Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 29, 2014 | Aug. 01, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 29-Jun-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Trading Symbol | 'PBPB | ' |
Entity Registrant Name | 'Potbelly Corporation | ' |
Entity Central Index Key | '0001195734 | ' |
Current Fiscal Year End Date | '--12-28 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 29,477,677 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Jun. 29, 2014 | Dec. 29, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $70,524 | $69,579 |
Accounts receivable, net of allowances of $3 and $6 as of June 29, 2014 and December 29, 2013, respectively | 3,949 | 2,991 |
Inventories | 2,353 | 2,263 |
Prepaid expenses and other current assets | 8,872 | 6,965 |
Total current assets | 85,698 | 81,798 |
Property and equipment, net | 81,901 | 78,983 |
Intangible assets, net | 3,404 | 3,404 |
Goodwill | 1,428 | 1,428 |
Deferred income taxes | 17,176 | 17,297 |
Deferred expenses, net and other assets | 3,139 | 3,170 |
Total assets | 192,746 | 186,080 |
Current liabilities | ' | ' |
Accounts payable | 3,451 | 2,078 |
Accrued expenses | 14,977 | 16,337 |
Accrued income taxes | 490 | 216 |
Current portion of long-term debt | 74 | 74 |
Total current liabilities | 18,992 | 18,705 |
Long-term debt, net of current portion | 976 | 1,018 |
Deferred rent and landlord allowances | 13,011 | 12,288 |
Other long-term liabilities | 736 | 796 |
Total liabilities | 33,715 | 32,807 |
Equity | ' | ' |
Common stock, $0.01 par value-authorized, 200,000,000 shares; issued and outstanding 29,470,694 and 29,148,029 shares as of June 29, 2014, and December 29, 2013, respectively | 295 | 291 |
Warrants | 909 | 909 |
Additional paid-in-capital | 387,142 | 383,077 |
Accumulated deficit | -229,523 | -231,232 |
Total stockholders' equity | 158,823 | 153,045 |
Non-controlling interest | 208 | 228 |
Total equity | 159,031 | 153,273 |
Total liabilities and equity | $192,746 | $186,080 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Jun. 29, 2014 | Dec. 29, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheet [Abstract] | ' | ' |
Allowances on accounts receivable | $3 | $6 |
Common stock, par value | $0.01 | $0.01 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 29,470,694 | 29,148,029 |
Common stock, outstanding | 29,470,694 | 29,148,029 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 |
Revenues | ' | ' | ' | ' |
Sandwich shop sales, net | $83,268 | $77,926 | $156,791 | $146,467 |
Franchise royalties and fees | 352 | 260 | 710 | 463 |
Total revenues | 83,620 | 78,186 | 157,501 | 146,930 |
Sandwich shop operating expenses | ' | ' | ' | ' |
Cost of goods sold, excluding depreciation | 23,936 | 22,760 | 45,022 | 42,753 |
Labor and related expenses | 23,405 | 21,204 | 44,865 | 40,995 |
Occupancy expenses | 10,183 | 8,811 | 20,162 | 17,530 |
Other operating expenses | 8,691 | 7,901 | 16,849 | 15,112 |
General and administrative expenses | 8,865 | 7,823 | 16,687 | 16,005 |
Depreciation expense | 4,784 | 4,444 | 9,501 | 8,824 |
Pre-opening costs | 273 | 429 | 525 | 719 |
Impairment and loss on disposal of property and equipment | 29 | 53 | 877 | 79 |
Total expenses | 80,166 | 73,425 | 154,488 | 142,017 |
Income from operations | 3,454 | 4,761 | 3,013 | 4,913 |
Interest expense | 40 | 122 | 82 | 233 |
Other expense | 0 | 0 | 0 | 2 |
Income before income taxes | 3,414 | 4,639 | 2,931 | 4,678 |
Income tax expense | 1,407 | 1,869 | 1,216 | 1,886 |
Net income | 2,007 | 2,770 | 1,715 | 2,792 |
Net (loss) income attributable to non-controlling interest | -3 | 11 | 6 | 15 |
Net income attributable to Potbelly Corporation | 2,010 | 2,759 | 1,709 | 2,777 |
Accretion of redeemable convertible preferred stock to maximum redemption value | 0 | -2,905 | 0 | -10,301 |
Net income (loss) attributable to common stockholders | $2,010 | ($146) | $1,709 | ($7,524) |
Net income (loss) per common share attributable to common stockholders: | ' | ' | ' | ' |
Basic | $0.07 | ($0.03) | $0.06 | ($1.77) |
Diluted | $0.07 | ($0.03) | $0.06 | ($1.77) |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic | 29,342,528 | 4,244,879 | 29,246,676 | 4,241,752 |
Diluted | 30,509,553 | 4,244,879 | 30,642,892 | 4,241,752 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Equity (Deficit) (Unaudited) (USD $) | Total | Series A [Member] | Series B [Member] | Series C [Member] | Series D [Member] | Series E [Member] | Series F [Member] | Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Warrants [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] |
In Thousands, except Share data | |||||||||||||
Beginning Balance at Dec. 30, 2012 | ($168,728) | $52,796 | $46,983 | $23,715 | $18,319 | $79,861 | $28,669 | $250,343 | $42 | $1,552 | ' | ($170,518) | $196 |
Beginning Balance, Common Shares at Dec. 30, 2012 | ' | ' | ' | ' | ' | ' | ' | ' | 4,233,977 | ' | ' | ' | ' |
Beginning Balance, Preferred Shares at Dec. 30, 2012 | ' | 3,697,377 | 3,290,294 | 1,646,595 | 1,250,000 | 4,194,366 | 2,007,743 | 16,086,375 | ' | ' | ' | ' | ' |
Net income | 2,792 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,777 | 15 |
Beneficial Conversion Charge | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50 | -50 | ' |
Exercise of stock warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | -78 | ' | ' | ' |
Exercise of stock warrants, additional paid in capital | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 78 | ' | ' |
Exercise of stock warrants, Shares | ' | ' | ' | ' | ' | ' | ' | ' | 14,383 | ' | ' | ' | ' |
Changes in redemption value of preferred stock | -10,301 | 2,097 | 1,866 | 942 | 735 | 3,523 | 1,138 | 10,301 | ' | ' | -1,270 | -9,031 | ' |
Amortization of stock-based compensation | 1,142 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,142 | ' | ' |
Ending Balance at Jun. 30, 2013 | -175,095 | 54,893 | 48,849 | 24,657 | 19,054 | 83,384 | 29,807 | 260,644 | 42 | 1,474 | ' | -176,822 | 211 |
Ending Balance, Common Shares at Jun. 30, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | 4,248,360 | ' | ' | ' | ' |
Ending Balance, Preferred Shares at Jun. 30, 2013 | ' | 3,697,377 | 3,290,294 | 1,646,595 | 1,250,000 | 4,194,366 | 2,007,743 | 16,086,375 | ' | ' | ' | ' | ' |
Beginning Balance at Dec. 29, 2013 | 153,273 | ' | ' | ' | ' | ' | ' | ' | 291 | 909 | 383,077 | -231,232 | 228 |
Beginning Balance, Common Shares at Dec. 29, 2013 | 29,148,029 | ' | ' | ' | ' | ' | ' | ' | 29,148,029 | ' | ' | ' | ' |
Net income | 1,715 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,709 | 6 |
Issuance of unrestricted common stock | 400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400 | ' | ' |
Issuance of unrestricted common stock, Shares | ' | ' | ' | ' | ' | ' | ' | ' | 25,663 | ' | ' | ' | ' |
Exercise of stock options | 2,628 | ' | ' | ' | ' | ' | ' | ' | 4 | ' | 2,624 | ' | ' |
Exercise of stock options, Shares | 297,000 | ' | ' | ' | ' | ' | ' | ' | 297,002 | ' | ' | ' | ' |
Distribution to non-controlling interest | -26 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -26 |
Amortization of stock-based compensation | 1,041 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,041 | ' | ' |
Ending Balance at Jun. 29, 2014 | $159,031 | ' | ' | ' | ' | ' | ' | ' | $295 | $909 | $387,142 | ($229,523) | $208 |
Ending Balance, Common Shares at Jun. 29, 2014 | 29,470,694 | ' | ' | ' | ' | ' | ' | ' | 29,470,694 | ' | ' | ' | ' |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $1,715 | $2,792 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation | 9,501 | 8,824 |
Deferred income tax | 121 | 1,134 |
Deferred rent and landlord allowances | 723 | 90 |
Stock compensation expense | 1,441 | 1,142 |
Asset impairment and disposal of property and equipment | 877 | 79 |
Amortization of debt issuance costs | 35 | 29 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net | -958 | -781 |
Inventories | -90 | -150 |
Prepaid expenses and other assets | -2,035 | -1,453 |
Accounts payable | 1,351 | 831 |
Accrued and other liabilities | -910 | 1,218 |
Net cash provided by operating activities | 11,771 | 13,755 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -13,386 | -14,411 |
Net cash (used in) investing activities | -13,386 | -14,411 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Proceeds from exercise of stock options | 3,337 | 0 |
Payment of payroll taxes related to stock-based compensation awards | -709 | 0 |
Payment of costs associated with initial public offering | 0 | -160 |
Distribution to non-controlling interest | -26 | 0 |
Payments on note payable | -42 | -33 |
Net cash provided by (used in) financing activities | 2,560 | -193 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 945 | -849 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 69,579 | 22,595 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 70,524 | 21,746 |
Supplemental cash flow information: | ' | ' |
Income taxes paid | 700 | 397 |
Interest paid | 84 | 197 |
Supplemental non-cash investing and financing activities: | ' | ' |
Unpaid liability for purchases of property and equipment | 2,424 | 2,076 |
Accretion of redeemable convertible preferred stock to maximum redemption value | $0 | $10,301 |
Organization_and_Other_Matters
Organization and Other Matters | 6 Months Ended |
Jun. 29, 2014 | |
Accounting Policies [Abstract] | ' |
Organization and Other Matters | ' |
(1) Organization and Other Matters | |
Business | |
Potbelly Corporation (the “Company” or “Potbelly”), through its wholly owned subsidiaries, operates Potbelly Sandwich Works sandwich shops in 22 states and the District of Columbia. As of June 29, 2014, the Company had 312 company-operated shops. During the 26 weeks ended June 29, 2014, the Company opened 16 new company-operated shops and closed no shops. | |
The Company also sells and administers franchises of new Potbelly Sandwich Works sandwich shops. The first domestic and international franchise locations administered by the Company opened during February 2011. As of June 29, 2014, 13 franchised shops were in operation in domestic locations and 13 franchised shops were in operation internationally. | |
Basis of Presentation | |
The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Potbelly Corporation and its subsidiaries and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2013. The unaudited condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the SEC regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of December 29, 2013 and June 29, 2014, its statement of operations for the 13 and 26 weeks ended June 30, 2013 and June 29, 2014 and its statement of cash flows for the 26 weeks ended June 30, 2013 and June 29, 2014 have been included. The consolidated statements of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year. | |
The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements. | |
Principles of Consolidation | |
The unaudited condensed consolidated financial statements include the accounts of Potbelly Corporation; its wholly owned subsidiary, Potbelly Illinois, Inc. (“PII”); PII’s wholly owned subsidiaries, Potbelly Franchising, LLC, Potbelly Sandwich Works, LLC (“LLC”) and 17 of LLC’s wholly owned subsidiaries, collectively, the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. For the Company’s consolidated joint venture, non-controlling interest represents the non-controlling partner’s share of the assets, liabilities and operations related to the joint venture investment in Potbelly Airport II Boston, LLC, related to one shop located in the Boston Logan International Airport. The Company owns a seventy-five percent interest in this consolidated joint venture. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, primarily related to long-lived assets, income taxes, stock-based compensation and common stock equity valuations, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Fiscal Year | |
The Company uses a 52/53-week fiscal year that ends on the last Sunday of the calendar year. Approximately every five or six years a 53rd week is added. Fiscal 2013 and 2014 each consist of 52 weeks. The fiscal quarters ended June 30, 2013 and June 29, 2014 each consisted of 13 weeks. |
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 29, 2014 | |
Fair Value Disclosures [Abstract] | ' |
Fair Value Measurements | ' |
(2) Fair Value Measurements | |
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate fair values due to the short maturities of these balances. | |
The Company assesses potential impairments to its long-lived assets, which includes property and equipment, whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Shop-level assets are grouped at the individual shop-level for the purpose of the impairment assessment. Recoverability of an asset is measured by a comparison of the carrying amount of an asset to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. The fair value of the shop assets was determined using the discounted future cash flow method of anticipated cash flows through the shop’s lease-end date using fair value measurement inputs classified as Level 3. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. After performing a periodic review of our shops during the first fiscal quarter of 2014, it was determined that indicators of impairment were present for certain shops as a result of continued underperformance of shop profitability. We performed an impairment analysis related to these shops and recorded an impairment charge of $0.8 million related to the excess of the carrying amounts recorded on our balance sheet over the identified shops’ estimated fair values as of March 30, 2014. As of June 29, 2014, no additional indicators of impairment were noted. |
Earnings_per_share
Earnings per share | 6 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Earnings per share | ' | ||||||||||||||||
(3) Earnings per share | |||||||||||||||||
Basic income (loss) per common share attributable to common stockholders is calculated using the weighted average number of common shares outstanding for the period. For the 13 and 26 weeks ended June 30, 2013, diluted (loss) per common share attributable to common stockholders was computed by dividing the (loss) allocated to common stockholders utilizing the two-class method by the weighted average number of fully diluted common shares outstanding. In periods with net income attributable to common stockholders, the Company’s redeemable convertible preferred stock were all considered participating securities requiring the two-class method to calculate basic and diluted earnings per share. However, in periods of a net (loss) attributable to common stockholders, the redeemable convertible preferred stock were excluded from the computation of basic earnings per share due to the fact that they are not required to fund losses and the redemption amount is not reduced as a result of losses. For the 13 and 26 weeks ended June 30, 2013, the dilutive securities did not include stock options awarded to employees that had a performance condition requiring the completion of an initial public offering of common stock, as that performance condition was not satisfied at the reporting date and the holders of these options had no rights in our undistributed earnings until that time. On October 9, 2013, the Company completed an initial public offering. Effective upon the closing of such offering, all of the shares of preferred stock and non-voting common stock converted into common stock. As a result of the conversion, for subsequent reporting periods, the Company no longer utilized the two-class method in its calculation of diluted income (loss) per common share attributable to common stockholders. For the 13 and 26 weeks ended June 29, 2014, diluted income (loss) per common share attributable to common stockholders was calculated using income available to common shareholders divided by diluted weighted-average shares of common stock outstanding during the period. | |||||||||||||||||
For the 13 Weeks Ended | For the 26 Weeks Ended | ||||||||||||||||
June 29, | June 30, | June 29, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Calculation of undistributed income (loss) for basic and diluted shares: | |||||||||||||||||
Net income attributable to Potbelly Corporation | $ | 2,010 | $ | 2,759 | $ | 1,709 | $ | 2,777 | |||||||||
Less: Accretion of redeemable convertible preferred stock to maximum redemption value | — | (2,905 | ) | — | (10,301 | ) | |||||||||||
Undistributed income (loss) for basic and diluted shares | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Allocation of undistributed income (loss) to participating securities: | |||||||||||||||||
Common shares | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Redeemable convertible preferred shares | — | — | — | — | |||||||||||||
Undistributed income (loss) | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Weighted average common shares outstanding-basic | 29,342,528 | 4,244,879 | 29,246,676 | 4,241,752 | |||||||||||||
Plus: Effect of potential stock options exercise | 1,046,198 | — | 1,258,203 | — | |||||||||||||
Plus: Effect of potential warrant exercise | 120,827 | — | 138,013 | — | |||||||||||||
Weighted average common shares outstanding-diluted | 30,509,553 | 4,244,879 | 30,642,892 | 4,241,752 | |||||||||||||
Income (loss) per share available to common stockholders-basic | $ | 0.07 | $ | (0.03 | ) | $ | 0.06 | $ | (1.77 | ) | |||||||
Income (loss) per share available to common stockholders-diluted | $ | 0.07 | $ | (0.03 | ) | $ | 0.06 | $ | (1.77 | ) | |||||||
Potentially dilutive shares that are considered anti-dilutive: | |||||||||||||||||
Common share options | 242,636 | 4,399,773 | 242,636 | 4,399,773 | |||||||||||||
Warrants | — | 345,213 | — | 345,213 | |||||||||||||
For the 13 and 26 weeks ended June 30, 2013, the Company’s potential common stock instruments such as common share options and warrants were not included in the computation of diluted (loss) per common share as the effect of including these shares in the calculation would have been anti-dilutive. For the 13 and 26 weeks ended June 29, 2014, 242,636 common share options were not included in the computation of diluted income per common share for the respective periods, as the effect of including these shares in the calculation would have been anti-dilutive. |
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 29, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
(4) Income Taxes | |
The Company recognized income tax expense of $1.2 million on pre-tax income of $2.9 million, or an effective tax rate of 41.5%, for the 26 weeks ended June 29, 2014, compared to income tax expense of $1.9 million on pre-tax income of $4.7 million or an effective tax rate of 40.3%, for the 26 weeks ended June 30, 2013. The difference between the statutory rate and the effective tax rate is primarily attributable to state income taxes offset by certain federal and state tax credits. The increase in the effective tax rate primarily relates to the expiration of certain federal income tax credits for 2014 that were available in prior years. |
Capital_Stock
Capital Stock | 6 Months Ended |
Jun. 29, 2014 | |
Equity [Abstract] | ' |
Capital Stock | ' |
(5) Capital Stock | |
On October 9, 2013, the Company completed an initial public offering. Effective upon the closing of such offering, all shares of preferred stock and non-voting common stock converted into common stock. The terms of the non-voting common stock provided that all shares of non-voting common stock would convert into voting common stock on a 1:1 basis immediately prior to the closing of an underwritten IPO or sale of the Company. The redeemable convertible preferred stock included down-round provisions which would adjust the conversion price for any additional stock issued without consideration or for a consideration per share less than the respective conversion price for one or more of the series of preferred stock in effect immediately prior to the issuance of such additional stock. Each share of common stock has the same relative rights and was identical in all respects to each other share of common stock. Each holder of shares of common stock is entitled to one vote for each share held by such holder at all meetings of stockholders. |
StockBased_Compensation
Stock-Based Compensation | 6 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
(6) Stock-Based Compensation | |||||||||||||||||
During the first quarter of 2014, the Company issued 247,767 stock options under the 2013 Long-Term Incentive Plan to eligible employees and key executives. The fair value of the options was determined using the Black-Scholes option pricing model. The Company used the following assumptions for purposes of valuing these option grants: common stock fair value of $20.53 per share; expected life of options – seven years; volatility- 49.61%; risk-free interest rate – 1.13%; and dividend yield – 0.00%. The Company used the simplified method for determining the expected life of the options. Due to the lack of historical data as a newly public company, the Company calculated the specific stock price volatility using a blended volatility rate based on comparable publicly traded companies. | |||||||||||||||||
A summary of activity for the 26 weeks ended June 29, 2014 is as follows: | |||||||||||||||||
Options | Shares | Weighted | Aggregate | Weighted | |||||||||||||
(Thousands) | Average | Intrinsic | Average | ||||||||||||||
Exercise | Value | Remaining | |||||||||||||||
Price | (Thousands) | Term | |||||||||||||||
(Years) | |||||||||||||||||
Outstanding—December 29, 2013 | 5,030 | $ | 9.41 | $ | 78,575 | 6.31 | |||||||||||
Granted | 273 | 20.09 | |||||||||||||||
Exercised | (297 | ) | 8.91 | ||||||||||||||
Canceled | (57 | ) | 12.3 | ||||||||||||||
Outstanding—June 29, 2014 | 4,949 | 9.99 | $ | 29,147 | 6.05 | ||||||||||||
Exercisable—June 29, 2014 | 3,650 | 9.73 | $ | 29,610 | 5.74 | ||||||||||||
In May 2014, the Company issued 25,663 shares of unrestricted common stock to certain non-employee members of its Board of Directors. The unrestricted stock had a weighted average grant-date share price of $15.60 upon issuance. The Company recorded $0.4 million in stock-based compensation expense, with a corresponding increase to additional paid-in capital, related to the issuance of common stock. | |||||||||||||||||
In accordance with ASC Topic 718, Compensation—Stock Compensation, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period, which is generally the vesting period of the grant, with a corresponding increase to additional paid-in-capital. For the 13 and 26 weeks ended June 29, 2014, the Company recognized $1.0 million and $1.4 million, respectively, which includes $0.4 million related to the May 2014 unrestricted common stock grants. For the 13 and 26 weeks ended June 30, 2013, the Company recognized $0.4 million and $1.1 million, respectively. As of June 29, 2014, the unrecognized stock-based compensation expense was $6.6 million, which will be recognized through fiscal year 2018. The Company records stock-based compensation expense within general and administrative expenses in the consolidated statements of operations. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 29, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
(7) Subsequent Events | |
On August 1, 2014, the Company’s Board of Directors authorized a share repurchase program of up to $35.0 million of the Company’s common stock. With this authorization, repurchases may be made at management’s discretion from time to time on the open market. |
Organization_and_Other_Matters1
Organization and Other Matters (Policies) | 6 Months Ended |
Jun. 29, 2014 | |
Accounting Policies [Abstract] | ' |
Business | ' |
Business | |
Potbelly Corporation (the “Company” or “Potbelly”), through its wholly owned subsidiaries, operates Potbelly Sandwich Works sandwich shops in 22 states and the District of Columbia. As of June 29, 2014, the Company had 312 company-operated shops. During the 26 weeks ended June 29, 2014, the Company opened 16 new company-operated shops and closed no shops. | |
The Company also sells and administers franchises of new Potbelly Sandwich Works sandwich shops. The first domestic and international franchise locations administered by the Company opened during February 2011. As of June 29, 2014, 13 franchised shops were in operation in domestic locations and 13 franchised shops were in operation internationally. | |
Basis of Presentation | ' |
Basis of Presentation | |
The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Potbelly Corporation and its subsidiaries and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2013. The unaudited condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the SEC regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of December 29, 2013 and June 29, 2014, its statement of operations for the 13 and 26 weeks ended June 30, 2013 and June 29, 2014 and its statement of cash flows for the 26 weeks ended June 30, 2013 and June 29, 2014 have been included. The consolidated statements of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year. | |
The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
The unaudited condensed consolidated financial statements include the accounts of Potbelly Corporation; its wholly owned subsidiary, Potbelly Illinois, Inc. (“PII”); PII’s wholly owned subsidiaries, Potbelly Franchising, LLC, Potbelly Sandwich Works, LLC (“LLC”) and 17 of LLC’s wholly owned subsidiaries, collectively, the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. For the Company’s consolidated joint venture, non-controlling interest represents the non-controlling partner’s share of the assets, liabilities and operations related to the joint venture investment in Potbelly Airport II Boston, LLC, related to one shop located in the Boston Logan International Airport. The Company owns a seventy-five percent interest in this consolidated joint venture. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, primarily related to long-lived assets, income taxes, stock-based compensation and common stock equity valuations, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Fiscal Year | ' |
Fiscal Year | |
The Company uses a 52/53-week fiscal year that ends on the last Sunday of the calendar year. Approximately every five or six years a 53rd week is added. Fiscal 2013 and 2014 each consist of 52 weeks. The fiscal quarters ended June 30, 2013 and June 29, 2014 each consisted of 13 weeks. | |
Stock-based Compensation | ' |
In accordance with ASC Topic 718, Compensation—Stock Compensation, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period, which is generally the vesting period of the grant, with a corresponding increase to additional paid-in-capital. For the 13 and 26 weeks ended June 29, 2014, the Company recognized $1.0 million and $1.4 million, respectively, which includes $0.4 million related to the May 2014 unrestricted common stock grants. For the 13 and 26 weeks ended June 30, 2013, the Company recognized $0.4 million and $1.1 million, respectively. As of June 29, 2014, the unrecognized stock-based compensation expense was $6.6 million, which will be recognized through fiscal year 2018. The Company records stock-based compensation expense within general and administrative expenses in the consolidated statements of operations. |
Earnings_per_share_Tables
Earnings per share (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Schedule of the Calculation of Weighted Average Common Shares Outstanding for Basic and Diluted Earnings per Share Available to Common Stockholders | ' | ||||||||||||||||
For the 13 Weeks Ended | For the 26 Weeks Ended | ||||||||||||||||
June 29, | June 30, | June 29, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Calculation of undistributed income (loss) for basic and diluted shares: | |||||||||||||||||
Net income attributable to Potbelly Corporation | $ | 2,010 | $ | 2,759 | $ | 1,709 | $ | 2,777 | |||||||||
Less: Accretion of redeemable convertible preferred stock to maximum redemption value | — | (2,905 | ) | — | (10,301 | ) | |||||||||||
Undistributed income (loss) for basic and diluted shares | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Allocation of undistributed income (loss) to participating securities: | |||||||||||||||||
Common shares | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Redeemable convertible preferred shares | — | — | — | — | |||||||||||||
Undistributed income (loss) | $ | 2,010 | $ | (146 | ) | $ | 1,709 | $ | (7,524 | ) | |||||||
Weighted average common shares outstanding-basic | 29,342,528 | 4,244,879 | 29,246,676 | 4,241,752 | |||||||||||||
Plus: Effect of potential stock options exercise | 1,046,198 | — | 1,258,203 | — | |||||||||||||
Plus: Effect of potential warrant exercise | 120,827 | — | 138,013 | — | |||||||||||||
Weighted average common shares outstanding-diluted | 30,509,553 | 4,244,879 | 30,642,892 | 4,241,752 | |||||||||||||
Income (loss) per share available to common stockholders-basic | $ | 0.07 | $ | (0.03 | ) | $ | 0.06 | $ | (1.77 | ) | |||||||
Income (loss) per share available to common stockholders-diluted | $ | 0.07 | $ | (0.03 | ) | $ | 0.06 | $ | (1.77 | ) | |||||||
Potentially dilutive shares that are considered anti-dilutive: | |||||||||||||||||
Common share options | 242,636 | 4,399,773 | 242,636 | 4,399,773 | |||||||||||||
Warrants | — | 345,213 | — | 345,213 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||||||||||
Summary of Activity Under Plans and Agreement | ' | ||||||||||||||||
A summary of activity for the 26 weeks ended June 29, 2014 is as follows: | |||||||||||||||||
Options | Shares | Weighted | Aggregate | Weighted | |||||||||||||
(Thousands) | Average | Intrinsic | Average | ||||||||||||||
Exercise | Value | Remaining | |||||||||||||||
Price | (Thousands) | Term | |||||||||||||||
(Years) | |||||||||||||||||
Outstanding—December 29, 2013 | 5,030 | $ | 9.41 | $ | 78,575 | 6.31 | |||||||||||
Granted | 273 | 20.09 | |||||||||||||||
Exercised | (297 | ) | 8.91 | ||||||||||||||
Canceled | (57 | ) | 12.3 | ||||||||||||||
Outstanding—June 29, 2014 | 4,949 | 9.99 | $ | 29,147 | 6.05 | ||||||||||||
Exercisable—June 29, 2014 | 3,650 | 9.73 | $ | 29,610 | 5.74 | ||||||||||||
Organization_and_Other_Matters2
Organization and Other Matters - Additional Information (Detail) | 6 Months Ended |
Jun. 29, 2014 | |
Store | |
Nature Of Business And Basis Of Presentation [Line Items] | ' |
Number of sandwich works and shops operation states | 22 |
Domestic Operations [Member] | ' |
Nature Of Business And Basis Of Presentation [Line Items] | ' |
Number of shops | 13 |
International Operations [Member] | ' |
Nature Of Business And Basis Of Presentation [Line Items] | ' |
Number of shops | 13 |
Company Operated Shops [Member] | ' |
Nature Of Business And Basis Of Presentation [Line Items] | ' |
Number of shops | 312 |
Number of closed stores | 0 |
New Shops [Member] | ' |
Nature Of Business And Basis Of Presentation [Line Items] | ' |
Number of shops | 16 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 29, 2014 | Mar. 30, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 |
Fair Value Disclosures [Abstract] | ' | ' | ' | ' | ' |
Impairment charges | $29 | $800 | $53 | $877 | $79 |
Earnings_Per_Share_Schedule_of
Earnings Per Share - Schedule of the Calculation of Weighted Average Common Shares Outstanding for Basic and Diluted Earnings per Share Available to Common Stockholders (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 |
Calculation of undistributed income (loss) for basic and diluted shares: | ' | ' | ' | ' |
Net income attributable to Potbelly Corporation | $2,010 | $2,759 | $1,709 | $2,777 |
Less: Accretion of redeemable convertible preferred stock to maximum redemption value | 0 | -2,905 | 0 | -10,301 |
Undistributed income (loss) for basic and diluted shares | 2,010 | -146 | 1,709 | -7,524 |
Allocation of undistributed income (loss) to participating securities: | ' | ' | ' | ' |
Undistributed income (loss) | 2,010 | -146 | 1,709 | -7,524 |
Weighted average common shares outstanding-basic | 29,342,528 | 4,244,879 | 29,246,676 | 4,241,752 |
Plus: Effect of potential stock options exercise | 1,046,198 | 0 | 1,258,203 | 0 |
Plus: Effect of potential warrant exercise | 120,827 | 0 | 138,013 | 0 |
Weighted average common shares outstanding-diluted | 30,509,553 | 4,244,879 | 30,642,892 | 4,241,752 |
Income (loss) per share available to common stockholders-basic | $0.07 | ($0.03) | $0.06 | ($1.77) |
Income (loss) per share available to common stockholders-diluted | $0.07 | ($0.03) | $0.06 | ($1.77) |
Common Share Options [Member] | ' | ' | ' | ' |
Allocation of undistributed income (loss) to participating securities: | ' | ' | ' | ' |
Potentially dilutive shares that are considered anti-dilutive | 242,636 | 4,399,773 | 242,636 | 4,399,773 |
Common Stock [Member] | ' | ' | ' | ' |
Allocation of undistributed income (loss) to participating securities: | ' | ' | ' | ' |
Undistributed income (loss) | 2,010 | -146 | 1,709 | -7,524 |
Warrants [Member] | ' | ' | ' | ' |
Allocation of undistributed income (loss) to participating securities: | ' | ' | ' | ' |
Potentially dilutive shares that are considered anti-dilutive | 0 | 345,213 | 0 | 345,213 |
Redeemable Convertible Preferred Stock [Member] | ' | ' | ' | ' |
Allocation of undistributed income (loss) to participating securities: | ' | ' | ' | ' |
Undistributed income (loss) | ' | ' | $0 | ' |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) (Common Share Options [Member]) | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 | |
Common Share Options [Member] | ' | ' | ' | ' |
Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive Securities Excluded from computation of diluted income per common share | 242,636 | 4,399,773 | 242,636 | 4,399,773 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Income tax expense | $1,407 | $1,869 | $1,216 | $1,886 |
Pre-tax income | $3,414 | $4,639 | $2,931 | $4,678 |
Effective tax rate | ' | ' | 41.50% | 40.30% |
Capital_Stock_Additional_Infor
Capital Stock - Additional Information (Detail) | 6 Months Ended |
Jun. 29, 2014 | |
Equity [Abstract] | ' |
Terms of non-voting Common stock conversion basis ratio | 'The terms of the non-voting common stock provided that all shares of non-voting common stock would convert into voting common stock on a 1:1 basis immediately prior to the closing of an underwritten IPO or sale of the Company. |
Non-voting Common stock conversion basis ratio | 1 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | ||
31-May-14 | 31-May-14 | Jun. 29, 2014 | Jun. 30, 2013 | Jun. 29, 2014 | Jun. 30, 2013 | Mar. 30, 2014 | |
2013 Long Term Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Stock options issued | ' | ' | ' | ' | 273,000 | ' | 247,767 |
Common stock fair value | ' | ' | ' | ' | ' | ' | $20.53 |
Expected life of options | ' | ' | ' | ' | ' | ' | '7 years |
Volatility | ' | ' | ' | ' | ' | ' | 49.61% |
Risk-free interest rate | ' | ' | ' | ' | ' | ' | 1.13% |
Dividend yield | ' | ' | ' | ' | ' | ' | 0.00% |
Method used to determine fair value of the options | ' | ' | ' | ' | ' | ' | 'Black-Scholes option pricing model |
Issuance of unrestricted common stock | 25,663 | ' | ' | ' | ' | ' | ' |
Weighted average grant-date share price | $15.60 | ' | ' | ' | ' | ' | ' |
Weighted average share value of unrestricted common stock | $400,000 | ' | ' | ' | ' | ' | ' |
Recognized stock compensation expense | ' | 400,000 | 1,000,000 | 400,000 | 1,441,000 | 1,142,000 | ' |
Unrecognized stock compensation expense | ' | ' | $6,600,000 | ' | $6,600,000 | ' | ' |
Unrecognized stock compensation expense, recognition period | ' | ' | ' | ' | 'Through 2018 | ' | ' |
StockBased_Compensation_Summar
Stock-Based Compensation - Summary of Activity Under Plans and Agreement (Detail) (USD $) | 6 Months Ended | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Jun. 29, 2014 | Dec. 29, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ' |
Options Outstanding shares, Beginning balance | ' | 5,030 |
Options Outstanding shares, Granted | 273 | ' |
Options Outstanding shares, Exercised | -297 | ' |
Options Outstanding shares, Canceled | -57 | ' |
Options Outstanding shares, Ending balance | 4,949 | ' |
Options Outstanding shares, Exercisable | 3,650 | ' |
Options outstanding weighted average exercise price, Granted | $20.09 | ' |
Options outstanding weighted average exercise price, Exercised | $8.91 | ' |
Options outstanding weighted average exercise price, Canceled | $12.30 | ' |
Options outstanding weighted average exercise price, Ending balance | $9.99 | $9.41 |
Options outstanding weighted average exercise price, Exercisable | $9.73 | ' |
Options Outstanding Aggregate Intrinsic value | $29,147 | $78,575 |
Options Exercisable Aggregate Intrinsic Value | $29,610 | ' |
Option Outstanding Weighted Average Remaining Term | '6 years 18 days | '6 years 3 months 22 days |
Options Exercisable Weighted Average Remaining Term | '5 years 8 months 27 days | ' |
Subsequent_Events_Additional_I
Subsequent Events - Additional Information (Detail) (Subsequent Event [Member], USD $) | Aug. 01, 2014 |
In Millions, unless otherwise specified | |
Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Stock repurchase program, authorized amount | $35 |