025 | 230,326 | $2.1 | - The **2024 Repurchase Program** authorizes up to **$20.0 million** in common stock repurchases over three years, replacing the 2018 program[58](index=58&type=chunk) - Year-to-date June 29, 2025, **155,511** warrants were exercised at **$5.45** per warrant, leaving **727,891** warrants outstanding, exercisable through August 12, 2026[59](index=59&type=chunk) [(10) Stock-Based Compensation](index=14&type=section&id=Note%2010%20Stock-Based%20Compensation) The company recognized $1.2 million in RSU and $0.6 million in PSU compensation expense for Q2 2025 Stock-Based Compensation Expense (Amounts in millions) | Item | Q2 2025 | YTD 2025 | Q2 2024 | YTD 2024 | | :-------------------------- | :------ | :------- | :------ | :------- | | Restricted Stock Units (RSUs) | $1.2 | $2.0 | $1.1 | $1.9 | | Performance Stock Units (PSUs) | $0.6 | $1.3 | $0.4 | $1.3 | | Stock Options | $0.0 | $0.0 | $0.0 | $0.0 | - Unrecognized stock-based compensation expense for RSUs is **$6.2 million** and for PSUs is **$4.6 million**, both to be recognized through the second quarter of 2028[64](index=64&type=chunk)[67](index=67&type=chunk) [(11) Commitments and Contingencies](index=16&type=section&id=Note%2011%20Commitments%20and%20Contingencies) A class action lawsuit settlement is pending court approval, and the company manages food commodity price risks - A class action lawsuit in Washington state, related to the Equal Pay and Opportunities Act, has a probable material loss exposure of **$1.8 million**, recorded in 2024. A settlement agreement was executed on March 27, 2025, pending court approval[69](index=69&type=chunk) - The company uses a mix of forward pricing and formula pricing protocols for food commodities to manage price and availability risks[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, operational strategies, and liquidity for the quarter and year-to-date periods [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) This section highlights future financial position, operational goals, and growth strategies, subject to various risks - Forward-looking statements cover future financial position, operational goals, brand growth, shop development, liquidity, and strategic initiatives like the 'Traffic-Driven Profitability' Five-Pillar plan[71](index=71&type=chunk) - Risks and uncertainties include competition, marketing effectiveness, economic conditions (inflation), business strategy implementation, franchisee success, commodity/labor costs, credit facility compliance, employee retention, public health issues, growth management, and reputational issues[71](index=71&type=chunk) [Business](index=17&type=section&id=Business) Potbelly focuses on profitable growth through its 'Traffic-Driven Profitability' Five-Pillar plan and franchise development - Potbelly's 'Traffic-Driven Profitability' Five-Pillar strategic plan focuses on: Craveable-Quality Food, People Creating Good Vibes, Customer Experiences, Digitally-Driven Awareness, and Franchise-Focused Development[73](index=73&type=chunk)[74](index=74&type=chunk) - The company aims to generate average shop-level profit margins ranging from the **mid to high teens**[73](index=73&type=chunk) Shop Roll-Forward (Number of Shops) | Item | Company Operated | Franchise Operated | Total | | :-------------------------- | :--------------- | :----------------- | :---- | | Shops as of Dec 31, 2023 | 345 | 79 | 424 | | Shops as of June 30, 2024 | 345 | 84 | 429 | | Shops as of Dec 29, 2024 | 346 | 96 | 442 | | Shops as of June 29, 2025 | 340 | 107 | 447 | [Key Performance Indicators](index=18&type=section&id=Key%20Performance%20Indicators) Key metrics like same store sales, shop-level profit margin, and Adjusted EBITDA assess business performance and growth - Key performance indicators include: same store sales, number of shop openings, shop-level profit margins, system-wide sales, average unit volume, and adjusted EBITDA[78](index=78&type=chunk) - Shop-level profit margin is a non-GAAP measure defined as net Company-operated sandwich shop sales less operating expenses (excluding depreciation) as a percentage of net Company-operated sandwich shop sales[83](index=83&type=chunk) - Adjusted EBITDA is a non-GAAP measure that adjusts net income for non-operating and non-recurring items to provide a clearer picture of underlying business performance[86](index=86&type=chunk) [Quarter Ended June 29, 2025 Compared to Quarter Ended June 30, 2024](index=20&type=section&id=Quarter%20Ended%20June%2029,%202025%20Compared%20to%20Quarter%20Ended%20June%2030,%202024) Q2 2025 revenues increased by 3.4%, but net income decreased significantly due to a prior year tax benefit Q2 Financial Performance (Amounts in thousands, except percentages) | Item | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Total revenues | $123,709 | $119,697 | $4,012 | 3.4% | | Net income attributable to Potbelly Corporation | $2,488 | $34,712 | $(32,224) | (92.8)% | | Same store sales | 3.2% | 0.4% | 2.8% | | | Shop-level profit margin | 16.7% | 15.7% | 1.0% | | | System-wide sales | $154,170 | $144,470 | $9,699 | | | Adjusted EBITDA | $9,632 | $8,521 | $1,111 | | - Sandwich shop sales, net increased by **2.5%** to **$118.4 million**, driven by existing shops and new openings, partially offset by refranchised and closed shops[89](index=89&type=chunk) - Franchise royalties, fees and rental income increased by **27.6%** to **$5.3 million**, primarily due to new franchise-operated shop openings[90](index=90&type=chunk) - Food, beverage, and packaging costs decreased as a percentage of sandwich shop sales to **26.3%** (from 27.1%), driven by lower inflation and reduced supplies/packaging costs[91](index=91&type=chunk) - General and administrative expenses increased by **12.6%** to **$13.4 million**, mainly due to higher payroll, incentive compensation, consulting, and technology costs[96](index=96&type=chunk) - Depreciation expense increased by **30.3%** to **$3.9 million**, primarily due to additional leasehold improvements from remodeling existing Company-operated shops[97](index=97&type=chunk) - Income tax expense was **$0.7 million** in Q2 2025, a significant change from the **$31.0 million** benefit in Q2 2024, which was due to a valuation allowance release[102](index=102&type=chunk) [Year to Date Ended June 29, 2025 Compared to Year to Date Ended June 30, 2024](index=23&type=section&id=Year%20to%20Date%20Ended%20June%2029,%202025%20Compared%20to%20Year%20to%20Date%20Ended%20June%2030,%202024) YTD 2025 revenues increased by 2.8%, but net income decreased by 92.4% due to the prior year's tax benefit YTD Financial Performance (Amounts in thousands, except percentages) | Item | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Total revenues | $237,390 | $230,850 | $6,540 | 2.8% | | Net income attributable to Potbelly Corporation | $2,426 | $31,945 | $(29,519) | (92.4)% | | Same store sales | 2.1% | 0.1% | 2.0% | | | Shop-level profit margin | 15.3% | 14.6% | 0.6% | | | System-wide sales | $294,831 | $278,659 | $16,172 | | | Adjusted EBITDA | $15,154 | $14,201 | $953 | | - Sandwich shop sales, net increased by **1.9%** to **$227.4 million**, driven by existing shops and new openings, partially offset by refranchised and closed shops[105](index=105&type=chunk) - Franchise royalties, fees and rental income increased by **29.1%** to **$10.0 million**, primarily due to new franchise-operated shop openings[106](index=106&type=chunk) - Food, beverage, and packaging costs decreased as a percentage of sandwich shop sales to **26.2%** (from 27.2%), mainly due to lower protein costs and inflation[107](index=107&type=chunk) - Labor and related expenses increased by **2.7%** to **$66.3 million**, primarily due to higher incentive compensation, partially offset by sales leverage[108](index=108&type=chunk) - Loss on extinguishment of debt was **$0** for YTD 2025, compared to **$2.4 million** for YTD 2024, due to the Term Loan extinguishment in Q1 2024[117](index=117&type=chunk) - Net interest expense decreased by **46.8%** to **$0.3 million**, attributed to debt refinancing in February 2024, resulting in lower average borrowings and interest rates[118](index=118&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) The company reports improved Shop-Level Profit Margin and Adjusted EBITDA, providing additional operational insights Shop-Level Profit Margin (Non-GAAP) | Period | Shop-Level Profit Margin | | :----- | :----------------------- | | Q2 2025 | 16.7% | | Q2 2024 | 15.7% | | YTD 2025 | 15.3% | | YTD 2024 | 14.6% | Adjusted EBITDA (Non-GAAP, Amounts in thousands) | Period | Adjusted EBITDA | | :----- | :-------------- | | Q2 2025 | $9,632 | | Q2 2024 | $8,521 | | YTD 2025 | $15,154 | | YTD 2024 | $14,201 | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity increased to $46.2 million, supported by operating cash flow and the Revolving Facility - Primary liquidity sources are cash from operating activities, existing cash and cash equivalents, and the **$30 million** Revolving Facility[129](index=129&type=chunk)[135](index=135&type=chunk) Liquidity Overview (Amounts in millions) | Item | June 29, 2025 | June 30, 2024 | | :---------------------------------------------------------------- | :------------ | :------------ | | Cash balance | $17.0 | $9.1 | | Total liquidity (cash less restricted cash, plus available Revolving Facility) | $46.2 | $34.3 | - Net cash provided by operating activities increased by **$18.5 million** to **$22.4 million** for YTD June 29, 2025, driven by higher incentive payments in 2024 and working capital changes[132](index=132&type=chunk) - Net cash used in financing activities decreased by **$13.8 million** to **$7.1 million** for YTD June 29, 2025, primarily due to the repayment of the Term Loan in 2024, partially offset by lower borrowings under the Revolving Facility in 2025[134](index=134&type=chunk) - The company repurchased **230,326** shares of common stock for **$2.1 million** YTD June 29, 2025, under the 2024 Repurchase Program[146](index=146&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) Management's estimates for long-lived assets and income taxes remain unchanged since the last annual report - Significant estimates are used in accounting for long-lived assets and income taxes[149](index=149&type=chunk) - No significant changes in critical accounting estimates have been made since the last annual report[149](index=149&type=chunk) [New and Revised Financial Accounting Standards](index=30&type=section&id=New%20and%20Revised%20Financial%20Accounting%20Standards) Refer to Note 1 for details on new accounting standards, ASU 2023-09 and ASU 2024-03, impacting future disclosures - Refer to Note 1 for details on ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Incomes Statement Expenses), which will affect future financial statement disclosures[150](index=150&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposures have not materially changed since the last annual report - Market risk exposures have not materially changed since December 29, 2024[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of June 29, 2025[152](index=152&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 29, 2025[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 11 to the financial statements - Legal proceedings information is detailed in Note 11 of the financial statements[155](index=155&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the last annual report - No material changes to risk factors since the December 29, 2024, Annual Report on Form 10-K[156](index=156&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 140 thousand shares in Q2 2025 under its 2024 Repurchase Program Issuer Purchases of Equity Securities (Amounts in thousands, except per share data) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (2) | Maximum Value of Shares that May Yet be Purchased Under the Program (2) | | :-------------------------- | :----------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :---------------------------------------------------------------------- | | March 31, 2025 - April 27, 2025 | 134 | $9.51 | 54 | $17,026 | | April 28, 2025 - May 25, 2025 | 3 | $8.17 | 59 | $16,525 | | May 26, 2025 - June 29, 2025 | 3 | $10.70 | — | $16,525 | | Total number of shares purchased: | 140 | | 113 | | - The **2024 Repurchase Program**, authorized for up to **$20.0 million**, replaced the 2018 program. Repurchases can occur in the open market or privately negotiated transactions[158](index=158&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company's current financial reporting [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations or reporting requirements [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated trading agreements during the quarter ended June 29, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading agreement during the quarter ended June 29, 2025[161](index=161&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include certifications (Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL documents[163](index=163&type=chunk) [Signature](index=34&type=section&id=Signature) This section formally concludes the report with the required signature and filing date [Signature Block](index=34&type=section&id=Signature%20Block) The report was signed on August 6, 2025, by Steven W. Cirulis, the company's Chief Financial Officer - The report was signed by Steven W. Cirulis, Senior Vice President, Chief Financial Officer and Chief Strategy Officer, on August 6, 2025[166](index=166&type=chunk)

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) This section provides an overview of Potbelly Corporation's strong second fiscal quarter 2025 performance, strategic highlights, and updated financial guidance [Second Fiscal Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Fiscal%20Quarter%202025%20Performance%20Overview) Potbelly Corporation reported strong second fiscal quarter 2025 results, with system-wide sales growing by 6.7% and company-operated same-store sales increasing by 3.2%, accompanied by positive traffic growth. The company also expanded its footprint with eight new shop openings and secured 54 additional franchise shop commitments Metric Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | System-wide sales growth | 6.7% | N/A | +6.7% | | Company-operated same-store sales growth | 3.2% | N/A | +3.2% | | Total revenues | $123.7 million | $119.7 million | +3.4% | | GAAP net income attributable to Potbelly Corporation | $2.5 million | $34.7 million | -92.8% | | GAAP diluted EPS | $0.08 | $1.13 | -92.9% | | Adjusted net income attributable to Potbelly Corporation | $2.9 million | $2.5 million | +16.0% | | Adjusted diluted EPS | $0.09 | $0.08 | +12.5% | | Adjusted EBITDA | $9.6 million | $8.5 million | +13.0% | - Eight new Potbelly shops were opened during the second quarter, alongside 54 new franchise shop commitments, bringing the total open and committed shop count to **816** as of June 29, 2025[1](index=1&type=chunk)[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bob Wright expressed satisfaction with the strong Q2 performance, highlighting top-line momentum, positive traffic, new unit growth exceeding expectations, shop-level margin expansion, and adjusted EBITDA near the high end of guidance. The results are attributed to the Five-Pillar Operating Strategy, with future focus on menu innovation, digital asset investments, shop footprint modernization, and prudent cost controls for balanced growth - The company's strong Q2 performance is a result of the Five-Pillar Operating Strategy, driving top-line momentum, positive traffic, and new unit growth[3](index=3&type=chunk) - Future strategic focus areas include menu innovation, investments in consumer-facing digital assets, growing and modernizing the shop footprint, and exercising prudent cost controls to achieve balanced growth and incremental flow-through to corporate earnings[3](index=3&type=chunk) [Financial Outlook and Guidance](index=1&type=section&id=Financial%20Outlook%20and%20Guidance) Potbelly Corporation introduced its guidance for the third fiscal quarter of 2025 and raised its full-year 2025 guidance, reflecting confidence in continued positive same-store sales growth and Adjusted EBITDA performance 3Q'25 Guidance | Metric | Guidance Range | | :---------------------- | :------------- | | Same Store Sales % Growth | 3.25% to 4.25% | | Adjusted EBITDA | $9.0M to $10.0M | Full Year 2025 Guidance | Metric | Guidance Range | | :---------------------- | :------------- | | Same Store Sales % Growth | 2.0% to 3.0% | | New Unit Growth | At least 38 shops | | Adjusted EBITDA | $34M to $35M | [Operational Updates](index=2&type=section&id=Operational%20Updates) This section details Potbelly's expansion efforts through new shop openings and franchise commitments, alongside its share repurchase activities [Development Update](index=2&type=section&id=Development%20Update) During the second quarter, Potbelly continued its expansion with new shop openings and significant franchise commitments, contributing to a growing system-wide footprint - **Eight** new Potbelly shops were opened during the second quarter[6](index=6&type=chunk) - The Company signed **54** new franchise shop commitments in Q2, bringing the total number of open and committed shops to **816** as of June 29, 2025[6](index=6&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) Potbelly actively repurchased shares under its authorized program during the second quarter, demonstrating a commitment to returning value to shareholders - Approximately **113,000** shares of common stock were repurchased for a total of approximately **$1.0 million** during the second quarter[7](index=7&type=chunk) - As of June 29, 2025, **$16.5 million** remained available under the three-year share repurchase program authorized on May 7, 2024[7](index=7&type=chunk) [Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides essential corporate details, including investor communication, company background, definitions of key financial terms, and forward-looking statement disclaimers [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Details for the conference call and audio webcast to discuss the second fiscal quarter 2025 results were provided, along with information for accessing the replay - A conference call and audio webcast was scheduled for August 6, 2025, at 5:00 p.m. Eastern Time to discuss the results[9](index=9&type=chunk) - An audio replay will be available through Wednesday, August 13, 2025, via phone and a web-based archive on the company's investor relations website[10](index=10&type=chunk) [About Potbelly Corporation](index=2&type=section&id=About%20Potbelly%20Corporation) Potbelly Corporation is an iconic neighborhood sandwich shop concept known for its warm, toasty sandwiches and friendly service, operating for over 40 years with a significant presence across the United States - Potbelly Corporation is a neighborhood sandwich concept established in Chicago in 1977, offering warm sandwiches, salads, and shakes[11](index=11&type=chunk) - The company operates more than **440** shops in the United States, including over **90** franchised locations[11](index=11&type=chunk) [Definitions of Key Terms](index=2&type=section&id=Definitions%20of%20Key%20Terms) This section provides clear definitions for various financial and operational terms used throughout the press release, including revenue components, sales metrics, and non-GAAP measures, to ensure consistent understanding - Revenues are defined as net company-operated sandwich shop sales and franchise royalties and fees[12](index=12&type=chunk) - Company-operated same-store sales represent the year-over-year change in sales for comparable company-operated stores open for **15 months** or longer[15](index=15&type=chunk) - System-wide sales include sales from both company-operated and franchised shops, net of promotional allowances, discounts, and employee meals[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes several non-GAAP financial measures, such as Adjusted EBITDA, Adjusted Net Income, and Shop-Level Profit, to provide investors with greater transparency and a clearer view of underlying business performance, excluding certain non-cash and non-recurring items - Non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are used by management to evaluate performance and ensure comparability of financial results by excluding certain non-cash charges and other items not reflective of underlying business performance[13](index=13&type=chunk)[14](index=14&type=chunk) - Shop-level profit and shop-level profit margin are key metrics for evaluating the profitability of incremental sales and overall shop performance[15](index=15&type=chunk)[16](index=16&type=chunk) - The presentation of these non-GAAP measures is intended to assist investors in assessing operating performance but should not be considered in isolation or as a substitute for GAAP results[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section provides a standard disclaimer regarding forward-looking statements, outlining the inherent risks and uncertainties that could cause actual results to differ materially from projections, and advises against undue reliance on such statements - Forward-looking statements represent the Company's expectations or beliefs concerning future events and include statements related to future financial position, results of operations, growth, profitability, and guidance[18](index=18&type=chunk) - These statements involve risks and uncertainties, such as competition, economic conditions, labor costs, consumer preferences, and the success of business strategies, which could cause actual results to differ materially[19](index=19&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by law[19](index=19&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents Potbelly's detailed consolidated financial statements, including statements of operations, balance sheets, cash flows, and reconciliations of non-GAAP measures [Consolidated Statements of Operations and Margin Analysis](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Margin%20Analysis) The consolidated statements of operations show a 3.4% increase in total revenues for Q2 2025 compared to Q2 2024, driven by higher sandwich shop sales and franchise income. However, GAAP net income attributable to Potbelly Corporation significantly decreased due to a prior-year income tax benefit Q2 2025 vs Q2 2024 Consolidated Statements of Operations (amounts in thousands) | Metric | Q2 2025 | % of Revenues | Q2 2024 | % of Revenues | YoY Change | | :------------------------------------------ | :------ | :------------ | :------ | :------------ | :--------- | | Sandwich shop sales, net | $118,396 | 95.7% | $115,536 | 96.5% | +2.5% | | Franchise royalties, fees and rent income | $5,313 | 4.3% | $4,161 | 3.5% | +27.7% | | **Total revenues** | **$123,709** | **100.0%** | **$119,697** | **100.0%** | **+3.4%** | | Food, beverage and packaging costs | $31,110 | 26.3% (of shop sales) | $31,306 | 27.1% (of shop sales) | -0.6% | | Labor and related expenses | $33,210 | 28.0% (of shop sales) | $32,313 | 28.0% (of shop sales) | +2.8% | | General and administrative expenses | $13,362 | 10.8% (of total revenues) | $11,866 | 9.9% (of total revenues) | +12.6% | | Income from operations | $3,702 | 3.0% | $4,119 | 3.4% | -10.2% | | Income tax expense (benefit) | $665 | 0.5% | $(30,982) | (25.9%) | N/A | | **Net income attributable to Potbelly Corporation** | **$2,488** | **2.1%** | **$34,712** | **29.0%** | **-92.8%** | | Diluted EPS | $0.08 | N/A | $1.13 | N/A | -92.9% | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 29, 2025, shows an increase in total assets and stockholders' equity compared to December 29, 2024, with notable changes in cash and cash equivalents and a reduction in long-term debt Consolidated Balance Sheet Highlights (amounts in thousands) | Asset/Liability/Equity | Jun 29, 2025 | Dec 29, 2024 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $16,187 | $11,663 | +$4,524 | | Total current assets | $36,994 | $33,201 | +$3,793 | | Property and equipment, net | $54,391 | $50,533 | +$3,858 | | Total assets | $265,241 | $263,146 | +$2,095 | | Total current liabilities | $73,392 | $65,233 | +$8,159 | | Long-term debt, net of current portion | $0 | $4,000 | -$4,000 | | Total liabilities | $204,144 | $205,198 | -$1,054 | | Total stockholders' equity | $61,355 | $58,387 | +$2,968 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the year-to-date ended June 29, 2025, Potbelly generated significantly more cash from operating activities compared to the prior year, while cash used in investing and financing activities also saw changes, resulting in a positive net change in cash YTD Cash Flow Summary (amounts in thousands) | Cash Flow Activity | YTD Jun 29, 2025 | YTD Jun 30, 2024 | Change | | :----------------------------------- | :--------------- | :--------------- | :----- | | Net cash provided by operating activities | $22,366 | $3,850 | +$18,516 | | Net cash used in investing activities | $(10,755) | $(8,460) | -$2,295 | | Net cash used in financing activities | $(7,087) | $(20,856) | +$13,769 | | Net change in cash and cash equivalents and restricted cash | $4,524 | $(25,466) | +$29,990 | | Cash and cash equivalents and restricted cash at end of period | $17,002 | $9,071 | +$7,931 | [Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20to%20GAAP%20Financial%20Measures) This section provides detailed reconciliations of non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Shop-Level Profit, to their most directly comparable GAAP measures, highlighting adjustments for items like impairment, debt extinguishment, and legal settlements Adjusted Net Income Attributable to Potbelly Corporation (amounts in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net income attributable to Potbelly Corporation, as reported | $2,488 | $34,712 | $2,426 | $31,945 | | Total adjustments after income tax | $435 | $(32,188) | $540 | $(29,192) | | **Adjusted net income attributable to Potbelly Corporation** | **$2,923** | **$2,524** | **$2,966** | **$2,753** | | Adjusted diluted EPS | $0.09 | $0.08 | $0.10 | $0.09 | Adjusted EBITDA (amounts in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net income attributable to Potbelly Corporation, as reported | $2,488 | $34,712 | $2,426 | $31,945 | | EBITDA | $7,204 | $6,927 | $11,028 | $7,586 | | Total adjustments to EBITDA | $2,428 | $1,594 | $4,126 | $6,615 | | **Adjusted EBITDA** | **$9,632** | **$8,521** | **$15,154** | **$14,201** | Shop-level Profit and Margin (amounts in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Shop-level profit | $19,746 | $18,110 | $34,682 | $32,621 | | Shop-level profit margin | 16.7% | 15.7% | 15.3% | 14.6% | [Selected Operating Data](index=11&type=section&id=Selected%20Operating%20Data) The selected operating data provides key performance indicators for Potbelly's operations, including company-operated same-store sales growth, system-wide sales, and detailed shop count changes for both company-operated and franchised locations Selected Operating Data Highlights | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Company-operated same store sales | 3.2% | 0.4% | 2.1% | 0.1% | | Sales from company-operated shops, net (in thousands) | $118,396 | $115,536 | $227,398 | $223,113 | | Sales from franchise shops, net (in thousands) | $35,774 | $28,934 | $67,433 | $55,545 | | System-wide sales (in thousands) | $154,170 | $144,470 | $294,831 | $278,658 | Shop Count Changes | Shop Type | Beginning of Q2 2025 | Openings (Q2) | Closures (Q2) | End of Q2 2025 | | :-------------------- | :------------------- | :------------ | :------------ | :------------- | | Company-operated shops | 341 | 2 | (3) | 340 | | Franchised shops | 103 | 6 | (2) | 107 | | System-wide shops | 444 | 8 | (5) | 447 | [Footnotes to Financial Statements](index=12&type=section&id=Footnotes%20to%20Financial%20Statements) This section provides explanatory footnotes detailing the nature of adjustments made in the reconciliation of non-GAAP financial measures, clarifying specific costs and their impact on reported figures - Adjustment (1) includes costs related to impairment of long-lived assets, loss on disposal of property and equipment, and shop closure expenses[34](index=34&type=chunk) - Adjustment (3) covers costs associated with the Franchise Growth Acceleration Initiative, aimed at growing franchise units through multi-unit development agreements, potentially including refranchising company-operated shops[34](index=34&type=chunk) - Adjustment (5) accounts for the income tax impacts of the other listed adjustments based on the Company's effective tax rate[34](index=34&type=chunk)

Core Insights - Potbelly Corporation reported a strong second quarter with system-wide sales growth of 6.7%, including a 3.2% increase in company-operated same-store sales and positive traffic growth [1][4] - The company opened eight new shops and secured 54 additional franchise commitments during the second quarter [6][8] - Potbelly raised its full-year guidance and introduced guidance for Q3 2025, projecting same-store sales growth of 3.25% to 4.25% [5] Financial Performance - Total revenues for the second quarter increased by 3.4% to $123.7 million compared to $119.7 million in the prior year [7] - Adjusted EBITDA rose by 13.0% to $9.6 million, up from $8.5 million [7][32] - GAAP net income was reported at $2.5 million, a decrease from $34.7 million in the previous year, primarily due to a prior year tax benefit [7][30] Operational Highlights - Average Weekly Sales (AWS) increased by 3.6% to $27,040 compared to $26,110 [7] - The total number of open and committed shops reached 816 as of June 29, 2025 [8] - The company repurchased approximately 113,000 shares of common stock for about $1.0 million during the second quarter [9] Future Outlook - For Q3 2025, Potbelly expects adjusted EBITDA between $9.0 million and $10.0 million, with full-year adjusted EBITDA guidance set at $34 million to $35 million [5] - The company aims to open at least 38 new shops in 2025 [5]

Core Viewpoint - Potbelly Corporation is set to release its second quarter 2025 financial results on August 6, 2025, after market close, followed by a conference call for investors to discuss the results [2][3]. Financial Results Announcement - Potbelly will report its financial results for the fiscal second quarter 2025 on Wednesday, August 6, 2025, after market close [2]. - A conference call is scheduled for the same day at 5:00 p.m. Eastern Time, hosted by President and CEO Bob Wright and CFO Steve Cirulis [2][3]. Conference Call Details - Date: Wednesday, August 6, 2025 [3] - Time: 5:00 p.m. Eastern Time [3] - Dial-In Numbers: 844-676-5533 (U.S. & Canada), 412-634-6942 (International) [3] - The call will be webcast live on the company's corporate website, with an audio replay available until August 13, 2025 [3]. Company Overview - Potbelly Corporation has been serving customers with warm, toasty sandwiches and other fresh menu items for over 40 years, emphasizing Fresh, Fast & Friendly service [4]. - The company has expanded to over 440 shops across the United States, including more than 90 franchised locations [4].