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Potbelly Corporation (NASDAQ:PBPB) Q3 2023 Results Conference Call November 1, 2023 5:00 PM ET Company Participants Bob Wright - President, CEO Steve Cirulis - SVP, CFO Adiya Dixon - Chief Legal Officer and Secretary Conference Call Participants Todd Brooks - The Benchmark Company Jeremy Hamblin - Craig-Hallum Capital Group Mark Smith - Lake Street Capital Matt Curtis - William Blair Operator Good afternoon, everyone, and welcome to Potbelly Corporation's Third Quarter 2023 Earnings Conference Call. Today's ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ______________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 24, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ____to ____ Commission File Number: 001-36104 ______________________________________________ Potbell ...

New Franchise Development Agreements Limited Availability Unavailable POTBELLY Q3'23 Guidance & FY'23 Outlook | --- | --- | |-----------------------|----------------------------------------------| | Average Weekly Sales: | Q3'23 Guidance \n $25,000 - $25,500 | | Same-store sales: | 7.0% - 9.0% | | Shop-level margin: | 12.0% - 14.0% | | Adj. EBITDA: | $5.0 million- $6.0 million | | | FY'23 Outlook | | | | | Average Unit Volumes: | Record levels | | Same-store sales: | High single-digit to low double-digit gr ...

Financial Data and Key Metrics Changes - Same-store sales grew by 12.9%, primarily driven by traffic growth [6][20] - Total revenues increased by 8.4% to $124.7 million [20] - Shop-level margins improved by 300 basis points to 14.4% [24] - Adjusted EBITDA rose to $8.0 million, a 140 basis point improvement year-over-year [24] Business Line Data and Key Metrics Changes - Digital business represented approximately 38% of total shop sales, an increase of 170 basis points year-over-year [21] - Food, beverage, and packaging costs were 28.0% of shop sales, a 50 basis point improvement [22] - Labor expenses decreased to 30.4% of sales, a 100 basis point improvement [22] Market Data and Key Metrics Changes - The company continues to take traffic share from the fast casual category on a weekly basis [6][20] - Each real estate type achieved same-store sales growth of at least high single-digit percentages [20] Company Strategy and Development Direction - The company is focused on executing a five-pillar strategic plan and expanding its franchise growth acceleration initiative [6][8] - The goal is to achieve 10% unit growth in 2024, with a target of 2,000 units in the U.S. over the next decade [15][18] - The company is enhancing its digital capabilities and expanding Potbelly Digital Kitchen installations [7][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2024 growth targets, citing strong brand value and strategic marketing efforts [17][26] - The company anticipates continued strength in same-store sales and shop-level margins [25][26] Other Important Information - The company reported net income of $2.2 million for the quarter, a $1.6 million improvement year-over-year [24] - General and administrative expenses were 9.2% of revenue, driven by higher bonus accruals and digital maintenance costs [24] Q&A Session Summary Question: What gives confidence in achieving 10% unit growth next year? - Management highlighted the number of shop commitments and the momentum built through the franchise growth acceleration initiative [28][29] Question: Why is system-wide sales a more applicable metric? - The transition to a more franchise-based organization necessitates reflecting the relationship between sales and the investment needed to support those sales [30][31] Question: How significant is the opportunity for nontraditional units? - Management sees nontraditional units as a long-term opportunity but emphasizes a focus on multiunit franchise agreements for predictable growth [32][33] Question: Clarification on the 2024 AUV target of $1.3 million - Management indicated that while current performance suggests exceeding this target, they prefer to wait for more data before solidifying the target [36][38] Question: Who are the competitors from whom Potbelly is gaining market share? - Management noted that while it's difficult to pinpoint specific chains, data indicates that Potbelly's growth is outpacing the fast casual segment [39] Question: How is the digital business performing in terms of Perks members? - Management expressed satisfaction with the growth of the Perks program, indicating that it contributes significantly to digital sales [42][43] Question: What is the composition of traffic and ticket? - Management confirmed that strong traffic growth is the primary driver of same-store sales, with a focus on customer retention and frequency [47][49]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ______________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 25, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ____to ____ Commission File Number: 001-36104 ______________________________________________ Potbelly Cor ...

First Quarter 2023 Earnings Presentation -- May 4, 2023 -- In addition to historical information, this presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995. Forward-looking statements, written, oral or otherwise made, represent the Company's expectation or belief concerning future events. Without limiting the foregoin ...

Potbelly Corporation (NASDAQ:PBPB) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET Company Participants Adiya Dixon – Senior Vice President and Chief Legal Officer Bob Wright – President and Chief Executive Officer Steve Cirulis – Senior Vice President and Chief Financial Officer Lisa Fortuna – Alpha IR Group Conference Call Participants Matt Curtis – William Blair Operator Good afternoon, everyone, and welcome to Potbelly Corporation’s First Quarter 2023 Earnings Conference Call. All participants w ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ______________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 26, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ____to ____ Commission File Number: 001-36104 ______________________________________________ Potbelly Co ...

Financial Data and Key Metrics Changes - Quarterly revenue reached $120.2 million, and full-year revenue was $452 million, both all-time records, representing a 17% increase for the quarter and a 19% increase for the year compared to the previous year [14][24] - Same store sales growth was 18.9% for the quarter and 18.5% for the year, driven by strong traffic and operational success [14][24] - Positive net income of $2.7 million for the quarter and $4.3 million for the year, marking the third consecutive quarter of profitability [14][18] - Adjusted EBITDA for the year was $15.7 million, an improvement of $15.2 million compared to the previous year [24] Business Line Data and Key Metrics Changes - Digital engagement represented 38% of revenue, significantly contributing to record fourth-quarter results [15][44] - Catering business is accelerating, with sales approaching pre-pandemic levels, supported by targeted marketing initiatives [16][40] Market Data and Key Metrics Changes - AUVs (Average Unit Volumes) were $24,144 for the fourth quarter and $22,464 for the full year, with January and February 2023 AUVs recorded at $22,311 and $23,815 respectively [14][17] - The company experienced strong growth in CBD, airport, and suburban locations, indicating a recovery in these markets [3][17] Company Strategy and Development Direction - The company aims to become primarily franchise-focused, with 51 new shop commitments signed in late 2022, and plans to refranchise approximately 25% of company-owned shops [13][22] - The strategic plan includes achieving AUVs of $1.3 million and shop level margins of 16% by 2024 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in 2023, expecting first-quarter AUVs between $23,000 and $24,000 and same store sales growth between 18.5% and 20.5% [21] - The company anticipates inflation to be less impactful in 2023, with a focus on maintaining operational efficiencies [19][20] Other Important Information - The company reported a liquidity position of $31.4 million at the end of the fourth quarter, including cash and available credit [23] - The company has made significant progress in improving customer satisfaction scores and operational efficiencies [3][12] Q&A Session Summary Question: What is the goal for new shop commitments by year-end? - The company is focusing on quality over quantity in filling the pipeline, with mid-hundreds of leads per quarter and a robust sales team to manage these leads [28][30] Question: What is the outlook on commodity pressures and contracts? - Commodity inflation peaked at over 21% but is expected to continue decreasing, with about 55% of the basket locked in contracts [31] Question: How has wage inflation been trending? - Wage inflation is expected to be in the mid-single digits, with high retention rates aiding in recruitment [33][35] Question: What is the status of the digital kitchen rollout? - The digital kitchen is currently in 38 locations, with plans to expand to around 100 by year-end, showing improvements in customer experience metrics [51] Question: How is the company leveraging digital engagement? - The company is focusing on digital advertising, e-commerce efforts, and a perks loyalty program to enhance customer engagement [59][69]