Chicago, Illinois – Potbelly Corporation, a popular sandwich shop chain, has reported steady results for the first quarter of 2024, despite facing some challenges in foot traffic. As a result, the company has adjusted its full-year guidance for same-store sales growth and adjusted EBITDA growth.

Originally, Potbelly’s 2024 guidance was on par with expectations, but the revised forecast now indicates a slight decrease in same-store sales growth and adjusted EBITDA expectations. This adjustment has also prompted a reevaluation of the company’s stock value, which is now viewed as slightly undervalued.

Looking ahead, Potbelly aims to expand its franchise presence, with plans to reach around 2,000 locations in the next decade, with most of them being franchise-operated. As of Q1 2024, the company had 427 open shops, with commitments for an additional 215 locations.

While the number of open shops has remained relatively stable compared to the previous year, the company has been transitioning some company-operated locations into franchise shops. This strategic shift aims to optimize the company’s operational structure to better align with its long-term goals.

In terms of financial performance, Potbelly’s Q1 2024 results were respectable, with same-store sales slightly down compared to the previous year. The company noted that it outperformed the overall restaurant industry and the fast-casual segment, gaining market share in the process.

Despite challenges in the market, Potbelly’s adjusted EBITDA for Q1 2024 surpassed expectations, aided in part by a one-time legal settlement. The company’s focus on cost control and operational efficiency has also contributed to improved shop-level margins.

Looking ahead to the remainder of 2024, Potbelly has adjusted its full-year outlook for same-store sales growth and adjusted EBITDA, anticipating a more modest increase than initially projected. The company remains optimistic about its growth potential and is implementing measures to mitigate the impact of lower sales growth expectations.

Overall, while Potbelly faces challenges in the current market landscape, the company’s strategic adjustments and focus on operational efficiency position it for future growth and success in the competitive restaurant industry.