Potbelly Corporation Reports 2.3% Revenue Growth and Improved Net Loss in Q1 Fiscal 2025

Potbelly Corporation reported a modest increase in financial performance for the first quarter of fiscal 2025, with total revenues reaching $113.7 million, up 2.3% from $111.2 million in the same period last year. The growth was primarily driven by a 1.3% increase in sandwich shop sales, which totaled $109.0 million, and a significant 30.8% rise in franchise royalties, fees, and rent income, amounting to $4.7 million. Despite these gains, the company recorded a net loss of $62,000, a notable improvement from a net loss of $2.8 million in the prior year, reflecting a strategic focus on operational efficiency and cost management.

In terms of operational metrics, Potbelly's same-store sales increased by 0.9%, and the shop-level profit margin improved to 13.7% from 13.5% year-over-year. The company operated 341 company-operated shops and 103 franchise-operated shops as of March 30, 2025, reflecting a strategic refranchising initiative that involved selling four company-operated shops to franchisees. This initiative is part of Potbelly's broader Franchise Growth Acceleration Initiative aimed at expanding its franchise footprint and enhancing revenue streams.

The company’s expenses also saw some fluctuations, with total operating expenses rising to $113.4 million, up 2.2% from the previous year. Notably, food, beverage, and packaging costs decreased by 2.8% to $28.5 million, while labor and related expenses increased by 2.6% to $33.1 million, attributed to prior year benefits from a settlement payment. General and administrative expenses rose by 7.1% to $12.4 million, driven by higher payroll and consulting costs. The company also reported a significant reduction in interest expenses, down 54.1% to $167,000, following a refinancing of its debt structure.

Looking ahead, Potbelly remains optimistic about its growth trajectory, supported by its strategic initiatives and operational improvements. The company ended the quarter with a cash balance of $15.6 million and total liquidity of $40.3 million, indicating a solid financial position to support ongoing operations and future investments. Potbelly's management emphasized their commitment to enhancing customer experiences and driving traffic growth through their "Traffic-Driven Profitability" Five-Pillar strategic plan, which focuses on quality food, customer engagement, and digital marketing efforts. The company is poised to leverage these strategies to navigate market challenges and capitalize on growth opportunities in the coming quarters.