Potbelly(US:PBPB)2025-03-07 02:00Financial Data and Key Metrics Changes - System-wide sales for Q4 2024 were approximately $142.6 million, a decrease of 3.3%. Excluding the impact of the 53rd operating week in 2023, system-wide sales increased 1.9% from the prior year [27] - Total revenue in Q4 was $116.6 million, down 7.3% year-over-year, driven by the impact of the 53rd week and refranchising. Excluding these items, total revenue was flat versus the prior year [28] - Adjusted net income for Q4 was $3.9 million, a $3.2 million increase versus the prior year period, with adjusted EBITDA of $9.7 million or 8.3% of total revenue [36] Business Line Data and Key Metrics Changes - Company-operated shop revenue was $112.3 million, down 8% year-over-year. Excluding the impact of the 53rd week and refranchising, revenue decreased only 0.9% [28][30] - Franchise revenue was $4.3 million in Q4, up 24% relative to the fourth quarter last year, driven by a 22% increase in franchise units [29] Market Data and Key Metrics Changes - Average weekly sales were approximately $25,230, with company-operated same-store sales up 0.3% in the quarter, attributed to a 2.2% increase in average check [31] - Digital business represented over 40% of total shop sales, an increase of approximately 100 basis points versus last year [14] Company Strategy and Development Direction - The company plans to drive comp sales growth through menu innovation and investments in consumer-facing digital assets, as well as data and analytics [6][7] - The company aims to grow and modernize its footprint through accelerated unit openings by franchisees and remodeling efforts [7][21] - The company is focused on prudent cost controls to achieve balanced growth while allowing incremental flow through to corporate earnings [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the underlying strength and trends of the business, despite unusual weather impacts affecting Q1 [4][5] - For 2025, the company anticipates same-store sales growth of 1.5% to 2.5%, unit growth of at least 38 openings, and adjusted EBITDA of approximately $33 to $34 million [39] Other Important Information - The company repurchased approximately 48,000 shares of common stock for about $450,000 during Q4, totaling approximately 164,000 shares for the year [38] - The company plans to test four different levels of remodels this year to evaluate their return profiles before considering a larger-scale effort [25] Q&A Session Summary Question: Can you elaborate on the Q1 comp trends and the weather impact? - Management noted that severe weather in January affected sales, but underlying demand remains strong, suggesting that without weather impacts, same-store sales would have been positive [46][47] Question: How are the 2024 new units performing and what is the expected cadence of openings? - New units are performing in line with average shops, and the cadence of openings is expected to build throughout the year, similar to the previous year [51] Question: What is the impact of menu innovation on comp trends? - Management confirmed that menu innovation is driving traffic and they are excited about the pipeline of new menu items [60][62] Question: What is the outlook on inflation and commodity impacts? - Overall inflation is expected to be around 2.2% to mid-twos, with food inflation in the higher end of the 2% to 3% range [75][78] Question: What is the reception of the new franchisee incentive plan? - The reception has been positive, with franchisees expressing excitement about the incentives that support long-term planning and development [114]